REUK Feed in Tariff Calculator

Since updating our Feed in Tariff article with the latest information on the feed in tariffs on offer in the UK from April 2010, we have received emails everyday taking issue with my statement that

“If you are lucky enough to have £10-12,500 in the bank AND have a south (or nearly south) facing roof, you’ll struggle to find a better financial investment than installing a PV solar array on your home”.

Therefore, to help to diminish the confusion out there about the financial returns possible, we’ve put together a simple UK Feed in Tariff Calculator which should clear up most of the questions people have been asking.

It is not possible to predict 25 years into the future, but this calculator should give you more than a rough idea of whether you should invest in an array of PV solar panels, or just keep your cash in the bank.

Simply enter the requested details below, click calculate, and the calculator will work out your predicted state of affairs at the end of years 1-25 inclusive if you install the PV array rather than just keeping the money in the bank. The bottom right hand corner of each table gives the key figure to be compared: the money in your pocket at the end of 25 years.

NEW (updated 1st August 2012) – our feed in tariff calculator has been updated to reflect the changes which came into force today – i.e. the reduced 16p per kWh feed in tariff and reduced payment term from 25 to 20 years. At the same time we have updated some of the default values in the calculator – for example the cost of a 4kWh solar installation has fallen in the last 18 months from £12,500 to £8,000-9,000. Try your values for both 20 and 25 years to see the significant effect on returns that the payment term reduction has had!

UK Feed In Tariff Calculator

Notes

Here is a glossary of the table headings used above:
FIT – Feed in Tariff payment made at the end of each year tax free to homeowner. Note that the FIT will be increased in line with inflation each year.
E. Saved – Reduction in electricity bill thanks to free electricity, i.e. electricity used immediately when it is generated rather than exported to the Grid. Calculator assumes the homeowner will invest this financial saving in their bank account each year.
Gross Int. – Gross interest paid at the end of the year on the bank account (gross = with tax not deducted).
Tax – The amount of tax deducted from the gross interest.
Net Int. – Net interest – i.e. gross interest minus tax paid is the net interest: it is the amount you can keep (and reinvest).
Bank Acc. – Balance at the end of the year in the bank account.

Key dates to look out for are a) the year in which your bank account balance exceeds the initial cost of the system installation – i.e. you’ve got your money back AND you still have X years of FITs and free electricity to come, and b) the year in which your bank account balance (if you installed a system) exceeds the bank balance you would have had you just kept the money in the bank. With the variables set to their default values, by the end of year 9 the installation has more than paid for itself, and by the end of year 12 the installation has paid for itself AND recovered the bank interest payments you would have received had your money been left in the bank instead of being locked up in solar panels.

Do not forget that after the 25 year period has finished, you will still have an array of solar panels which may continue to generate electricity for at least another 10-15 years (at perhaps 70-80% of their power output at time of manufacture). This will likely continue to attract cash payments if exported to the National Grid and/or give you a source of free electricity.