If you follow the UK solar market, you know that the last few years have been a roller coaster ride. First, the government offered great solar incentives (feed-in tariffs) to encourage people to install solar panels on their roofs. Then, the government made a massive U-turn (Thanks, David Cameron! /sarcasm). The result was a large boom in installations, and then a bust. (Actually, the history here was even much more volatile, genuinely more like a roller coaster, but I’m simplifying it for brevity’s sake.)
The very interesting thing, however, is that the return on investment (ROI) on a solar installation has remained high. It has not wavered nearly as much as policy or growth. Someone tipped me to a really interesting study on this matter.
For a thorough read on this matter, check it out here. The author examines solar panel feed-in tariff rate reductions for 2010–2014, solar panel installation cost reductions 2010–2014, domestic electricity cost increases 2010–2014, and then solar panel rate of return and system payback times.
I think you can guess what the general story is: despite feed-in tariffs getting cut, the cost of solar panels has fallen quickly and retail electricity prices have risen, so rate of return has remained fairly consistent.
Here are several graphs from the study linked above that give a good visual explanation of what has happened:
Again, check out this Green Business Watch article for much more information.
Before closing, here’s a chart on US solar ROI that is interesting to compare with this UK solar information, especially using the investment context on the right of the chart: