Loan letter

We got mail today from Energy Saving Scotland to tell us that the maximum loan available for generating electricity from renewable sources is now £4,000. It is a shame that the loan and the grant departments at this quango are not a single unit, as it would have been nice to have been officially informed that we were not going to get a grant either.

My wonderful partner is more cautious about this whole process. She simply sees that we are going to have to find over £14,000 quickly and then have to pay it back, increasing our monthly outgoings. This is a very understandable position and it is true to say that as I plough deeper into this (and as I model it ever more carefully with my beloved spreadsheets), it has become less attractive than it was. However, it is still very attractive.

Based on my most recent models, we will have to find more money, initially at least. But it is only on the order of £20 a month. This is because the FiT payments are generous enough to cover our total electricity costs and cover most of the loan. Once the loan is paid, it's all very positive.

I see things over the long term. Seen over 25 years, worst case and assuming 3% inflation, we have two options: Do nothing and spend £38,000 on electricity; or spend £14,300 now and never have to pay for electricity for that 25 year period - maybe even make some money. A no-brainer if ever I saw one.

Commentators have described it as a gilt-edged investment with a guaranteed 8% return, or as a way of buying 25 years electricity up-front. The most interesting comment came from George Monbiot when he was bitterly questioning the validity of solar PV andthe FiT scheme in the Guardian: "If you own a house and can afford the investment, you'd be crazy not to cash in."