Home solar panels are becoming increasingly popular in the UK, with government data showing that there were 230,000 homes with solar panels at the end of 2012. The big question is this though – how much money do they actually save, and is it worth it?
PV (photovoltaic) solar panels can reduce your electricity bill and generate some extra income through feed-in tariffs and exporting excess-energy back into the national grid. They work by absorbing sunlight and converting it into electrical energy that can be used in your home.
Solar Panel companies usually present solar power as a long-term investment – it won’t make you mega-bucks, but over time the money you save will eventually cover the initial cost. It will take several years to recuperate your cash – how long exactly depends on a number of different factors.
Is my home suitable?
PV panels work best on a south-facing roof. This is because the UK is in the northern hemisphere, and from our point-of-view the sun moves from the south-east to the south-west throughout the day. This means that south-facing panels can absorb the maximum amount of sunlight.
Your roof also needs to be big enough. A typical panel is approximately 1m x 1.6m in size, and a typical home system requires between 8 and 16 panels. Solar panels work well on a conventional pitched roof.
Do they work in the UK?
Surprisingly yes. Bear in mind that solar panels use daylight, not heat. Direct, bright sunlight is best, but they will still generate power on a cloudy day. The further south you live, the more solar energy your will get throughout the year – this is one of the reasons why there are more solar installations in the south of England than there are in Scotland.
How much do they cost to install?
Prices vary depending on the company you use, and the model and number of panels. According to the Energy Saving Trust the typical cost of a complete system can range from £5,500 to £9,500.
How do solar panels make money?
PV Solar panels save/make money in three ways:
- Electricity savings
Because you are generating your own electricity, you will need to buy less from your energy provider, resulting in a smaller electricity bill. Note that most solar PV systems cannot store electricity – you need to use it there and then, while the sun is shining. You can maximise your savings by doing your power-hungry activities (using the washing machine, hovering etc.) during daylight hours. Which leads us onto point number two… - Export earnings
Any excess electricity that you don’t use can be ‘sold’ back to the National Grid. The current rate is 4.64p per kWh (or ‘unit’ of electricity). Now, because it is difficult for your energy company to measure exactly how much electricity you export, they simply assume that you use 50% of what you generate and export the other 50%. If in reality you use more than 50% of what your panels generate, then you’re quids-in! - The feed-in tariff
The government will actually pay you for every unit of electricity you generate (on top of your savings and export earnings) – this is known as the feed-in tariff. It was introduced in April 2010 as an incentive for people to produce their own clean energy. The current rate for a typical-sized home system is 14.9p per kWh. Once your system has been registered, you are guaranteed to continue receiving the feed-in tariff for 20 years. It is tax-free and index linked, meaning that it will rise to reflect inflation and the cost of living.
How much money do solar panels make?
If you approach a solar panel company for a quote, they should be able to give you a fairly accurate estimate using something called the Standard Assessment Procedure (SAP). When a solar panel company make their estimates using SAP, they will use data provided by the government in their calculations. This means that they cannot lie or exaggerate when they give you estimates of performance.
Below is an example (fictional) quote for a typical 4KWp solar panel system on a south-facing roof:
Our example system would save its owner around £837 per year.
If you were to pay £8,000 to have this system installed it would take about 9 ½ years to pay for itself, giving you a return on your investment (ROI) of 10.46%. That compares quite favourably against other more traditional types of investment, although you should factor in things like maintenance costs and the lifespan of the panels (check with the manufacturer).
A few things to be aware of
- You should use a company that is approved by REAL (Renewable Energy Assurance Ltd). REAL approved companies are bound by a code of ethics when it comes to their selling tactics and making claims. Avoid any company that tries to use pressure-selling or that makes outlandish claims about how much money you will make.
- The company that fits your panels must be MCS certified. If they are not, you won’t be eligible for the Feed-in Tariff.
- Check what’s included in the quote. It should include the cost of the panels, the inverter (a piece of equipment that makes the electricity usable in your home), cables, any other materials, plus things like labour costs, scaffolding and delivery.
- The Feed-in Tariff is not available in Northern Ireland.
Other ways to save energy
If you have the money, home solar panels could be a good way to save cash and feel good about your green credentials. However, they are a long-term investment that doesn’t suit everyone. If the initial cost scares you, there are plenty of easier and cheaper ways to cut back your energy bills – such as cavity wall insulation and loft insulation, which you may be able to get a grant for.
Before you do anything else, make sure you are not paying too much for your gas and electricity in the first place (a surprising number of people are!) Read our utility switching guide here or type in your postcode below to run a quick price comparison with uSwitch.
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