So, what is a solar panel?

Solar panels – also known as photovoltaic (PV) – catch the sun’s energy and convert it into electricity that can be used to power lighting, household appliances and even electric cars if they can be plugged in.  Imagine running a car on sunshine!  The majority of PV systems are made up of panels that fit on top of an existing roof, but you can also fit solar tiles.  Solar panels don’t need lots of sunny weather to work and will still generate electricity even on cloudy days. It’s the length of daylight hours that is more important then intense sunshine.

How much do they cost?

The average domestic solar panel system is 4kWp and costs between £5,000-£8,000, including VAT. Prices have fallen significantly since the early days when solar PV cost £10,000-£12,000. Solar tile systems will typically cost twice as much and are usually only considered when panels aren’t suitable for planning or aesthetic reasons.

Electricity bill savings

The Energy Saving Trust estimates that a typical system can knock around £70 from a family’s bills each year. Savings vary with geographical location, direction your roof faces and other factors, including lifestyle. The more you use household appliances during the day, for example  washing machine, dishwasher and tumble-dryer, the more you are likely to save as you’ll need less energy from the National Grid. The Energy Saving Trust has produced a useful solar energy calculator to help you work out savings http://www.pvfitcalculator.energysavingtrust.org.uk/

Payments for electricity generated

 Under the government’s Feed-in-Tariff scheme, you will receive payments for all the energy your panels generate whether you use it or not. The income is tax-free, inflation-linked and guaranteed for 20 years. But the rate is set to reduce by 3.5 per cent every three months, so the amount you will receive depends on when you install the panels. From April to June 2018, the highest rate for a small household system is 4.01p per kilowatt hour (kWh) of electricity generated. Before the rates were slashed in February 2016, homeowners could get 12.03/kWh.

Sell electricity back to the grid

 In addition, homeowners receive another payment for the electricity they don’t use but sell back to the National Grid. For example, those with systems of 4kW or less (the size of most domestic systems) will receive an export tariff of 5.24p per kW hour. However, anyone installing panels must check their home has at least a grade D Energy Performance Certificate (EPC) energy efficiency rating or they won’t qualify for the higher feed-in rates.

Do the sums add up?  

You will have to do the maths. In the early days of high feed-in tariffs – worth £1,100 plus per year – it was a no-brainer. The money was guaranteed for 25 years then too. But government cut the tariffs, arguing solar panels had become less expensive to install. In August 2017, the Energy Savings Trust reckoned the average saving and/or earnings across all areas of the UK was around £300 per year. The money you can make will vary hugely depending on factors including how many panels you can fit on your roof, whether they are south-facing and how much of the energy generated you can use during the daytime.

Over the 20 years you are eligible for the feed-in tariff, the payments and electricity savings could add up to a total £6,400 (for an average home in      London). Based on rates published by the Energy Savings Trust which were correct in August 2017, it would take 20.3 years to break even for a £6,500 system (London), whereas it would take 21.3 years in Aberystwyth, 22.4 years in Manchester and 23.2 years in Stirling. Figures will vary with individual circumstances.

Remember the carbon savings: The other major benefit is solar electricity is clean energy and doesn’t require burning of fossil fuels. As a green renewable energy, it doesn’t release any carbon dioxide or other harmful pollutants. An average home solar PV system could save around 1.2 to 1.7 tonnes of carbon per year, according to the Energy Savings Trust.

Will they add value to my home? Which? The consumer watchdog warns against assuming solar panels will add value to your property. Most estate agents think that having solar panels make no difference to how much your home is worth. Just eight per cent said they thought solar panels increased property values and 17 per cent said they decrease it. But 67 per cent of estate agent businesses said it made no difference at all. The age of the solar panels, whether they are owned by a company or the homeowner, also made a difference. The research was carried out by Which? in June 2017.

So, a good investment? Currently, there are around 1.5 million homes in the UK with PV systems, which puts Britain fourth in the European solar panel league, ahead of sunny Spain. While people who install today receive a much lower feed-in tariff rate than in the past, panels can still give a good return on investment, especially with energy price increases. Adding battery storage (costing between about £3,000-£9,000) means you can use electricity after dark, further reducing your reliance on the grid and minimising the money you put in the pockets of energy companies. Some homes could become energy self-sufficient. And you can feel virtuous as solar panels cut your carbon footprint.

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