This crackpot government scheme could help you beat inflation
Bengt Saelensminde reveals an investment opportunity that could make you a nice 5% index linked payback on your savings, all courtesy of a crazy government backed-scheme.
Forget Libya, forget Oman. What's really going to kick the oil price spike into orbit is if the unrest in the Middle East spreads to the world'snumber oneoil producer, Saudi Arabia.
The Saudi kingdom controls most of the world's spareoil production capacity. If the crisis leads to an interruption to Saudi supply - as it could well do - oil prices are going to react violently.
I've already been on the lookout for something to counter the inevitable spike in ourenergy bills. What I've found shocked me. This is not the usual kind of opportunity I tell you about, but it's one I think you need to see.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
What I want to show you today could do very nicely for the lucky few, but will in fact make electricity bills all the more costly for the vast majority of UK householders - right at the worst possible time.
If this suits you, it could make you a nice 5% index-linked payback on your savings and save your energy bill. What's more, it's a government backed-scheme. That means it could be one of the safest ways to get an inflation busting return on cash.
Let me show you what it's about... and - if you like the look of it - how to put it to use...
Make money from the government's crazy solar plan
How can it be possible to earn 5% index linked on your savings? - nobody's offering those sorts of rates anymore. Well, the government has signed up to a load of EU initiatives on renewable energy. And sometimes they have to ensure some pretty outrageous subsidies to get crackpot schemes off the ground. That's exactly what they've done to make solar power a runner.
Solar panels are nothing unusual to me. They've been popular for some time down in our part of the south of France - and the sums seem to make sense. Plenty of sunlight hours equal plenty of cheap electricity or hot water for the pool.
The strange thing is, over the last year more and more people have been jumping on this green bandwagon right here in the UK. In grey-Britannia! Can that really make sense? Nope, of course it can't. That is, not unless you can get in on what looks like a pretty lucrative scheme - the one I want to show you today.
What's happening is that the government has made sure that the big six electricity providers are going to pay up big-time for private electricity generation. And who's going to ultimately foot the bill? The rest of their customers.
Here's how it works
Your electricity bill is based on the amount of kilowatt hours (kwh) you use. Say your tariff is 10p/kwh and you leave a 1kw heater on for an hour, it'll cost you 10p.
Now, if you put in a solar panel installation, you can cut down your bills immediately. While you're generating you won't need to buy the energy from your supplier. On top of that, you can sell your excess production back to the supplier for 3p/kwh. Sounds alright.
But there's a major problem. And that's the cost of setting up the installation. That's where we need the big-fat hand of government (the scheme came in under Labour, but the Tories seem just as keen).
In their wisdom, they've agreed to pay anyone setting up an installation 41.3p (and that rises with inflation) for every kwh produced. But that's ridiculous!
The energy you produce is only worth 3p/kwh to the National Grid if you're selling it to them, but the government is happy to pay you 41.3p to generate the stuff! And it doesn't even matter if that power is used in your own home - you don't have to sell it back to the grid! And what's more, as it currently stands these tariffs are guaranteed and remain index linked for 25 years.
With such a generous scheme in place, it's not surprising that many businesses have set up shop to try to fleece it. You may have seen their ads in the papers offering homeowners with suitable property free solar panels and reduced electricity bills. So what do these companies get in return for setting up your installation? They get the 41.3p (index linked - of course) for every kwh you produce.
Your FREE oil report: The 3 best ways to play the coming oil supply crunch right now!
Discover how to profit from oil without ever owning a single barrel
Why NOW is the best time to put a few carefully selected oil investments into your portfolio
Hopefully you could profit from this bonkers scheme
Here's the only good thing about this bonkers' scheme. If your home is suitable to take these panels and you've got something like £10k to £30k that you want to put to work, then you could do very well from it.
A friend of mine is pressing ahead with an installation for his home in Liverpool - and that's hardly the Costa del Sol. He's reckoning on a return of 5% on his £17k outlay. And as I mentioned, the subsidy he receives from the energy company will grow along with inflation for 25 years.
He tells me "at least I've got the security of the panels sitting on my roof generating my leccy!"
The scheme is only available with accredited installation companies - you can get all the information you need from The Energy Savings Trust. There's also a calculator where you can work out your payback time. My mate reckons he'll get his investment back in less than ten years - and after that - it'll all be gravy...
If this could be of interest to you, then you might as well get a quote (I understand they're free). Those generous subsidies won't be on offer forever, that's for sure.
A couple of considerations for you: the best roofs are south-facing, receive direct sunlight, and have a shallow pitch. Most roofs are strong enough to take the additional load - and of course you'll have to respect any planning issues.
If you're selling your home, this could be an attractive feature. But, of course, if the buyer doesn't want it, you'll be in a very poor negotiating position to try to get your investment back!
Well, I told you it was a different idea for you today. But for some readers it's going to make sense. What do you think? Let me know if this crazy government scheme is something you might look into. Feel free to share your thoughts on our website - I'll give you a link to the comments section below.
Your capital is at risk when you invest in shares - you can lose some or all of your money, so never risk more than you can afford to lose. Always seek personal advice if you are unsure about the suitability of any investment. Past performance and forecasts are not reliable indicators of future results. Commissions, fees and other charges can reduce returns from investments. Profits from share dealing are a form of income and subject to taxation. Tax treatment depends on individual circumstances and may be subject to change in the future. Please note that there will be no follow up to recommendations in The Right Side.
Managing Editor: Theo Casey. The Right Side is issued by MoneyWeek Ltd.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Bengt graduated from Reading University in 1994 and followed up with a master's degree in business economics.
He started stock market investing at the age of 13, and this eventually led to a job in the City of London in 1995. He started on a bond desk at Cantor Fitzgerald and ended up running a desk at stockbroker's Cazenove.
Bengt left the City in 2000 to start up his own import and beauty products business which he still runs today.
Millions of over 50s fear pension investment risk – how should you position your portfolio?
£150 off energy bills: millions more to get discount this winter
