Solar panels are in demand as homeowners look to reduce soaring energy bills – but are they worth the £6,000 bill?

As millions of households struggle to cope with spiralling fuel bills, it’s no surprise more people are considering solar panels. A record increase in global gas prices has seen the regulator’s energy price cap rise by 54% from April 2022. This means the average dual fuel bill (electric and gas) will go up to £1,971, an increase of £693 .

And with more people working from home and using more electricity during the day, many are investigating solar panels to cut costs as well as become greener. Indeed, Carbon Zero Renewables reported its busiest January ever as people looked for alternative ways to heat their homes.

Solar panels can cut your electricity bill by 15-25%, according to the Energy Savings Trust, a charity promoting energy efficiency. But the high upfront cost of installing solar panels can put people off.

How much do solar panels cost?

Prices will vary with the size and type of system. The more panels on your roof, the higher the bill but also the potential to produce energy – and long-term savings. Household systems usually have between 10 and 15 panels, each of which generate between 200kW and 350kW of energy, according to the Energy Savings Trust.

Green Match, which compares green energy products, says a single panel costs between £350-500. A standard domestic size is a 4kW solar panel system, covering around 29 square metres of roof. Installation for such a system would cost between £6,000-£8,000, it says.

The price does not include a battery which allows solar energy to be stored to cover you when there is less sunshine. Electric storage units typically range in price from £1,200 and £6,000.

While prices for solar panels have come down over the past decade, recent supply chain problems and the increased cost of labour, have seen costs go back up recently.

How much do you save with solar panels?

Solar panels convert clean energy from the sun into electricity. Environmental benefits aside, households that generate their own solar power can save £160-£430 a year on their electricity bills, according to Green Match. They can do this in two ways. First, they can run appliances on the solar energy they generate themselves instead of paying for expensive electricity from the National Grid. Secondly, they can sell any energy which is not used back into the grid.

The savings on your bills will vary with where you live, how much electricity you use and if you generate an income from a solar panel funding scheme. Homes with solar panels in sunnier areas, such the south of England, are likely to enjoy higher energy production and savings, than those in Scotland.

It’s possible to increase savings on your bills by using your appliances (washing machine, dishwasher, hot tub, electric car charger) during the day, when the solar panels are active.

In addition, how much energy your solar panels can generate in a set time will also affect how much you can save. Monocrystalline panels are more efficient but also more costly while polycrystalline are less productive but cheaper.

The Energy Savings Trust has a handy calculator to help you work out potential fuel bill savings, financial payments you may receive by installing solar panels.   https://www.pvfitcalculator.energysavingtrust.org.uk/

It considers factors, such as your postcode, direction and slope of your roof, installation size and how much of the day you are home.

We looked at a home in the Winchester area, with a south-facing roof owned by someone who would be in most of the day. It estimated a potential energy bill saving of £280 with an additional Smart Energy Export (SEG payment of £69 a year (more on that later). This means it would take about 17 years for a standard 4kW system costing £6,000 to pay for itself. But the potential lifetime saving was £8,240 with a massive carbon savings of 18,593 kg.

 Making money back

There are schemes that can help you recoup the costs. Under the Smart Export Guarantee (SEG), households can earn money for electricity they generate but don’t use which is exported to the national grid. Bigger suppliers must offer an SEG tariff to buy up any excess energy generated by their customers.

If you have a standard 4kW system installed, you can expect annual earnings of around £100 on top of savings on your electricity bill, say Green Match. Suppliers set their own tariffs, so it’s important to shop around. For example, Octopus Energy customers earn a fixed rate of 7.5p/kWh for every unit of power they export (prices correct March, 2022). But with 4kWp of solar panels and battery storage on a more flexible rate, they could earn £436 – over 50% more, says the energy supplier. Octopus Energy offers among the best rates. Some suppliers offer as little as 1p/kWh.

A good rate is 4-6p/ kWh, says Green Match. But that compares with a rate of around 28p/kWh if you’re buying electricity on a standard tariff after April 2022, so it’s still a raw deal.

Before SEG was introduced, there was a more generous Feed-in-Tariff (FIT) scheme, introduced by the government to boost take-up of solar panels in 2010. Until March 2019, the price paid for solar power was set by the regulator rather than individual suppliers. The price paid steadily reduced over the nine years that this FiT scheme ran. Today households are paid anything from 54p per kWh for the early adopters of solar in 2010, to 3.79p per kWh for those who signed-up just before the scheme shut. Payments are guaranteed for 20 years.

Planning and permissions

South-facing roofs are ideal as solar panels will receive the sun at its most powerful for the longest time. In most cases, they will achieve the highest electricity bill savings and a quickest payback period. East and west-facing roofs generate about 15% less energy. A north-facing roof is usually considered impractical in the UK. The best results will be achieved by a roof with a pitch between 30 and 40 degrees, according to the Green Energy Group.

Solar panels are considered permitted development, so in most cases you will not require planning permission. If your home is listed or you live in a conservation area or national park, there will be restrictions. It is best to contact your local planning authority. It’s worth also checking if the panels are covered by your home insurance.

The company which brings electricity to your home, known as your Distribution Network Operator, must be informed when you install solar panels. The Energy Networks Association has an online search box which, by entering your postcode, will tell you which company operates in your area.

Property values

There has been little research on how solar panels affect the value of properties, says the Energy Savings Trust. Solar panels aren’t pretty but homes with better energy performance sell for more. And installing solar panels along with better insulation can improve your property’s Energy Performance Certificate (EPC) rating, making it more attractive to buyers.

If you invest in solar panels, the Microgeneration Certification Scheme (MCS) ensures the quality of any products, so you can have confidence in the low-carbon technology. The MCS website is useful to find accredited installers near your home.

The financial case for investing in solar panels is rising along with the cost of buying electricity from the national grid. The largest saving from solar is likely to be from using the power generated rather than selling excess energy back to your supplier. Gareth Jones, managing director of Carbon Zero Renewables, said: “Solar panels are an investment and for those looking further ahead will be the most viable option, especially as advances in electric continue to take place and more people install high-energy items at their properties, such as car-charging ports, air source heat pumps and hot tubs.”

If you are looking for help with any electrical issues, you may find some of these services useful: