Solar company offering low interest loans
By Katie Anderson on August 13, 2012
An installer of solar photovoltaic panels has offered households in the UK an incentive to switch to green energy by supplying low-interest loans to homeowners.
Domestic solar power has endured a turbulent year. Although the manufacturing cost of solar panels has fallen over the past twelve months, government subsidies have twice been cut.
At the beginning of the year, the Feed-In Tariff (FIT) was worth 43.3p per kWh. Households generating electricity from solar PV technology received this rate until April, when the government reduced the subsidy to 21p per kWh. Four months later, the tariff was cut again, this time to 16p per kWh. Further reductions are expected as the cost of producing solar panels falls.
The solar industry was pessimistic about the first wave of cuts, claiming the halving of subsidies could very well destroy one of Britain’s few areas of growth. The government, however, was adamant that households would be able to afford the cuts as solar panels became cheaper. On balance, despite fewer panels being installed on a weekly basis compared to last year, the government was not entirely wrong: the solar industry and its customers appear to be coping with the cuts.
Engensa, an installer of solar panels, has provided an example of how market conditions can make up the shortfall caused by government spending cuts.
Partnering with Hitachi Finance, Engensa is to offer low-interest loans for homeowners who want to install solar panels on their properties but cannot afford to do so without financial help. The solar loans are subject to an APR of 7.9 per cent, which ought to be considered competitive in the current economy.
Engensa claims the loans will be available to any person who is employed and owns his home, however, a credit check will apply, so applicants who have a poor credit score may be rejected. The unsecured loan is capped at £50,000 over a period of ten years, but borrowers can settle the loan early without penalty. The main advantages of the deal are that homeowners own the solar panels and derive all benefits from using them.
Toby Darbyshire, the founder of Engensa, claims the detail should breathe new life into a sector that still offers households the chance to make a sizeable return on investment over a period of twenty years.