Are Solar Panels Worth It?
Author: Duncan Lambden
Published: Sunday, 19 May 2019
✔ Solar panels are at their lowest price ever, with prices having tumbled by 70% in the past decade.
✔ Find out what you can expect to gain from buying solar panels, including energy bill savings and SEG payments.
✔ To receive free solar panel quotes from our professional installers, simply fill in the short form above.
DISCLAIMER: Our partners no longer take appointments for homeowners looking to benefit from the Feed-in Tariff, which concluded on 31st March 2019
Green energy is on the rise. More and more people and companies are implementing green initiatives in an effort to save the planet. Maybe you’ve switched to an electric car, or you’ve installed a greywater tank. But there’s always another step to be taken in the quest to be as eco-friendly as possible, and maybe your next (or first) step is the installation of solar panels.
Making this step can be hard, however, when the information behind solar panels is conflicting and confusing. Your green intentions may be overcome by your financial concerns. There can be all sorts of information about tariffs, prices, and different models. This overwhelming influx of info can leave you asking ‘are solar panels worth it?’
We’re here to clear the air regarding solar panels, and tell you whether or not solar panels are cost effective. If you'd like to start exploring your options and receive free quotes from professional solar panel installers, please fill out the form at the top of this page and our suppliers will get back to you.
Now is a great time to switch to solar. On 1st October 2019, the UK government will increase VAT on solar panels and solar batteries from 5% to 20%, so it's wise to get your solar PV system installed before the autumn.
What's on this page?
I know people with solar panels who say it's a great investment
You may well have friends, family, or neighbours who have solar panels and are ecstatic with their purchase. This is likely because their solar panels were installed with the solar panel feed-in tariff in mind.
This tariff allowed people with alternative power sources, like wind turbines or, in our case, solar panels, to sell any unused energy generated by these sources back to the government, tax-free. This meant that, as well as saving money on their energy bills, solar panel owners would be making money off of their excess energy, meaning the solar panels would literally be paying for themselves.
The Smart Export Guarantee
So this feed-in tariff sounds great! But why are we referring to it in past tense? Well, as past tense would imply, this tariff is history; it was unfortunately ended on March 31st 2019. If you have installed solar panels under this tariff before March 31st 2019, there is no need to worry - you are 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).
While it’s a shame that the tariff was ended, solar panels have become more affordable than ever before, which means the subsidization isn’t as necessary as it was when the tariff was implemented. Prices for solar panels have dropped around 70% since 2010, which is a faster drop in price than most emerging technologies.
Don’t worry though, there is a replacement scheme in the pipeline. The Smart Export Guarantee (SEG) is a similar subsidy plan that will allow those who participate in low-carbon electricity generation to make money by selling power back to the grid. To find out more about the SEG, check out our guide to government grants and solar panel initiatives.
What are the benefits now?
Even though the Feed-in Tariff is no more, there are plenty of great reasons to install solar panels.
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 1.6 tonnes of carbon from entering the atmosphere every year. But you came to this article looking to see if they were a good investment, so let's get onto the money side of things.
Shrinking energy bills
Solar panels will still save you money on your energy bills. Based on estimates from Energy Saving Trust, a typical 4 kWp solar PV system will save you between £85 and £220 every year. For more information, Energy Saving Trust has a detailed table on how much solar panels can save you depending on your general location in the UK. As you can see, a large percentage of your energy bills can be saved by installing solar panels, which quickly adds up.
By minimizing the drain of energy bills, solar panels seriously free up your financials.
Don't even think about it
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 to the best solar panels on the market today.
Cheaper than ever
Like we mentioned above, solar panels are cheaper today than they ever have been before. This means that 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. While the lack of Feed-in Tariff is an unfortunate side effect of the low price, there is no arguing that such an enormous drop in price can only be good for someone looking to buy solar panels.
A typical 3-4kWp solar panel system can run you around £6,000, but you can see more specifics in our article about the typical cost of solar panels.
When will solar power become cheaper than the grid?
It looks like the golden era of solar power is just on the horizon. While the disappearance of the Feed-in Tariff has certainly made solar power more expensive than buying electricity from the grid, UK electricity bills are constantly on the rise, and the turning point is not far away.
So we put our financial hats on and did some good old-fashioned number-crunching. Using a lot of information (see our methodology below), we put electricity bills head-to-head with solar costs over the next 20+ years. We compared the cumulative cost of a solar-plus-storage system with the cumulative cost of buying your electricity from the grid.
This study rides on the assumption that the UK’s energy bills will keep on rising. They shot up by an average of 3.73% per year between 2004 and 2019, and there’s no reason why they won’t keep climbing. What’s more, Brexit is soon to seriously weaken the pound, and the UK currently imports about 36% of its energy.
Check out our graph below to see what we found out (the green line is the exciting bit) - or you can view it much bigger here.
That’s right: if you buy solar panels and a solar battery now, we believe you will actually spend less on powering your home over the next 15 years than if you simply stuck with the grid.
We weren't surprised to see this, given recent reports of how renewable energy will become cost-competitive with fossil fuels in just a few years.
Of course for this to happen, energy bills will need to keep rising as they have over the last 20 years. But the way things are looking solar panels are definitely a savvy purchase in the long-run
The cumulative cost of a solar-plus-storage system almost falls below electricity bills in 2031, but a solar battery replacement (required every decade or so, costing approximately £4,250) sets the big moment back a few years. After 2035, we believe you'll be laughing.
Here’s a focus on costs and savings in 2019 and 2035:
Electricity bills (cumulative)
Solar panel system cost (cumulative)
Solar savings in that year
Solar savings (cumulative)
Energy bill in that year (with a solar PV system)
Between 2019 and 2040, we expect the cost of electricity bills as a percentage of disposable median household income to rise from 2.26% to 3.87%. If you already feel like you’re paying an arm and a leg for energy, those arms and legs are about to get even bigger.
Plus, we haven’t even factored in the earnings that households will make from the Smart Export Guarantee (SEG), as we won’t know the market rate until it launches in January 2020. This additional income for solar-powered homes will make solar panels an even more favourable investment.
So, in other words, in less than 15 years, we are confident the switch to solar will become a bit of a no-brainer. Check out our lovely infographic for a more colourful idea of what we're saying. If you'd like to see the infographic in full size, just click here.
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How we worked it out
Our steps were as follows:
1) We calculated the average annual cost of electricity bills in the UK between 2004 and 2019, using three different sources (Ofgem, OVOEnergy, and Statista). We assumed an average household consumption of 3,800kWh, based on estimates by the BEIS.
2) This enabled us to work out the Compound Annual Growth Rate (CAGR) of UK electricity bills, which is 3.73%. Combining this with median household disposable income, we created a 20-year forecast for UK electricity bill costs.
3) Then we applied the solar stuff. We assumed a cost of approximately £6,000 for a 3.8kWh solar PV system (based on data from Which?), along with a solar battery costing £4,250 (based on the average price of the six most popular lithium-ion batteries). On top of that, there’s the average annual cost of keeping your solar panels clean (£100), and the cost of replacing your inverter every decade (£1,000, according to the CAT).
4) Given that an average south-facing 3.5kWh solar PV system can produce roughly 3,000kWh of electricity each year in the UK (source: the CAT), that means that a typical UK household can rely on a solar-plus-storage system for 79% of its annual electricity consumption. Once you’ve purchased the system, you will (in theory) only need to buy 11% of your electricity from the grid each year.
Do solar panels increase your house's value?
With energy bills on the rise and the climate emergency in full swing, it’s not surprising that properties with solar panels are more desirable than those without. To a prospective house buyer, solar panels basically mean “low energy bills” and “low carbon footprint”. What’s more, the costs of maintaining solar panels are extremely low, as there are no moving parts at risk of breaking.
Every property comes with an Energy Performance Certificate (EPC), with grades ranging from A (the best) to G (the worst). A solar PV system can boost a property’s EPC by up to two grades, which can then have a positive impact on price.
A study conducted by Zillow in April 2019 found that US homes with solar panels sell for 4.1% more than homes without, and this enthusiasm for solar is certainly mirrored in the UK. As the world’s awareness of global warming continues to increase, the effect of solar panels on property prices is expected to grow and grow.
Of course, there are people who find solar panels to be an eyesore, but panels are looking ever sleeker (particularly monocrystalline panels), and the climate-conscious younger generations tend to think aesthetics are a lower priority than our dear, declining Earth.
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?
Following the end of the Feed-in Tariff, solar panels are a significant investment, but after the initial cost, all they do is save you money. They’re also cheaper today than they ever have been before, because of a 70% drop in price since 2010. This, combined with their enormous environmental benefits, makes it worth it to get solar panels.
To find out how much it would cost you to install solar panels, simply answer the question below, fill in our quick form, and you’ll receive free solar panel quotes from local, professional installers.