Excellent Return on Investment
By installing a photovoltaic system, you are making an investment with a much better return than most other options. So, a 3kWp Photovoltaic system might cost £15,000. We'll use this figure to compare return on investment.
Saving in a bank
You get interest, but how much do you get? Really, at present you can expect an interest rate of 0.1% on a current account, and possibly 4-5% in a savings account. This is based on the AER interest rate.
The table below shows what you can expect from leaving money in a bank. Example Investment Amount: £15,000.
| Investment type | Period | Interest rate (AER) | Return on Investment | Tax | Final ROI |
|---|---|---|---|---|---|
| Current account | 5 Years | 0.1% | £75 | £15 | £50 |
| Av savings account | 5 Years | 4.2% | £3,426 | £685 | £2,740 |
| Good savings account | 5 Years | 5% | £4,144 | £829 | £3,315 |
Savings made with Photovoltaic
Now compare this with the Direct savings made with an installed PV system. Again this is the savings made over 5 years. Example Investment Amount: £15,000.
| Investment type | Period | Interest rate (AER) | Return on Investment | Tax | Final ROI |
|---|---|---|---|---|---|
| Photovoltaic system | 5 Years | 8.438% | £7,490 | £0 | £7,490 |
Of course, with the interest from the bank, your interest is taxed. With a PV system the money you save and get paid by the supplier are yours to keep. For means of comparison, a virtual interest rate is included for the Photovoltaic system, actual interest is not paid - this return is made in savings, payments to you, and the grant.
How the PV saving was worked out
- The total savings on electricity = £2,428
- With an electricity price increase of 15% a year, the savings per year were then added up. See Reduce your electric bill for the figures used.
- The total paid to you by supplier = £2,562
- The money paid to your by the supplier for the total production using a yearly rate increase of 15%. This is likely to be higher after the new feed-in tariffs are launched in April 2010. See Get paid for your electricity for the first years figure used.
- The £2,500 Grant
- To make it fair, the grant has not been taken off first in the case of the bank accounts, as you would need the higher figure initially to pay for the Photovoltaic system, then the Grant would be deposited into your bank account afterwards.
Please note that this is an example system cost, and average electricity figures have been used and estimated yearly price increases used. The system cost will be dependant on survey and subsequent system design, and savings would need to be calculated using figures from specific electricity suppliers.