The United Kingdom may be notorious for its seemingly perpetual rain and fog, but, as this Guardian profile shows, a British residential solar panel installation that will potentially pay itself back before Prince Charles ascends to the crown is indeed feasible. The author, Ashley Seager, documents in detail the various costs associated with the installation and the financial incentives provided by the British government, concluding that he will receive a payback period of ten years. After installing the Kyocera 3kW photovoltaic system on his terraced Victorian roof two years ago, Seager estimates that the system is currently supplying 90 percent of the electricity used in his four-person household. I’ve included his number-crunching below, though I’d recommend perusing the entire article, if only for an interesting point of comparison. (And, last time I checked, the exchange rate was roughly $1.51 on the pound.)

We have a 3kW peak system (about 4m by 3m) on the roof. It produced 2,703kW hours (kWh) in its second full year (to 5 April), only 1% lower than the 2,730 kWh it produced in the first year, and that in spite of a lousy 2008 summer.

That was about 80% of the 3,500 kWh we used, and our usage was up because we had builders do some underpinning, which meant lots of kettles and cement mixers on.

The previous year we – a family of four – used 3,000 kWh, so the solar system produced 92% of our needs, a figure we expect to return to in the coming 12 months.

The breakdown:

Well, buying 3,000 kWh of electricity normally would cost around £420, based on 14 pence/kWh with npower, our supplier. We end up saving almost £400 of that by producing nearly all our own.

On top of that, we were getting payments under the government’s Renewable Obligation Certification (ROC) scheme of around £35 per megawatt/hour, rounded to the nearest whole one. So that is £105, putting us about £70 in the black for the year.

Since 1 April, that ROC payment has doubled to £210, putting us about £175 in the black. That compares with £420 in the red without the panels – a gain of almost £600 a year.

Indeed, the system means that, with a condensing boiler, we are now down to only about £30 a month to heat and light our property while our carbon emissions are very low. So what about the investment yield? The system cost £17,000, for which we got a 50% grant, making £8,500. With a return of £600, that’s around 7%. It’s not taxed, so is equivalent of about 9% for a basic-rate taxpayer and 11% for a higher-rate taxpayer. You’d struggle to do better buying junk bonds and this stuff is ­certainly not junk!

Moreover, that gives you a crude payback period of only 10 years, not the 100 years that some critics have claimed.

Ah, you say, but that 50% grant is no longer available, the maximum is £2,500. True, but systems have come down in price since we installed ours, so your post-grant price for a system like ours would be around £12,000 now. The £600 saving gives a return of 5% (or 7% or 8.5% gross – not bad when compared with just about any other kind of investment these days).

…

That 5% yield is likely to improve – next April, the government plans to introduce a so-called feed-in tariff (FIT) when you get paid an above-market price for every unit of electricity fed into the grid.

The ROC system gives you the equivalent of about 27p-28p per exported unit, but the FIT could well be higher than that. It is not clear how the FIT will work but it will probably replace the ROCs and the £2,500 grant.

Not bad for a place with solar radiation one third below that of Spain or southern Italy!

EDIT: An alert commenter has pointed out that these numbers actually don’t seem to quite add up–read ECD Fan’s number-crunching below–and after looking more carefully at the above figures, I would have to agree (and slap a hand to my forehead). I stand corrected! If anything, though, the above article can still give an insight into solar incentives elsewhere–even someplace as famously rainy as Britain.