Photovoltaic Panels (PV) - How it works

The solar array generates DC current by day which is converted to AC current and then fed back into the houses electrical network.

Presuming that there are some appliances in the house in operation, the electricity generated is used effectively to power these directly.

Any surplus is exported back into the grid through an export meter, for which you receive payment or credit according to the tariff you have chosen.

Hence you become a buyer and seller of electricity, exporting power available by day through your solar system, and importing by night from the grid.

Feed in Tariff

The feed-in tariff obligates utility companies to pay consumers with renewable energy systems a set rate for the unit of electricity generated by their system.

The Rate for retrofit PV System is 41.30p for pv systems are for a term of 25 years and the income is tax free. The rates will also be index-linked for inflation. Any surplus electricity exported back to the grid can be sold for a minimum of 3p per kWh.

Part of the buying decision may be based on the payback of the cost of the system. The payback period will be substantially influenced by future electricity prices, which are universally expected to rise at increasing rates in the future. For example, between May 2006 and June 2008, single rate electricity prices for the first 125KwH used rose on average 64%, and for subsequent consumption on average 30% (based on rates from N-Power, Scottish Power, Powergen, Southern Electric, Northern, Swalec, Yorkshire Power, Eastern).

 

Worked example of returns

Size of system KWp	1.7	2.2	3	3.7
Size of roof area M2	11.7	15.5	20.7	25.9
Installed cost	£9.060	£11,950	£14,780	£17,350
Annual electricity saving	£87	£115	£154	£193
Annual income	£655	£862	£1,160	£1450
Payback period	10 years	10 years	9 years	9 years
Total profit over 25 Years	£21,917	£28,524	£39,224	£49,024