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 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 Conservative MPs.
Official figures showed last month that 499,687 domestic solar schemes had been installed, Mr Barker said the total has since passed 500,000.
04 February 2014 The Telegraph