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Last updated: 20 July 2020

Are Solar Panels Worth It in the UK in 2020?

Make the Most of Your Solar Panel Investment

Solar panels are worth it if you generate enough electricity and stay in the same house long enough. Solar panels absorb the sun’s energy to generate electricity for free, which can help reduce your electricity bills significantly. In addition, variables like solar panel grants, such as the Smart Export Guarantee, can further increase your savings and help you break even faster.

Consider all of these factors to find what kind of investment will see the quickest gains:

  • Your home’s electricity needs
  • Size of the solar PV system
  • Financial incentive schemes

For example, an average sized home with a 4kW solar panel system will spend approximately £6,000 - £8,000 on the system. You can expect to save roughly £270 on electricity bills annually, and together with the Smart Export Guarantee (SEG), you would reach the break-even point within 16-22 years.

In the end, though, no matter the situation, solar energy in the UK is typically worth it. Monetary benefits aside, any solar panels are worth it for protecting the environment and reducing your carbon footprint.

Do you want to reduce your home’s carbon footprint and save money at the same time? Simply fill in the contact form and you will receive up to four tailor-made quotes from suppliers near you. Our service is completely free and non-binding!

How Much Do Solar Panels Cost?

On average, the cost of solar panels is between £5,000 and £10,000, and about £350 per panel. You will notice that that is a considerable gap, and that's because there are several variables at play; perhaps the most influential of these is the size and occupancy of your house.

If you have more residents or amenities, you will use more power, so your solar panel costs will rise. No matter the size of your home, though, you should expect to spend at least £5,000.

The table below outlines the yearly energy output per system size and the estimated costs for them.

Solar Panel Costs and Output by System Size
System Size Yearly Energy Output Estimated Costs
3 kW panel system 2,700 kWh £5,000 - £6,000
4 kW panel system 3,600 kWh £6,000 - £8,000
5 kW panel system 4,320 kWh £7,000 - £9,000
6 kW panel system 5,400 kWh £8,000 - £10,000

*The figures in this table are based on systems using 250W panels.

Remember that these numbers are estimates because, generally speaking, the more efficient the PV technology, the more expensive it will be.

The individual prices on PV systems aren't the only things that factor into the actual cost of solar power. The number of panels you need, SEG payments and energy savings all play a part in the final equation as well.

How Much Can You Save with Solar Panels?

Solar energy can save you money in two areas. First, it decreases the amount of energy you have to buy from the grid, thus lowering your energy bill. Second, you can earn money back through payments from the SEG.

Solar panel savings aren't dependent on tariffs, though. In London, a photovoltaic system could save you between £100 and £270 a year from lowering your energy bill. In areas like Manchester and Stirling, you could similarly save between £90 and £230.

Average Annual Savings by System Size
System Size Annual Savings on Utility Bills
3 kW system £160
4 kW system £270
5 kW system £320
6 kW system £430

*These figures are calculated using 250W panels and the average household energy consumption in the UK.

How much money you can save depends on how and when you use the solar-powered electricity. If you are home during the day and use your appliances then, you will get the most out of your investment, but if you only use appliances once the sun has gone down then you will need to draw from the national grid.

Solar Panel Funding

Previously, the government would reward you through the Feed-In Tariff (FIT) programme. With the FIT, power companies would pay you both a generation tariff and an export tariff, with government-fixed rates. You would earn 4p per kWh for what you generate and 5.38p per kWh for the excess energy you give back to the grid.

Finally, UK companies have offered a free solar panel scheme in the past where they would install PV panels on your roof free of charge, enabling you to get free solar power. In return, these companies would collect the FIT payments to make a profit.

The FIT came to an end in 2019, however, and no new applications are being accepted, meaning this free solar panel scheme is no longer run by businesses.

Under the Smart Export Guarantee — the new solar PV incentive scheme — how much you will save is much more varied. Unlike the FIT, the SEG doesn't regulate rates, letting energy companies decide for themselves how much they will be. These companies also only have to offer tariffs for exported energy, not generation.

How Long Does It Take for Solar Panels to Be Paid Back?

With all of these things in mind, how long is the average solar panel payback time in the UK? Since there are so many variables involved, this answer will vary among different circumstances — most importantly, whether you make use of the SEG payments or not.

Without the SEG, your solar panel savings will come from your decreased reliance on the grid. As mentioned earlier, these savings will be between £100 and £270 for an average London house. With an average system cost of around £6,000, it would take you 22 to 60 years to break even.

With SEG payments, solar panel payback times are significantly shorter. A similarly-sized system with the same cost of £6,000 could earn around £100 in annual SEG payments. With both these payments and average energy savings, it would take you between 16 and 22 years to break even.

Save More with the SEG

Your break-even point on your solar panel investment when using the Smart Export Guarantee (SEG) can be as early as 16 years. Tariff rates for the SEG vary per supplier, but a good rate is 4-6p/kWh.

The more PV power you generate, the more you can earn from the SEG. The programme applies to all renewable energy up to 5MW, so you most likely don't have to worry about investing in too large of a system. As long as you stay under that figure, the more extensive your system, the shorter the payback time you will have.

How Many Solar Panels Do I Need to Power My House?

When asking yourself how many solar panels you need for your home, there are again a number of variables to take into account. The most significant contributing factor here is how much energy you use. While there's no single answer, a good rule of thumb is that it takes roughly four solar panels per kilowatts needed.

Most solar panels produce around 250W every four hours of full sunlight. So how does this all play out reality?

A 3kW PV system will be sufficient for roughly three residents, according to average energy consumption. Using this formula, a system of this size would use about 12 panels on average.

A more common size for homes in the UK is 4kW, which can provide for three to four residents. If you use the same formula, a 4kW system would need an average of 16 solar panels.

You can always use a solar PV system to power some of your home instead of all of it. That would certainly lower the number of solar panels you need, but may not be as profitable in the long run.

3kW system versus 4kW system

Are Solar Panels With Battery Storage Worth It?

One of the downsides to solar panels is that you usually have to use energy immediately. In most cases, if you're not actively using it, the power your PV system generates is lost. You can remedy that situation with solar batteries.

Solar battery storage works just like any other battery: you store any electricity you don't use so that you can go back and use it later.

You don't need to know the ins and outs of solar batteries to use them, but their complexity does affect you. A solar battery system can cost you roughly £4,000, which may almost double the cost of your solar panels. If you're comfortable spending that much, though, it will help you save more money.

Solar batteries will enable you to use PV power at night, further lowering your energy bill. Similarly, they make it easier to sell any energy you don't use back to the grid. Keep in mind, though, that the added initial cost will mean it will take longer to make a return on investment.

Do Solar Panels Increase the Value of My Home?

Investing in solar energy could help you if you want to sell your home in the future. As more people are growing concerned about environmental issues, renewable energy could make your property more attractive, and potential buyers may be interested in how the panels could save them money.

Remember that your home's resale value won't match your investment size exactly. You can't expect a £5,000 solar PV system to increase your house's value by £5,000, but it will still raise it.

You also have to consider the quality of your solar panel system. If you invest in new, top-of-the-line panels, the value they add to your home could be considerable.

To determine how much solar panels will affect your home's value, talk to a local estate agent.

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Written by Emily Folk Guest Contributor Emily is a freelance environmental writer who writes on renewable energy, green technology and sustainability. To read more of her writing, you can visit her blog, Conservation Folks, or follow her on Twitter @EmilySFolk
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