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Solar panels: are they worth it and how much could you save?

6 mins read
by Kate Morgan
Last updated Monday, December 11, 2023

As we continue seeking new ways to save money and use energy sustainably, solar panels are continuing to gain popularity. Find out if they’re worth it.

Few people in the UK have been left unimpacted by the spiralling energy costs.

As part of the search for more economical energy consumption, many are turning to solar panels to generate power that is sustainable and cost-effective.

But are they worth it? Below, we weigh up the benefits and the cost of solar panels. 

There is no silver bullet to the skyrocketing energy prices. Paired with the general hike in the cost of living, the challenge of rising prices means many are seeking more cost-effective energy sources.

One option that has become increasingly attractive is solar panels.  

As a way of reducing costs and generating environmentally friendly energy, solar panels tick both boxes.

Significant reductions in their upfront cost mean that more homeowners than ever are using solar panels.

According to a 2020 report by the UK government, 970,000 UK homes have solar panel installations. Now, as we search for more money-saving tips, that number is likely to increase even further.  

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What are solar panels and how do they work?   

Solar panels are also known as photovoltaics (PV). They capture energy from the sun and convert it into electricity that can be used in your home. 

The panels don’t need direct sunlight to generate electricity, but it generates more electricity depending on the strength of the sunshine.

Since household appliances generally use ‘alternating current’ electricity, the installation of a solar PV system will likely require an inverter to convert the generated electricity. It can either be used in your home or exported to the national energy grid.   

How much do solar panels cost?  

The upfront cost of solar panels remains a barrier to entry for some UK homeowners.

The Energy Savings Trust estimate that an installation on a three-bed semi-detached house with four occupants would cost £6,500.

Of course, the figures can vary depending on things like house size and the amount of energy that a home needs to generate, but solar panels are seen as a long-term money saver – hence the acceptance of an extensive upfront cost.  

The good news is that the cost of solar panels is falling. Since 2010, prices of solar panels have dropped by 88 per cent, making them a far more viable solution for homeowners.  

How long do they last? 

Not only are solar panels a sustainable source of energy, they’re also long-lasting. The life expectancy is estimated to be around 25-30 years, far outweighing that of a boiler, which has an average lifespan of 10-15 years.  

Solar panels also often have a limited power warranty of around 25 years; this warranty guarantees a power output of 90 per cent for the first decade, and 80 per cent over the 25-year lifetime.   

They won’t necessarily stop working after 25-30 years, either. Some modules have an expected lifespan of 40-50 years, but after the warranty period, the energy output is no longer guaranteed.   

How much energy do solar panels produce? 

A typical residential solar panel can produce between 250 and 400 watts per hour, while a domestic solar panel system should have a capacity of between 1kW and 4kW.

For context, the average household uses between eight to ten kW of energy per day, though this can differ depending on variables like the size of your home and how many people live there.   

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Savings and financial benefits 

The ‘maths’ of solar panels is continuing to look more and more attractive to homeowners in the UK.

Energy bills are rising, while the cost of solar panel installation is decreasing, meaning their cost-efficiency is rising.

Arguably the biggest gain arises from solar panel owners being able to use what they generate.

These savings depend on size, but the Energy Savings Trust estimates that a typical UK household with a 4.2 kW system may see a reduction in their energy bills ranging between £210 and £514 per year, when taking into account the price cap rates of October 2022.  

Alongside the savings that you can make through energy generated from solar panels, you can also get paid for the energy you ‘export’. The smart export guarantee (SEG) scheme offers households the opportunity to pump energy back into the national grid and get paid to do so.  

Grants for solar panels 

There is currently one solar panel grant available to support homeowners. The ECO4 grant is part of the government’s Energy Company Obligation (ECO) scheme which aims to help low-income households with upgrades for their homes and heating systems.

The grant, which started in July 2022 and ends in March 2026, is available to people that receive the benefits below:  

  • Income-based Jobseekers Allowance (JSA) 

  • Income-related Employment & Support Allowance (ESA)

  • Income Support (IS)

  • Pension Credit Guarantee

  • Working Tax Credit (WTC)

  • Child Tax Credits (CTC) 

  • Universal Credit (UC)

  • Housing Benefit

  • Pension Credit

  • Savings Credit    

However, the government also helps households with the purchase of solar panels with a VAT discount, allowing homeowners to pay zero per cent VAT on energy-saving materials.  

What are the main benefits of solar panels? 

The fundamental benefit of solar panels is that they enable homeowners to generate electricity from a free energy source.

Offering you energy all year round, they can help reduce your carbon footprint while reducing your electricity bills. Plus, they may increase the value of your property, and with the SEG scheme, you can actually make money from exporting the energy that you don’t use. 

The disadvantages of solar panels are mainly associated with the high upfront cost. However, they can also be cumbersome and take up a lot of space, which many people don’t have the luxury of – particularly if they live in a terraced house or a flat.

They are, of course, also weather dependent; so, take into account that on cloudy or rainy days, their efficiency may drop.  

Can I get them? 

Unfortunately, not all houses in the UK are suitable for solar panels.

Generally, you need a south-facing roof for the panels to be fully beneficial; while southwest or west may still offer some benefit, they will not be optimised.

Your roof should also be unshaded between the hours of 10am and 4pm, since you need them fully exposed to sunlight during peak hours. Plus, the roof should be in good condition, and with enough space to house enough panels as your home requires.  

Although the specifications of your roof need to tick these boxes, you are unlikely to require planning permission for solar panels.

In England and Wales, the planning portal found on the government website states that panels are usually considered ‘permitted development’ – though there are exceptions, such as your home being listed in a conservation area.  

The other consideration isn’t necessarily whether you can, but whether it makes financial sense.

Generally, it’s considered that solar panels take around 11 years to recoup the upfront cost. While this may reduce in the face of rising energy bills, you should still consider carefully whether they are worth the money if you plan on moving home within this time frame.  

It always helps to have a financial expert on your side.

Let us help match you with your perfect financial adviser, so you can take the first steps to a better financial future today.   

If you found this article useful, you might also find out article all about smart meters informative, too. 

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Author
Kate Morgan
Kate has written for leading publications and blue chip companies over the last 20 years.