What’s the catch with free solar panel offers?


Sales of solar panels have risen sharply since the previous government introduced cash for electricity (the so-called ‘feed in tariffs’ or ‘clean energy cashback’) in April 2010. However, many people are put off installing solar panels by the upfront costs which can run to around £15,000. Recently, several companies have offered free solar panels. Sounds good?

How the free solar panel deals work
If you want solar panels on your roof, you’ll normally have to pay between £8,000 and £15,000 depending on the size of your roof. With a free solar panel deal:

– You don’t pay for the solar panels: you don’t pay a penny towards the cost of buying or installing the solar panels.

SAVVY TIP: You can use the Energy Saving Trust’s cashback calculator to find out how much you could receive if you paid for the panels upfront. Consumer Focus reckons you could be around £2,000 better off over the 25 years by taking out a loan and paying for the solar panels yourself.

– You can use electricity generated by the panels for free. The amount of electricity the solar panels generate will depend on their position and the amount of sunshine, but you won’t pay a penny for electricity that you use.

– The solar panel company receives the cashback from electricity you generate. You can sell surplus electricity to the national grid but the solar panel company and not you will get the money. You normally have to sign a contract for up to 25 years, which means that you won’t receive a penny of the money the government has promised to pay for excess electricity you generate.

What’s the catch?
The catch is that you don’t benefit from the feed in tariff payment and there may be a problem selling your home or remortgaging, depending on the type of contract you have. The Council of Mortgage Lenders, which represents banks and building societies, has information about free solar panel issues.

What consumer organisations say
The consumer organisation Consumer Focus says that, while there could be good ‘free solar panel’ deals out there, it’s worth asking questions before you sign up.

SAVVY TIP: Companies that have signed up to the REAL assurance scheme (the Renewable Energy Association listed) have to abide by a code of conduct which came into force in September this year and all companies must be members of REAL to get access to the clean energy cashback. The code says that companies mustn’t offer a high starting price and large discounts or a discount for signing up on the day.

Consumer Focus suggests asking:

– How much are you giving up? Find out what you’re sacrificing by letting the solar panel company take the money from the feed in tariff.

SAVVY TIP: The clean energy cashback scheme has two different elements, the ‘feed in tariff’ and the ‘export tariff’. It’s worth asking if you’re giving up just the feed in tariff element or the export element as well.

– Are you being given a loan? As the company has to buy and install the solar panels upfront, it’s worth finding out whether they’re effectively giving you a loan that you repay from the proceeds of the clean energy cashback scheme.

SAVVY TIP: If you are being given a loan, find out what type of loan or hire purchase agreement it is. Also ask if you are able to pay it off early and, if so, can you then receive payments from the clean energy cashback scheme?

– Who pays for servicing or repair costs if anything goes wrong? Find out whether the solar panels come with a guarantee and, if so, what happens after it runs out. It’s also worth asking what happens if the company goes out of business before the contract runs out.

– What happens if the government changes the feed in tariff? The feed in tariff scheme is supposed to be guaranteed for 25 years but it’s possible that the rules or tariff may change.

– What happens when you sell your home? It’s possible that you’ll sell your property while the agreement is still in force, so what happens if your buyer doesn’t want to take on the solar panel deal?

– Who owns the solar panels after the 25-year-deal runs out? What happens when the clean energy cashback deal runs out? Are you tied to any company for repairs or servicing or do you have complete control?

SAVVY TIP: Consumer Focus has a free factsheet that you can download.

Related articles:

Saving energy and money in your home

Spending money to save energy

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