This article was written by Mark Osborne and Emma Hughes

Renewable energy generator ‘A Shade Greener’ (ASG) is the first of an expected many companies to offer free solar photovoltaic installations to residents in the UK. The company, which is based in South Yorkshire, started up in October 2009 with the aim of installing 2,000 PV systems on residential rooftops in select regions, however, since the introduction of the feed-in tariff and exposure on the BBC, interest has increased dramatically.

The company is able to get away with offering solar PV systems free of charge by using initial funding of several million pounds provided by the Royal Bank of Scotland (RBS) to cover the upfront cost, and then utilizing the feed-in tariff for renewable energy generation to gain a profit as well as to pay for future system installations.

Each system installed is typically comprised of 18 ET Solar's mono-c-Si modules at 185 watts (ET-M572185) and an SMA inverter. ASG has begun its first wave of installations, aiming for a target of 6,000 systems in three years. Based on the fact that each install is typically 3.3kW, the company will have installed an approximate 19MW by the end of this period.

A company representative informed us that customer requests have amplified by so much in the last week that they are actually receiving five calls per second. Due to this unprecedented demand, ASG is expected to expand its workforce from its current northern locations down into the Midlands and the South West regions of the UK.

How the costs and earnings stack-up

ASG is using mono-crystalline modules manufactured by Taiwan-based ET Solar. ET Solar has operated in the UK for several years and was responsible for solar modules fitted at London City Hall, several years ago. As mentioned above, each module used has an electricity output (under perfect light conditions) of a minimum of 185 watts. Combined, the 18 modules installed on the roof the system has a theoretical output of 3,330kWh.

However, there are losses of energy to be expected through transmission to the solar inverter that converts direct current produced by the solar modules to AC current. We believe the inverter being used by the company is from SMA Solar Technology, the largest manufacturer of solar inverters in the world. These inverters typically have minimum energy losses, or put another way have efficiencies typically in the 95 to 98% range.

Although it is difficult to be precise, as the real-world energy output of any solar installation can vary, it can be assumed that a 10% loss from the theoretical system output is to be expected. Therefore this system would realistically be generating around 3,000kWh.

The feed-in tariff (FiT) for a retrofit solar system for residential houses in the UK is 41.3p per kWh over 25 years. The money earned by the company is subsequently potentially around £1,239 per annum (pa). Over the 25-year tariff period this system could generate as much as £30,975 for the company.

There is also a small earning potential from the system that comes from electricity not consumed by the household and therefore fed back to the electricity grid. Again, this is difficult to calculate due to individual household electricity usage patterns, but this could generate another £500 over the 25-year period for the company.

In total the earnings from this installation for the company are estimated to be approximately £31,475 over the 25-year period.

Although the company noted that this particular solar installation would have a retail cost of approximately £20,000 the cost of components and installation are likely to be significantly less than this figure. Based on current large-quantity purchasing prices typical across the industry, the cost of the installation could be £10,000 or lower, equivalent to a 50% discount on the retail price mentioned.

Deducting the cost of the components and installation costs, the company could be earning around £21,475 from this installation over the 25-year period.

However, as the maintenance of the complete system is covered by the company we can also assume that as the solar inverter has a typical life expectancy of 10 to 15 years, the replacement and installation cost of a second solar inverter also has be included in the cost to the company. Typically, at current retail prices this can be assumed to cost around £1,500. The result is an earning potential of around £20,000 over the 25-year period from this single installation.

What the consumer saves

With the free installation and no maintenance costs to worry about, especially the cost of a replacement solar inverter about half-way through the feed-in tariff period, the consumer saves money by using as little electricity as possible from the existing grid, typically at a cost of 0.12p per kWh.

Again it is difficult to calculate how much electricity this household would use in a year, but this relatively large-scale residential system could provide between 60 and 80% of their electricity needs.

The consumer could therefore save approximately £360pa from their normal electricity bills and produce a total saving of £9,000 over the 25-year period, based on current electricity prices. Of course the savings could be more should electricity prices go up over the period covered but it should be noted that they could also be less due to consumption behaviour of the household as well as the actual solar systems annual overall electricity generation.

Paying for your own system

Based on the figures already calculated for the this type of installation a household able to pay for a similar system outright and benefit from the feed-in tariff and energy cost savings could see a revenue generation of around £41,000.

An outright purchaser benefits from the 41.3p per kWh tariff (£31,475 total) and the saved cost of purchasing electricity of £9,000. Coupled to the £500 possibly generated from giving electricity back to the grid, gives the breakdown of the potential total earnings.

Of course the £20,000 cost of the system has to be deducted from the calculations as well as the £1,500 needed for a replacement solar inverter. Smaller service/check costs would also have to be included.

An outright purchaser could therefore be looking at an earnings potential of approximately £19,000 over the 25-year period, equating to yearly earnings of £750 from the £20,000 investment.

It should be pointed out at this stage that all energy production calculations and therefore earnings and savings are linear. All solar cell technologies actually degrade over time so the energy produced from the system will actually decline. Module manufacturers have varying performance degradation guarantees due to the specific characteristics of their manufacturing technology but typically a system could produce 20% less energy than it did when new by the time the system has been operating for 20 years.

Solar modules can last many more years than the 25-year period used for this case study and A Shade Greener states clearly in its documentation that after the feed-in tariff period of 25 years, the modules are not removed and the household can continue to benefit from the energy savings at no cost to them.

What isn’t clear is whether there is a cost to the household for removing the system when energy production drops significantly or the systems’ life span expires. It is also not known who is responsible for the recycling of the modules after this period.