Energy minister says those approaching retirement should consider putting some
of their savings into solar panels because they would deliver a better
financial return than a pension
Installing solar panels on household roofs is a better investment than a
pension, a minister has said.
Greg Barker, the energy minister, said that anyone approaching retirement
should consider putting some of their savings into solar panels because they
would deliver a better financial return than a pension.
Mr Barker disclosed that 500,000 British homes have installed solar panels,
which allow users to generate their own electricity and sell any excess
power to energy firms.
Installing panels can cost several thousand pounds, but savings on bills and
the ability to sell excess power mean households can turn a profit over time.
To encourage domestic solar power, the Government offers to guarantee the
price at which users can sell their excess electricity. The guaranteed price
was cut in 2012, but the Government continues to provide a subsidy.
Prices for solar panels have fallen sharply in recent years. According to the
Department of Energy and Climate Change, the typical domestic installation
costs around £4,500, compared with £13,000 in 2010.
That means that typical rates of return on domestic solar panels are between 5
per cent and 8 per cent a year, government figures show.
Mr Barker said that makes solar power a better investment than some pensions.
Many pensioners buy a retirement income by investing in an annuity, a
contract guaranteeing them an annual income for life.
Returns on annuities have fallen in recent years, and typical products deliver
an income of around £6,000 for every £100,000 of pension savings.
Mr Barker said that those planning for retirement should think about putting
some money into solar panels instead of a traditional pension.
“Solar (Copenhagen: SOLAR-B.CO – news) is a really attractive financial proposition,” the minister told The
Daily Telegraph. “You get a guaranteed tariff for 20 years and if your panel
is well-sited, it could yield 8 per cent or more. That is more than an
annuity, particularly if you are in your 50s or early 60s.”
He added: “Anyone considering retiring should seriously consider whether solar
panels are right for them, because in some circumstances, they will get a
higher return than from putting the money into an annuity.”
The minister’s financial argument is part of an attempt to improve the image
of renewable energy sources, which are unpopular with some voters and many
Official figures showed last month that 499,687 domestic solar schemes had
been installed, Mr Barker said the total has since passed 500,000.