Solar is suddenly a great investment

It might seem strange in 'cloudy Britain' but you can now make money from converting daylight into electricity. In fact, the payments you will receive, which are guaranteed by the government, represent one of the most secure investments you can make today.

So how does it work?
You get some solar electric panels (photovoltaics or 'PV' for short) installed on the roof of your house or garage, or even in your garden, ideally pointing perfectly south at an angle of about 30 or 40 degrees.

The panels convert daylight into DC electricity which is converted into AC by an inverter (a small box installed in the loft, or near the panels) which is then fed into your main distribution board in your house.
If you're in the house and using electricity the power from the panels will be used in your house straight away, so you avoid buying so much from the grid. If you're out, and the panels are still generating, then the electricity is exported to the grid for a small payment.

So how do you make money?
Here's the best bit. The government legislation, known as the UK 'feed-in tariff', guarantees you a payment for EVERY unit the system generates, regardless of whether you use it in your home or not. And an additional payment for every unit which you export to the grid.

For a 'retro-fit' installation (panels installed on an existing home) the rates are 41.3p for every unit the system generates and an extra 3p for every unit which is sold to the grid. If you sign up in the first two years of the scheme these rates are guaranteed, tax free and will increase with inflation for 25 years into the future!

That's an amazing deal. It beats an ISA or a pension scheme or pretty much any other kind of investment, but you do need to own your own roof.

If you sell you house, you'll get a premium for the added value the solar provides. No-one has actually sold a house with a 'feed-in tariff' qualified system on the roof at the moment and it will be interesting to see exactly how much value it adds.

It seems obvious that house-hunters would pay more than the system cost the existing home owner to secure a 'green' property, which is guaranteed to have lower electricity bills than average AND a guaranteed income for the remainder of the 25 years.

Check out the estimates for cost vs return on your property using Solarcentury's online PV calculator or visit The Solar Energy Co-op.