The main benefit of renewable resources is what they can do for the environment. Or rather, what they do not do to the environment. They do not create pollution like fossil fuels do, and they don’t contribute to global warming. It is due to this that the UK government has incentivised them, which is why it is now possible to make money with things like solar energy.
Save With Renewable Energy
The savings that you can make using renewable resources will be considered before we get on to the government incentives. These will still apply of course, it’s just that you get more with the incentives available.
We’ll focus on solar energy for now, for the simple reason that it is the most popular form of renewable energy. You can get the solar panels installed on your roof, so it’s pretty simple and available to most people. Looking at the savings, you have to take in to account of the cost of the installation as well though.
When it comes to the actual amount of savings that you can make by using something like solar energy instead of your normal energy supplier, the savings are not actually that big. Although having said that, they’re getting bigger all the time as energy prices rise.
When you are looking at the savings you are going to make by doing something, you also have to consider how much it cost to do it. So in this case, the savings from using solar energy have to be set against a solar installation. In that case they don’t come out that favourably as it would take around 25 years usually to pay off the cost of the installation usually.
It should be no surprise, then, that before the feed in tariff came in to effect, there were not many people who were getting solar installations. Afterwards though, there were many more people getting solar panels, and we will now see why that is.
Feed In Tariff
The government scheme which applies to renewable resources used to generate electricity is called the feed in tariff. How it works is that for every unit of electricity you produce with your solar panels, you get a certain amount of money. This is energy that you are also using, it’s just that they are providing financial compensation for energy created in this way.
Governments all over the world are introducing feed in tariffs for this purpose because they want to reduce their carbon emissions. Indeed, the UK government has a specific target to make a significant reduction in carbon emissions by the year 2020. The reason for this is that they are concerned about the potential effects of global warming if we keep using fossil fuels as we have been.
By taking the feed in tariff in to account as well then, by how much does this improve the financial incentive for getting solar panels? Well, one way of looking at it is that instead of taking 25 years for you to make enough to equal the cost of the installation, it now only takes around 10 years.
The effect of taking much less time to pay off the cost of the installation, of course, is that it means that you will be able to make much more money. You could have about 15 years of actually making money on the solar energy, for example. And at the same time be guarded from the full effects of rising conventional energy prices.
The Renewable Heat Incentive
The renewable heat incentive, which is going to be available soon, works in the same way as the feed in tariff. While the feed in tariff applies to electricity produced with renewable energy though, the renewable heat incentive applies to heat energy that you produce.
This is going to apply to a number of systems. For example heat pumps like the ground source heat pump. You can also get an air source heat pump. It will also apply to solar thermal systems, which use solar energy to heat water. So it’s soon going to be more financially viable to use a solar hot water system as well.