Due the government cuts, the current (2017) payback time for the average South facing 4kWp installation has increased from 8 years to 12 years since 2012. As the Feed in Tariff is now paid for 20 years, this equates to roughly £8,000 in earnings and savings after 20 years. Systems larger than 4kWp will deliver larger returns.
As the cost of solar PV falls it will take less time to repay the outlay. The average 4kW system costs £5,000 - £6,000 depending on panel and inverter selection and whether scaffolding is required at your property. Although we are only seeing a small reduction in installation costs, prices are expected to reduce over time due to predicted lower manufacturing costs.
Any earnings from energy generation and export rates are index-linked, this means that the payback will increase or decrease with inflation. The goverment’s current inflation projections state a 2% target. This means as interest rises and fall, they should remain close to this target if the economy remains stable.
The Department of Energy and Climate Change (DECC) current prediction state that the cost of electricity will rise at 2.6% every year until 2030. There are other reports that put this figure much higher. In an average household, electricity makes up 25% of total energy used. Of course solar panels can offset more than just the electricity, as gas appliances can be switched to electricity to draw from the generated energy.