If you want to install solar panels on your roof and take advantage of lucrative new feed-in tariffs but have been put off by a lack of funds, you could soon get a loan to cover the whole cost.
This week the government unveiled plans to offer homeowners 20 year loans of up to £15,000 to allow families to invest in green technologies, safe in the knowledge that their loan would be taken over by the purchaser if they move before it's paid off.
This follows an announcement by the Department of Energy and Climate Change (DECC) that it will start paying feed-in tariffs (FiT's) to households installing green technologies such as electricity generating photovoltaic (PV) systems, which will set you back around £8,000 per kWp installed.
Households with south-facing roofs able to install a 4 kWp solar PV system will receive payments and savings totalling over £1,600 a year (Import savings £218.11 + FiT income £1390.16 + Export income £50.49 = £1658.76) from 1 April 2010.
Until now households wanting to introduce these carbon-reducing measures had to pay the upfront installation costs, or borrow the money, leading to accusations that they were only affordable for the well-off. Equally, spending thousands on solar power made little sense to anyone planning to move home a few years later.
The government has tried to answer both criticisms this week by introducing a pay-as-you-save (PAYS) scheme, which follows a pilot run in a number of cities.
- Although details of how the scheme will work are yet to be finalised we now have a rough idea:
The loans, typically between £10,000 and £15,000, are expected to come from commercial organisations rather than government funds. As well as the big six energy companies, Sainsbury's, B&Q, Co-op Bank and HSBC are among those expressing an interest.
- Once taken out, the loans would effectively become a charge against the house in the same way as a mortgage. They are expected to be paid back over 20-25 years, but, unlike a mortgage, if you move house before the loan is paid off, the new buyer would take over the payments. Of course, they also take over the savings, and any feed-in tariffs payable, which DECC says would always be greater than the repayments. It should make the home more attractive to any purchaser.
- The interest is yet to be determined – 6% has been mentioned, but as the loans will be coming from the private sector rates will reflect the market at the time. It is likely the rate would be similar to a long-term fixed-rate mortgage, typically 5%-6%. If you have lots of equity in your home, and you are remortgaging, you might find it cheaper to add the cost to your mortgage.
Households would be able to spend the money on a variety of technologies. Solar PV and Solar Thermal water heaters will be favourites, but so will solid-wall insulation which is aimed at homes that were built without cavity walls. It is much more expensive than cavity wall insulation, but can bring down energy bills significantly. Ground and air source heat pumps and wind turbines will qualify.
DECC says it is aiming for 7m households – owner-occupier and rented – to benefit by 2020. It wants to make the loans available to the widest possible group rather than just the well-off. It aims to have a single point of contact for those hoping to get a loan, pushing applicants to the most appropriate commercial supplier.
One option could see the power firms, which already have responsibility for paying the feed-in tariffs, also overseeing the loans and simply paying the customer the surplus at the end of each month. This would enable those with less-than-perfect credit histories to install carbon-reducing measures.
URBAN ENERGY
Our mission: “To provide and install, sustainable, world class, clean energy products with the highest level of service and care”.
Urban Energy is an innovative organisation specialising in the financing, design and installation of economic and environmentally sound solar powered energy systems for commercial property (private and public) and domestic dwellings. Our expertise in the field of Government sponsored funding programmes and solar power products will provide individuals and organisations with an excellent opportunity to overcome capital cost barriers, save money on energy bills, increase profit margins, increase the value of their property and reduce their carbon footprint.
Urban Energy employ the very best engineers in this field, all of which are fully qualified, MCS certified and Government approved to carry out this task, complying with strict guidelines and are members of the Solar Trade Association.
0% interest instalment payment program available for domestic solar thermal and photovoltaic systems.
For further information about Urban Energy products and services:
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