Going Green to Save Money - How Solar Panels can Reduce Costs

Last October we celebrated Green GB Week (opens new window) and heard that our current trajectory of relying on fossil fuels is leading to irreversible damage to our world and its climate. We need to make big changes in order to save our planet, and drastic changes to the way we consume and live are called for. We must move toward sustainable resources and adopt new habits.

But with energy there is little we can do when we are beholden to the 'big six' suppliers. Unless they take action we are stuck using fossil fuels to power our homes and, unless we have tens or hundreds of thousands of pounds at our disposal, we can't move towards generating our own renewable power.

The Power Purchase Agreement model is the perfect answer, allowing us to act on climate change by making our everyday activities more sustainable, and without having to spend any money. In fact, it saves you money, including those living in an extra care housing setting.

Going Green to Save Money - How Solar Panels can Reduce CostsA Power Purchase Agreement is a contract between an Energy Supplier and the Consumer, where the Supplier leases the roof space of the Consumer and sets up a solar PV system on it. The two parties then enter into a contract for around 25 years where the Consumer agrees to purchase any energy they use from the solar panels. A fixed price per kWh is agreed with an inflationary increase every year. The Generator pays for the whole system and ongoing maintenance.

A government subsidy, the Feed In Tariff, allows the Supplier to sell the energy to the Consumer at a reduced rate, often less then what the Consumer pays to their supplier. The inflationary increase every year follows RPI, whereas with the big energy suppliers prices have gone up every year between 5 and 8%, and look set to continue that trend. Year on year the Consumer sees an increasing saving on their energy bill, anywhere from hundreds to thousands of pounds. The Consumer gets to use clean renewable energy, help prevent climate change, and save money on their energy bills for the next 25 years.

The Supplier is able to offer this because of the length of the contract. By fixing the contract and price for 25 years the Supplier, over time, is able to pay back their initial costs, slowly making the contract profitable. This is because the Feed In Tariff rate has slowly been going down for the last few years.

Feed In Tariffs are scheduled to end in April 2019, and installations after this date will no longer be eligible to claim. After that, prices for solar electricity will jump up to higher than what the big suppliers will be able to offer, so the next few months are a last opportunity to get renewable energy and save money.

If you are an extra care housing operator or a resident of an extra care scheme, where every penny counts, PPAs are a clever way to improve your finances. They are a mutually beneficial model for all parties: Business owner, Resident and Generator, and help our move to a more sustainable world.

We can’t wait for our governments or multinationals to make these changes for us, but we can show them what is possible and how going green is good, financially and environmentally, for our current and future generations of older people.