Solar panels and other renewables will be installed on one in ten homes

Families can earn £900 a year by installing solar panels on their roofs as part of a new Government scheme to pay people to generate their own electricity.

By Louise Gray, Environment CorrespondentPublished: 7:00AM GMT 02 Feb 2010

Under the deal, which will start from April this year, households will be paid for electricity fed into the grid from renewable technologies such as solar, wind or energy from waste.
The most attractive rate of return will be on solar panels, which for an average sized three bedroom home could earn households £25,000 over 25 years.

Ed Miliband, the Energy and Climate Change Secretary, said he expected that one in 10 homes will have installed renewable power on their homes in the next decade. He pointed out that the payments would be tax-free and a return of up to 9 per cent annually was better than any bank could provide.
However campaigners said the scheme, that will add around £11 on the average household bill by 2020 as electricity companies recoup the costs from everyone, is just another “green tax”.
Landowners, farmers and environmental groups said the rates have not been set high enough to encourage a green energy revolution.
The deal, called feed-in tariffs, will ensure that any households or building that invest in installing renewable electricity, should be paid a good rate of return. People who currently have solar panels must do a deal with their electricity company. The panels cannot provide a home’s entire energy needs as they only work in daylight and the energy they generate cannot be stored. When they are generating electricity, any surplus goes straight into the national grid.
Mr Miliband said he expected the number of people with solar panels alone to increase from 10,000 today to 700,000 by 2020.
“The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living," he said.
“The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past.
“It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology.”
Solar panels get the best rate of return under the feed-in tariff, followed by wind turbines and hydroelectric.
Installing solar panels, which cover a space of around 10ft x 10ft on an average sized roof, will cost around £12,500 but this will be paid back in10 years because the households will be paid £900 per annum, plus making £140 savings on the yearly electricity bill.
Previously, the government had intended that the most households could earn was £720 a year but has now increased that to make it more attractive.
A medium sized wind turbine, that costs around £4,500 to install, will earn a household about £400 each year.
Mr Miliband also introduced a renewable heat incentive that will pay households for producing their own heat from woodchip boilers or an air source heat pump. A ground source heat pump, that costs more than £1,000 to put in, could be rewarded with £1,000 a year and lead to savings of £200 per year if used instead of oil.
John Sauven, Executive Director of Greenpeace UK, welcomed the scheme but said rates are still too low for communities to invest in expensive long term schemes like hydro electric on rivers or larger turbines.
“For many families, generating their own clean electricity will be an attractive investment,” he said. “However, the level of ambition set by the government’s Feed-in Tariff is still far too low if we are to reach the full potential of small scale renewables.”
Landowners and farmers are angry that the Government has set the rate for energy generated from waste or anaerobic digestion, that could be installed on many farms, so low.
Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said it was “yet another green tax on energy which will punish ordinary families when they can least afford it”.
“Energy bills are already very high, and the last thing people need is yet another levy added on top of their existing costs. Effectively this scheme taxes less well off families, and gives their money to people who are rich enough to afford windmills and solar panels on their houses. People are sick of the Government using green taxes to punish behaviour that most people cannot avoid,” he said.