How Much do Solar Panel Systems Cost

There are many factors when looking at the cost of solar panels. These include: the type of solar panels installed, the size of the system, your type of property and which way the roof faces, and maybe more obviously the quality of the panels and components (such as the inverter) used.

Over recent years the solar industry has grown and changed, and as a result solar panels have become much more affordable. The savings on your electricity bill alone are an attractive reason to consider solar energy, but regardless of cost and money made, they are a great source of renewable energy and will undoubtedly lower your carbon footprint.

Solar panels will always be a long-term investment and the initial solar panel costs can seem high however the price of solar is now 70% cheaper than previous years.

Government incentives, schemes and support for this industry have now all ended but the price of a system is now far more affordable (and continues to fall).

Electricity and gas bills will only ever go up now so a solar panel system for your home or business will help insulate you from these rising costs that are completely outside your control.

Solar panel cost:

Your average solar set up will cost you between £2500 and £8000 including installation cost. This will vary depending on the panels you choose and the size of your roof. There are also solar roof tiles, these are much more costly than solar panels, between £5000 and £14000 depending on how many are needed.

To give you some idea of the average house need and cost, we have a case study on a semi-detached house:

The following case study is for an average sized semi-detached house: (17-year ROI)

  • House type: Semi-detached
  • Solar panels: 2.00 kW
  • Number of panels: 8
  • Solar panel cost, including installation: £3800.00
  • Estimated annual output: 1700 kWh
  • Estimated Smart Export Guarantee Tariff: £40.00
  • Estimated savings on fuel bills: £90.00
  • Total Savings/Earnings in year: £214.00
  • These figures don’t take into consideration the annual increase of electricity costs from providers (average increase 10% PA)
    This means that your electricity bills could be double in ten years and your savings will be much higher.

Property Type

Small array
Small semi-detached
Average semi-detached/detached

Approx. Roof size

21m²- 28m²

Approx System size

3kWp – 4kWp

Average System cost (mcl VAT @ 5%)

£ 2500- £ 3000
£ 3000- £ 4000
£ 4000- £ 8000

Co2 Saved Per Year (tonnes)

1.5 – 2

Approximate Yearly System output

900 kWh
1,800 kWh
2,700 kWh – 3,400 kWh


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Feed in tariff scheme:

As of the 31st of March 2019, the feed in tariff no longer exists. Currently, you can make money from any unused electricity by selling it back to the National Grid.

Now that the Feed in Tariff has ended there are two other options:

The first is a battery which will store the unused electricity and means that you can run off grid depending on the amount you collect and use.

The second is the Smart Export Guarantee introduced by the government which means that energy suppliers will compete to give households the best price for their excess electricity.  Homeowners will still see a long-term payment and faster return on their investments.

It is true that solar panels will never be cheap, but nevertheless, they are a worthwhile investment. Annually you can expect to save between £85 to £500+ on your energy bills depending on how much power you use daily and how many people live in your household. Those eligible for the FIT payments will save more money every year for 20 years. Even without FIT payments or when the payments end the power produced by your solar set up will be free.

Old feed in tariff (FIT) rates:

If you were lucky enough to sign up before the 31st of March 2019 you would have received these payments. If you have a property which has an EPC of D or above, the FIT rate was 3.79p at scheme end. You can find the rates on the Ofgem website.

Once receiving the FIT, you would have continued to receive it for 20 years.

Free solar panels:

In the past there have been schemes based on a ‘rent a roof’ basis, where companies will pay for solar panels if you agree to hand over money made from the feed in tariff. This no longer exists as the feed in tariff has been scrapped this year, therefore there is unfortunately no way to get your solar panels for free. The best way, if you have the capital, is to buy your solar PV system upfront, so you can start to recoup the cost as soon as possible as the ROI is currently better than leaving the money in the bank.

However, if you do not have this option, you could consider a loan. This will need to be thought through very carefully as it may have implications on how viable it is financially.

To maximise the money, you save from installing solar panels, it’s important to ensure a few things.

Number one would be choosing the right kind of solar panels for you. There is solar PV which converts sunlight into power for your home and then there is solar thermal which allows you to heat water and save money on your water heating bills. You will need to decide which system works in your household and will be the most financially viable.

Number two would be making sure your roof gets enough sunlight. If your roof is south facing you are in a good position for solar panels. South-west facing roofs could still see some benefit but will not be as efficient.

You will also need to make sure no large trees or anything else create too much shade during the most valuable daylight hours. To maximise the benefit, you will get out of your solar panels you will need to make sure they can work efficiently, the less factors making them less efficient the more money you are likely to save on energy bills.

If you were planning on fitting solar panels before the fit ended you would have needed a grade D or above EPC rating to be certain that you would receive the higher rate payment. Regardless of being lucky enough to have applied for the FIT or not, you can still earn money tax free, from the power you sell back to the grid. Your solar panels must have been installed by a company that holds an MCS certificate, if you were in time to receive the FIT payments, so make sure your installer has one.

*Assuming that only the south-facing portion of the roof is used, with an average of 20% unusable roof space.

Purchasing options for solar panels

Buying solar panels outright with cash

  • If you have the capital available and you wish to invest you can attain a reasonable investment with the Feed-in Tariff. You can save a reasonable amount of money on your bills over 20 years and insulate yourself from future energy price increases. You will be looking at income and savings of roughly £266 per year from a 4Kw system.

Take out a loan to cover the domestic solar panel UK cost

  • If you don’t have the capital, then the second option is to get a loan to pay for them. This method will allow for a considerably longer-term investment but will still offer some reward and offer the comfort of protection from rising energy costs. The loan and cost of the system should break even within the lifetime of the system if worked correctly.

Install free solar panels

  • unfortunately, there is no longer a way to receive free solar panels, this is due to the end of the FIT on the 30th of March 2019. Any schemes that did exist are no longer viable.

Solar Panel Financial Information

Finance options for Solar Panels

There are several companies offering finance for solar technology in the United Kingdom. Finance, in the form of loans and leasing agreements, is available for domestic, commercial, and industrial installations, in both the private and public sectors. Finance for renewable energy technologies allows customers to avoid large upfront costs and make payments out of the income from any Feed-in tariffs, as well as energy bill savings.

Finance may be offered on a range of bases, each offering varying levels of financial risk and reward, as well as varying interest rates. Typically, the finance company will provide the money to fund the cost of installation in return for payments spread over a period of time. Depending on the type of agreement, the client will most likely own the technology from the outset.

The arrangements offered by finance companies will vary, and each company will offer different advice. It is therefore advisable to obtain quotes and agreement terms from a range of companies. They should be based on clients’ energy needs and financial situation. Caution should also be taken when calculating one’s ability to make repayments, as the returns offered by some renewable technologies depend in large part on the weather. Remember that if using finance arrangements this may impact on your future benefits and savings from having the solar panels and this should be carefully considered.

It Is best to factor in all costs and any money you may receive for energy produced to calculate how much your solar panels can save you and what the return on your investment is. In the short term it may seem expensive however as a long-term investment you will make savings, and this can be worth the initial cost of having them installed. If you were eligible for the feed in tariff which ends on the 30th of March 2019 then you are likely to see a faster return on your investment and will receive the payments for 20 years (but at scheme end this was fairly small in real terms).

You can save more on energy bills by making small changes to your daily routine and using the most of your electricity during daylight hours whilst your solar panels are most effective, this will help your saving on energy bills. While the saving varies on average most households save at minimum, £100 a year on energy bills.

Look Here for some UK companies offering finance for renewable technologies.

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