Costs & Returns of Solar
There’s no denying that installing solar panels comes with significant upfront cost. The question is, when it comes to balancing the costs with return on investment, are solar panels worth it?
How Much Do Solar Panels Cost?
On average, installing solar panels costs between £2,000 to £8,000. This will vary depending on the number of panels you need to cover your electricity demand. Prices will also vary with your choice of brand and type of panel i.e. how energy efficient the silicon is.
|Size of Solar System||No. of Solar Panels||Electricity Output (Annual)||Average Cost|
|1kW||2||850kWh||£2,000 – £3,000|
|2kW||8||1,700kWh||£3,000 – £5,000|
|3kW||12||2,550kWh||£5,000 – £6,000|
|4kW||16||3,400kWh||£6,000 – £8,500|
Generally, the average home in the UK (with 3 or more inhabitants) will need a 3-4kW system to cover their entire energy usage. This will likely cost between £5,000 – £6,000 to have installed.
What are the Financial Returns?
So once you’ve made the £5,000 investment into your solar panel system, what financial return can you expect to see? There are two ways in which your solar panels will repay your investment but both will take time.
1. Reduced Energy Bills
The free energy generated by your solar panels can be used in your home in place of what you would usually have to buy from an energy supplier and mean cheaper bills. Although it’s unlikely you will be able to generate enough energy to power your home completely, including a solar battery in your system will maximise the amount of free energy you can keep hold of without having to send it back to the Grid.
2. Feed-in Tariff Payments
To incentivise UK homeowners to adopt solar energy solutions, the government introduced the Feed-in Tariffs. These are essentially tax-free, financial rewards for generating your own power and for contributing to the National Grid. They are adjusted quarterly and in line with the Retail Price Index level of inflation. According to the Energy Saving Trust, the average UK home with a 4kW system in place would have received £210 – £255 in FIT payments for the period 1st April 2017 and 30th June 2017.
There are two kinds of tariff and you’ll continue to receive both for 20 years after installation:
- Generation Tariff: You receive a fixed payment for every kWh of electricity you produce. Between October – December 2017 this stood at 4.0p per kWh.
- Export Tariff: You receive another payment for every kWh of electricity you generate and send back to the National Grid i.e. don’t use at home. Between October – December 2017 this stood at 4.22p per kWh.
Remember in order to qualify for the full amount of FIT payments your home needs to have an EPC rating of D or higher and the installation must be carried out by an MCS accredited installer.
We can find you up to 3 MCS accredited installers in your area who will provide tailored quotes for your solar panel installation. Get quotes now.
Other Benefits of Solar Panels
By reducing your reliance on the National Grid and generating your own renewable energy you will also be reducing your home’s carbon emissions. For the average home this could be as much as a 1,420 – 1,710kg reduction each year.
Increased Property Value
In many cases a solar panel system can add real value to your home’s resale value as it will improve the EPC rating meaning lower energy bills for prospective buyers. They will also continue to receive the FIT payments as they apply to the current owner of the registered system, not the homeowner at the time of the installation.