With inflation on the increase and interest rates remaining low those fortunate enough to have savings are not getting a return on them.
The CPI (Consumer Prices Index) climbed to 3.3 per cent from 3.2 per cent, while inflation, as measured by the Retail Prices Index jumped from 4.5 per cent in March to 4.7 per cent in November. The RPI is accepted as the truest measure of the cost of living because it includes housing costs whereas the CPI does not. So in order for you to start getting a return on your savings interest rates will need to rise over 4.7%.
One way to make a return on your savings is to invest in a solar pv array which will typically give you a 10% return year on year for 25 years. This is due to the governments Feed in Tariffs which are index linked and guaranteed for the full 25 year period.
A solar PV system installed for a domestic property can cost anything from £10,000 to £16,000 and if its been sold by a responsible company i.e. not the double glazing firms who’ve jumped on the band wagon you should get anywhere from 8% – 12% return on your investment.
Buyer beware: I have had a company based on the South coast quote for installing a system which would give less than a 5% return which is highly unethical of them considering they happily boasted about the majority of their customers being in their 70’s. Little did they know I was more than capable of working out what the return of investment was.
Investing in solar PV is very straightforward, for each kWh (kilowatt hour) your PV system produces (whether you use the electricity or not) you will be paid £0.413p this is index linked and guaranteed by the Governments Feed in Tariff scheme.
The performance of a PV system is stated in kWp (kilowatt peak) and below details how you work what the annual return for a solar PV system should be.
How the kWp (kilowatt peak) for a system is calculated:
Panel Output(kWp) x Number of panels = Optimum output of the system expressed in kWp e.g. 190 w x 14 = 2660 Wp or 2.66 kWp
How the annual output for a system is calculated:
Optimum power output of the system(kWp) x Efficiency coefficient (0.8) x Solar Radiation Factor x Over shading Factor = Estimated annual power output (kWh)
e.g. 2.66 kWp x 0.8 x 1042 x 1 = 2217 kWh estimated output
How the annual Feed in Tariff is estimated:
Estimated annual output kWhx Feed in Tariff (41.3p) = Annual Feed in Tariff estimate
e.g. 2217 x 0.413 = £915.62
How the annual savings on your electricity bill are calculated:
Estimated annual output kWhx Current price for your electricity supplier (typically 12.5p /kWh) x Estimated % Used
e.g. 2217 x 0.125 x 75% = £207.84
How the export tariff savings are calculated:
Estimated annual output kWhx 50% (its assumed you will export 50% of energy used) x Export tariff (typically 3p / kWh)
e.g. 2217 x 0.5 x 0.03 = £33.25
Total annual savings:
Feed in Tariff+ Energy Savings + Export Tariff
e.g. = £915.62 + £207.84 + £33.25 = £1156.71
A system of the size used in the example above (2.66 kWp) from www.energymyway.co.uk would cost approximately £11,500 fully installed and would give you a 9.9% annual return also making you less vulnerable to future rises in electricity prices and adding value to your property.
James Eades – qualifed energy assessor, renewable energy expert, business consultant.
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