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Are Solar Panels Worth It In The UK?

Solar panel costs have tumbled by around 88% in the past decade

A solar PV system will typically save you £534 per year

You can significantly reduce your carbon footprint by going green 


As more people choose to go sustainable, solar panels have soared in popularity, with installations growing by 45% in the past three years (source: Gov.uk).

An increasing number of households are seeing the value in solar power, and are taking advantage.

Naturally, you want to see the data – which is why we've laid out all the costs involved in buying solar panels, how much you'll save per year, and when you'll break even.

If you’re already set on getting solar panels and want to get the ball rolling, fill in this quick form and our suppliers will be in touch with free quotes.

a street of houses with solar panels

 


What's on this page?

01 | When will you break even on your solar panels?
02 | The return on investment explained
03 | Are solar panels worth it in every part of the UK?
04 | The factors that affect the break-even point
05 | The Smart Export Guarantee
06 | Next steps

 


When will you break even on your solar panels?

You'll now break even on your solar panels after 10.2 years, according to our latest calculations.

That figure is based on a house that receives the average amount of sunshine in the UK, uses the average electricity rate, and uses the best Smart Export Guarantee (SEG) rate.

This relatively quick return on investment shows that the golden era of solar power is here.

The cost of solar panels has fallen by 88% since 2010, according to government data, and just at the right time.

Household electricity bills are rising rapidly – making it even better to use free solar power instead – and with the SEG, you can get paid 7.5p per kWh for all the solar energy you don't use.

 


The return on investment explained

We’ve calculated the total cost of the average solar array, factored in the money you’ll save on electricity from the National Grid, and added your SEG savings.

The result? Install solar panels today, and you’ll break even in 10.2 years, on average.

It may take you even less time to break even, considering we expect the price of electricity to stay high for at least the next two years.

Since the typical solar panel warranty lasts 25 years, breaking even after 10 years will leave you with 15 years to save even more money with your panels – and many solar arrays last well beyond 25 years.

In percentage terms, this rate of return is the same whatever the size of your house. The graph shows this clearly, as your expenses stay stable and your annual savings climb, allowing you to break even by 2032.

However, a bigger outlay will lead to bigger profits.

You’ll typically end up making a profit of £4,759 on a solar array for a one or two-bedroom house, £7,932 if your home has three bedrooms, and £11,105 on an array for four bedrooms.

 


How we worked it out

1. From our research, we found that the average solar panel has a capability of 350 kW.

2. The average 3.5 kWp system costs around £5,420, according to the Energy Saving Trust, so it follows that one 350 kW panel costs £542 (inclusive of installation costs).

3. We also discovered that the average solar panel is able to produce 85.25% of its potential output over its lifespan, meaning that a 3.5 kWp system can provide you with just under 3,000 kWh per year, on average.

4. The average household won’t use all of that 3,000 kWh, however, as most people don’t stay home all day. When the government used to offer an export tariff, it assumed you export 50% of the electricity you generate, so we used that figure.

That means you’ll use half of the solar energy you generate – 1,500 kWh – and the other 1,500 kWh will earn you money through the Smart Export Guarantee scheme.

5. This will save you a considerable amount of money on energy bills, but exactly how much depends largely on the size of your home.

According to Ofgem, the average house with one or two bedrooms uses 1,800 kWh per year, a home with three bedrooms uses 2,900 kWh, and a house with four bedrooms or more uses 4,300 kWh.

6. We multiplied each of these figures by the average price of electricity in the UK, which is 28.3p per kWh, according to the Energy Saving Trust, to find out how much each household would pay in electricity bills every year, and how much they’d save by using solar energy.

The average three-bedroom house, for instance, would typically pay £844 per year for its 2,900 kWh – but with a 3.5 kW solar array producing 1,492 kWh of energy the household uses, the occupants would save £422 per year.

7. We assumed that households would choose the highest Smart Export Guarantee rate currently on the market that doesn’t require you to switch suppliers or buy an additional piece of expensive hardware.

We then multiplied that rate of 7.5p per kWh, from Octopus, by the electricity each home sends back to the grid. The average three-bedroom house, for instance, makes £111.89 per year from exporting 1,492kWh – half of its solar energy.

8. We didn’t include any maintenance costs in our calculations. If you’re capable of cleaning your solar panels once per year, that makes it free, and the main expense – replacing your solar inverter – is falling all the time.

Inverters’ prices should continue to plummet in response to the continual decline of home solar panel prices – which have dropped by 50% since 2011, according to the government – plus the cost of electricity is consistently going up. We think these trends will cancel each other out.

 


Are solar panels worth it in every part of the UK?

Yes, solar panels are worth it in every UK region.

But how profitable your solar panels are depends on where you are in the UK, because the sun shines more in different regions.

It therefore makes sense that all the regions would have different break-even points – all of which you can see below.

 

RegionYears to break even
East Anglia
8.88
South East England
8.96
South England
8.96
South Wales
9.17
South West England
9.17
Midlands
9.69
East England
9.79
North East England
9.79
North West England
10.35
North Wales
10.35
East Scotland
11.03
West Scotland
11.14
Northern Ireland
12.01
North Scotland
12.9

 


The factors that affect the break-even point

Let's jump into more detail about everything that influences your return on investment when it comes to solar panels.

 

Location

The number of hours every year when the sun is shining varies across the country, as you'll know if you've spent any time living in different parts of these isles.

This directly impacts the amount of power you can generate. For instance, households in North Scotland receive 1,080 hours of sunlight every year, where as the lucky souls in East Anglia enjoy 1,570 hours, according to the Met Office.

That's 45% more sunshine, which of course means 45% more solar energy – a massive difference.

 

Smart Export Guarantee rate

The Smart Export Guarantee compels large suppliers to pay households for the renewable energy they export to the National Grid.

That means you can receive money for all the solar energy you don't use – which is 50%, on average.

However, different suppliers offer different rates, ranging from E Energy's extremely low 1p per kWh to Octopus's 7.5p per kWh.

Make sure you get on the highest rate possible, because it will save you £112 per year, on average.

 

Solar battery

It's even more profitable to use your solar energy than to sell it for Smart Export Guarantee payments – and that's where solar batteries come in.

A solar battery can help you to use 30% more of your solar energy, according to E.ON.

That will save you an extra £186 per year. A solar battery typically costs £4,500, which ends up delaying the break-even point for your solar array to 20 years, on average.

However, it also increases your energy independence, and reduces your greenhouse gas emissions by 18 tonnes.

 

 

Your electricity usage

The more electricity your household uses while the sun is shining, the more solar power you'll use, and the more you'll save by not getting energy from the National Grid.

However, if you don't have a solar battery and only use electricity at night, you may end up saving less money every year through your solar panels.

If you have smart controls, you'll be able to make sure appliances like your washing machine, dishwasher, and electric vehicle only charge using solar power, which helps a great deal.

 

The price of electricity

Buying electricity from the National Grid at its current rate is very expensive, so you'll save even more money by using free solar energy than you would have a few years ago.

Instead of paying £844 per year, a three-bedroom house could pay £310 – a saving of 63%.

As the cost of National Grid electricity continues to rise, you'll save even more in the future.

 


man repairs solar panels on a roof

The Smart Export Guarantee

The Smart Export Guarantee (SEG) launched on 1 January 2020. The scheme requires all large energy providers in the UK (i.e. with at least 150,000 customers) to pay households for the renewable electricity they send to the National Grid.

However, small energy suppliers are choosing to get involved too, so there's a lot of healthy competition.

There's a handful of energy providers currently offering at least 5.5p for every kWh of renewable electricity that a household exports to the grid.

To get the full lowdown, check out our detailed Guide to the Smart Export Guarantee.

 

The Feed-in Tariff

The feed-in tariff unfortunately ended on March 31st 2019.

If you had solar panels installed under this tariff before March 31st 2019, there's no need to worry – you're still covered by the tariff until your 20-year contract expires.

The exact reasons it ended were never officially released, but the most common explanation is that the government wanted to redirect this money towards more large-scale commercial projects (that would have a bigger, positive impact on the environment, ostensibly).

While it’s a shame the tariff ended, solar panels have become more affordable than ever, which means the subsidy isn’t as necessary as it was when the tariff started.

Prices for solar panels have dropped by 88% since 2010, which is a stunning fall.

For more facts and figures that show how far solar power has come in recent years, make sure you read Solar Panel Statistics.

 


What are the benefits of solar panels now?

Along with SEG payments, there are several other big benefits to installing solar panels today.

 

Clean, green energy machine

Unlike petrol, coal, or gas, the energy that solar panels produce is entirely clean. Installing a solar panel system can stop up to 0.9 tonnes of CO2 from entering the atmosphere every year.

The industry is also futureproof, as evidenced by its resilience during the coronavirus crisis.

 

Very little maintenance

Nowadays there are so many small gaps for our money to trickle out of our pockets. Taxes, mortgage, and all kinds of monthly bills are all constant drains on our bank accounts. Solar panels, however, are not one of these drains.

Once a solar panel system is installed, all it will do from then on is save you money. Solar panels last for decades, no matter which type, so the odds of having to replace one are slim.

They are famously resilient, require almost no maintenance, and on the slim chance that something does go wrong, most solar panel warranties last 25 years, meaning no money will have to come from you to repair it.

The fact that solar panels are a one-and-done purchase and require no further cost or attention is a huge boon. Take a look at our guide on The Best Solar Panels.

 

Cheaper than ever

As we mentioned above, solar panels are cheaper today than ever before.

This means the money spent is much more easily outweighed by the money gained through savings on energy bills, and the need for government subsidy is far smaller than before.

Such an enormous drop in price can only be good for someone looking to buy solar panels right now.

A typical 3.5 kWp solar panel system typically costs £5,420, but you can see more specifics in our article about solar panel costs.

 


Will solar panels become a better investment in the future?

Yes, because electricity will become more expensive and solar panels will get cheaper, but you should still install solar panels today.

Your annual savings will outweigh any amount you'll cut off the initial outlay by waiting – and here's how.

We predict that the cost of solar panels will decrease from their present level by 24.7% by 2030, and 45% by 2040, using the most recent government data.

By 2050, you'll be paying 59.9% less than you would if you bought solar panels today.

However, the current price of electricity is high – and it's only rising. The cost for consumers will increase by 24% by 2030, according to the Climate Change Committee.

That means that every year you're not using solar panels to reduce your intake from the National Grid, you'll be paying higher and higher electricity bills.

The average three-bedroom household could save just under £1,186 on the price of solar panels by waiting until 2030 – but you will have paid £628 more in electric bills, and missed out on £4,145 in solar power savings.

Overall, you would lose £3,587 by waiting – and that's without even factoring in the Smart Export Guarantee. It's a better idea to buy solar panels now, and start saving money straight away.

 


Do solar panels increase your house's value?

Solar panels do increase your home's value – and with energy bills and the climate crisis on the rise, that's no surprise.

They save you money, they barely require any maintenance, and they can boost your home's Energy Performance Certificate (EPC) rating by up to two grades.

Maybe that's why 65% of people told our latest National Home Energy Survey that they would buy a house with solar panels.

For more information, read our article explaining how solar panels affect your property’s value.

 


Selling a house with solar panels

If you’re looking to sell your solar-powered home, here are some tips for how to go about it.

Find an MCS-registered company to install your solar panels. This will guarantee that you qualify for the FiT scheme and that your panels have a secure warranty.

Be sure to provide evidence of the benefits of solar panels to prospective buyers. For example, you can show them your energy bills before and after installing the solar panels.

Give your solar panels a thorough clean before showing them to prospective buyers. The shinier the better!

Find an estate agent who understands and appreciates the value of solar PV. Some have not yet realised the full potential value that solar panels can bring to a property.

 


Do you really save money with solar panels?

Yes. Solar panels are usually a significant investment, but after the initial cost, all they do is save you money and make you money.

They’re also cheaper today than they ever have been before, because of a 88% drop in price since 2010. This, combined with their enormous environmental benefits, makes it worth it to get solar panels.


Next steps

The best next step is to check your annual electricity usage, assess your roof space, and work out how many panels and how much solar energy you want to generate per year.

If you ask a solar professional to perform these tasks for you, you'll be able to rely on the results – but make sure you get a few different assessments and quotes.

To find out how much it would cost you to install solar panels, fill in our quick form and you’ll receive free solar panel quotes from local, professional installers.

josh jackman
Josh Jackman Senior Writer

Josh has written about eco-friendly home improvements and climate change for the past three years. His work has featured on the front page of the Financial Times; he’s been interviewed by BBC One; and he was the resident expert in BT’s smart home tech initiative.

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