Retail Price Index rise ensures sunny outlook for solar power

25 February 2011

While the rising rate of inflation has left clouds hanging over UK high street, it also has bought the promise of bright times ahead for individuals willing to join the solar energy revolution.

Recent weeks have seen the Retail Prices Index (RPI) – a strong indicator of the spending power of the British public – soar past the 5% mark, leaving cash-strapped consumers even more reluctant to spend.

However, for homeowners willing to invest in generating their own energy, the gloomy economic conditions have actually made the feed-in tariff programme even more appealing than it already is.

Under the Government-led scheme, individuals are paid for the solar, hydro-electric or wind power that they generate on their property and feed into the national grid.

The increasing RPI means that from April 1st, they will actually receive more for the energy they generate while also making a small, but significant, contribution to the UK’s drive to reduce its carbon footprint.

As an example, a property with solar photovoltaic panels with a capacity of generating 4 kilowatt-hour (kWh)  or less, will see its generation tariff – the largest portion of the feed-in tariff - increase from 41.3 pence per kWh to 43.3 pence per kWh.

Meanwhile the export tariff – which is a bonus payment for every kWh of surplus electricity a property’s system exports to the electricity grid – is also set to increase under the current rate of inflation, from 3 pence to 3.1 pence per kWh.

Amid surging energy prices for consumers and ongoing increases in the RPI, there may have never been a better time for homeowners to generate their own solar power.

Given the current economic conditions, owning a Solar PV system means you can make a substantial tax free income while also benefiting from cheaper electricity.