Free Solar Panels and Solar Buyback
By Sarah Ingrams
Article 6 of 7
Free Solar Panels and Solar Buyback
Companies promising you free solar panels or cash for your feed-in tariff are tempting - find out if these schemes are too good to be true.
If you're thinking of getting free solar panels, or have been offered a lump sum in exchange for your feed-in tariff, then keep reading. We tell you what you need to know about free solar panels and buyback.
Are free solar panels a good idea? We take you through the pros and cons of such schemes, and give you advice on what your options are if you can't afford to buy solar panels outright.
Plus we look at how solar buyback (also known as solar equity release) schemes work, and whether they’re a good idea if you already have solar panels.
How do free solar panels schemes work?
'Free' solar panel schemes, also known as rent-a-roof schemes, used to be commonplace a couple of years ago. These were run by companies eager to cash in on the feed-in tariff (FIT). This guarantees payment in return for electricity generated using renewable technologies, including solar power.
Companies offered to pay to lease your roof from you for 20-25 years and, in exchange, would install and maintain solar PV panels on it. You didn't have to pay upfront for the panels, and would also benefit from the free electricity produced by the system.
But there are very few free solar panel schemes available now. Feed-in tariff payments were cut significantly in January 2016, making it much less attractive to businesses to offer free solar schemes.
Instead, there's a growing number of solar buyback schemes. Read on to find out what these are, or head straight to what was the catch with free solar panels?
What is solar buyback?
Solar buyback is also referred to as solar equity release, and you may also see offers to ‘sell your feed-in tariff’. That’s essentially what it is: companies offer a lump sum to householders who already have solar PV installed, in exchange for receiving the remainder of their feed-in tariff.
As with free solar panel schemes, these companies are keen to cash in on the feed-in tariff. The original FIT rate (which you’ll be receiving if you signed up before August 2012) was generous, so it’s a valuable investment.
Find out more about the feed-in tariff.
Could I make money by selling my feed-in tariff?
Some companies claim you could ‘earn up to £20,000’. You continue to use the free electricity generated by your solar panels.
The actual amount offered is calculated using factors including the feed-in tariff rate you receive, the number of years you have left to receive it, the size of your solar panel array, and your current generation-meter reading.
These schemes promise a large upfront payment. Otherwise you would receive your feed-in tariff gradually, over 20 years, as your panels generate electricity.
Calculate how much you expect to receive from your feed-in tariff payments in total, and compare this with the upfront sum offered by the solar buyback company.
Although you’ll have to wait longer to receive the total amount, it’s likely you’ll be better off this way in the long run. It would not make sense for the companies otherwise.
£14,250amount one Which? member expects to earn from their feed-in tariff. A buyback company offered them £4,987
One Which? member told us a company offered them £4,987 for 19 years’ worth of feed-in tariff payments. But over the same period of time, the member expects to earn £14,250.
Is there anything else to consider with solar buyback?
Besides comparing your total expected feed-in tariff earnings with the amount offered as solar equity release, consider the following if you’re thinking about signing up:
- Who owns your solar panels during the period in which a company is receiving your feed-in tariff?
- Are you liable to pay for any maintenance and repairs?
- What happens to your solar panels at the end (especially if they have reached the end of their life)?
- How does it affect your ability to renew your mortgage or change mortgage provider? Speak with your mortgage provider to find out.
- Does it affect the value of your home if you plan to sell? Some mortgage lenders are wary when third parties own assets on the property.
We’ll be looking into solar buyback schemes further, and will report back on our findings.
What was the catch with free solar panels?
While you benefit from the free electricity the system produces for your home, the rent-a-roof company usually takes all the generation and export tariff payments paid out under the FIT scheme.
If you signed up for free solar panels when the FIT rate was at its highest, back in 2011, we calculated that you could miss out on as much as £23,000 for a 4kWp system. You would also have saved more than £5,000 over 25 years from the electricity produced by the panels.
If you want to know how much you could potentially earn through solar panels, and how they compare with other investment options, see our guide to whether solar PV is a good investment.
Should you take out a loan to pay for solar PV instead?
If you can afford it, you should consider buying the solar PV system upfront, as 85% of Which? members we spoke to said they did. Even if you had to take out a loan for part or all of the system, you might still be better off in the long run.
Our guide to personal loans explains what they are, how to get them, the pros and cons, and allows you to search the best rates on the market.
Should you remortgage your home?
If you've done your research and analysis, and decided that solar panels are definitely right for your home but you can't cover the cost through your savings, you might consider remortgaging your home.
However, make sure you weigh this up against other funding methods, including loans, to see which offers you the best deal. You'll also need to bear in mind that you may not be accepted, so shouldn't rely on this method of funding.
And, of course, you'll need to consider whether it's worth having potentially higher mortgage interest payments after working out what you can reasonably expect to earn from the FIT scheme, and any potential savings you can make on your energy bills once you've installed solar panels.
Are rent-a-roof solar panel schemes a good option?
If they return to the market, they are worth considering if you can't afford the upfront cost of a solar PV system and don't want to take out a loan.
Like all solar PV systems, they're best if you're at home during the day (when the sun is shining) so you can make the most of the free electricity in the daytime.
An easy way to cut your energy bills is to check that you're on the best energy deal for your home. Use our independent switching site Which? Switch to compare gas and electricity prices.
What have I signed up to with free solar panels?
If you've rented your roof out, you ought to be fully aware of what you're involved with: you have entered into a lease contract with the company, and rented out your roof to someone else for 20-25 years.
We analysed a contract from one rent-a-roof company, and found issues with liabilities and provisions that were very much in favour of the company.
- The contract we saw stipulated that the householder would have to get consent during the term of the lease if they wanted to sell their house, or make any alterations or additions to the building near the solar PV system. This clause would apply to a loft conversion.
- If the panels needed to be removed for a period of time – to do maintenance work on the roof, for example – the householder would have to compensate the company for the missed FIT payments.
The lease stays with the property. So if you have free solar panels installed and want to sell your home within the 20-25-year lease period, you'll have to find a buyer who is happy to take on the lease for the remainder of the contract.
What do I need to watch out for?
We recommend that you get independent legal advice on the details of the contract, whether you have free solar panels or are considering solar buyback. You should consider who owns the system; what happens if you want to end the contract early; who is liable for damage; who pays for insurance, upkeep and repairs; and what happens if you move.
The Renewable Energy Consumer Code provides a list of free solar PV system information on its website, which you should expect rent-a-roof scheme companies to provide. It's certainly worth having a look before signing up to any contract.
Why are free solar panel schemes unfair on all consumers?
FIT is paid for by you – all electricity customers pay a small levy on their bill to fund the scheme. In 2016/17, more than £1.25bn was paid out. Rent-a-roof schemes mean that 'free solar' companies pocketed a chunk of that cash.
Which? thinks that the profits from rent-a-roof schemes should be shared more fairly between the rent-a-roof company and the householder. We're also concerned that cash intended for householders is going elsewhere.