Is now the optimum time to invest in UK solar
The UK solar industry is about to enter its next phase. Since the introduction of the UK feed in tariff back in April 2010 the industry has grown at an exponential rate. The below graph demonstrates this meteoric rise.
The falling price of solar panels coupled with aggressive marketing by solar developers has seen Septembers solar installation exceed all expectation.
This curve will only escalate as we get closer to the feed in tariff review in April 2012. However there could be a substantial drop off should the government decide to bring forward its feed in tariff review as is looking increasingly lively.
The feed in tariff when conceptualised back in 2010 was never meant to be this profitable for developers or rooftop owners alike. A privileged owner of a south facing rooftop in the Devon or Cornwall can expect a return on investment well in excess of 15% pa rising with inflation. This would result in a payback period of some 7 years at very conservative inflation levels.
You may also have seen adverts for free solar installations, large funds and institutional money are poring into the sector trying to secure as much of the feed in tariff as possible before the reduction. There wont be many opportunities like this to secure a double digit, inflation linked, government backed return, and I suspect these contracts will be changing hands for vastly inflated prices in the next 5 years given inflation rates.
So how much will the feed in tariff be cut by? The figure most people are bandying around appears to be 40% this would bring it back to somewhere near to where the original ROI was positioned still make the industry profitable if slightly less appealing.
In the recent blog post by David Owen, Founder and CEO of Solar Media, points to the fact that solar PV is likely to once again become the victim of its own success. The “unless earlier action is deemed necessary” quote used by Solomon-Williams most certainly refers to the amount of PV installed in recent months, pointing towards a significant cut in feed-in tariffs which could take place at another fast-track review.
So we know the review is coming its now a matter of making hay while the sun shines…
We know solar is profitable, and if you have a south facing roof there has never been or probably ever will be a better time to fit a system to your roof. Not to mention the rising cost of energy bills, you may also have aspirations of owning an electric car one day, with a free fuel pump attached to your roof this will prove more than just a small saving given petrol prices.
But not all of us are blessed with a roof let alone a south facing one, I personally live in an apartment next to a very tally shady oak tree. So is there any way I can get a piece of the feed in tariff before its gone without moving house?
Willow Rivers has partnered with one of the South Wests largest Solar developers who have successfully signed up a large number of South facing residential and commercial rooftops for the benefit of private investors into solar.
This is a Win Win for all parties involved, the rooftop owner who is unable to afford the outlay for the systems gets money of their utility bills and a small income form the export tariff and you the investor takes ownership of the generation tariff and the income stream this achieves for the next 25 years.
This equates to a 9.5% first year yield rising with inflation over the next 25 years (average 14% pa base on 4% RPI). By only taking rooftops in the south west we maintain the highest return on investment and optimise our investors returns.
Sadly given the above changes to the FIT this opportunity will not be around for much longer, the drop in feed in tariff will likely bring the yield down to 6% however for those that do get in before the closing date they will own one of the most valuable and fully tradable commodities around for the next 25 year. Given the difficulty in finding inflation beating investments we expect the gold rush to continue for some time yet.
To find out more about owning solar rooftop systems in the South West please visit http://www.willowrivers.com/solar-investment-uk-asset.shtml

Growth of the UK solar sector since the advent of the FIT









