Ever since the Government announced the introduction of Feed-In Tariff (FiT) subsidies for renewable energy projects in 2010, the race was on to maximise the investment opportunity, particularly within solar energy installations.

After all, the UK has been lagging the rest of the world for years when it comes to solar power, a well-established, clean and reliable form of renewable energy technology that also drastically reduces CO2 emissions.

Take Germany for example, hardly a holiday hot spot, but the world’s leading exponent of solar energy generation nonetheless.

That’s because solar panels rely on daylight rather than sunshine to generate electricity. Since Germany began its own programme of FiT incentives for renewable energy installations just over a decade ago it has increased its solar energy production by more htan 800 per cent.

It seemed that the UK Government was keen to follow Germany’s lead.

No surprise given the UK needs to do something major in order to meet its deadline of increasing the UK’s renewable energy output from 5.5 per cent today to 15 per cent by 2020. FiTs are a great way to stimulate private investment into an area of the market that has been neglected for too long.

So how does the FiT work? It’s quite simple.

It’s a payment made to homeowners or businesses that generate their own electricity through renewable energy installations such as solar panels, either on rooftops or in dedicated solar farms.

Not only do the site owners receive a payment for the electricity generated, reducing the burden on the National Grid, but they also stand to receive an amount for any electricity exported back to the Grid.

At times when site owners are producing less electricity than they are using, the shortfall can still be imported from the National Grid and paid for in the usual way.

Importantly once a site is connected, the FiT is guaranteed for 25 years and because it is pegged to the Retail Price Index, the payments will continue to rise in line with inflation.

Clearly a guaranteed return that rises alongside inflation is something not to be sniffed at. No wonder then that investors large and small were quick to recognise the investment potential.

One of the better ways to maximise the returns from solar came via Enterprise Investment Schemes (EIS). Through these products, investors benefit not only from income tax relief, capital gains tax deferral and inheritance tax relief, as well as the potential for some capital growth.

Some EIS schemes invest solely in qualifying companies from the solar energy sector.