The Cost of Solar Panels
There are many factors when looking at solar panel cost. These include: the type of solar panels installed, the size of the system, your type of property and which way it faces, and the quality of the panels 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 panel cost:
Your average solar set up will cost you between £3000 and £8000 including installation. This will vary depending on the panels you choose and the size of your roof. 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
- Cost, including installation: £3800.00
- Estimated annual output: 1700 kWh
- Estimated Export Tariff: £40.00
- Estimated savings on fuel bills: £90.00
- Total Savings/Earnings in year: £214.00
Feed in tariff scheme:
After the 31st of March 2019 the feed in tariff will no longer exist. Currently, you can make money off any unused electricity by selling it back to the National Grid. When this ends there will be 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 will be the government’s new proposed plans for 2019, which will mean that energy suppliers will compete to give households the best price for their excess electricity. This could take some months for the new legislation to be passed but will mean that 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 never the less, they are a good investment. Annually you can expect to save between £85 to £100 on your energy bills depending on how much power you use daily and how many people live in your household.
Current feed in tariff (FIT) rates:
If you sign up before the 31st of March 2019 you can still receive these payments. If you have a property which has an EPC of D or above, the FIT rate is 3.79p. You can find the latest rates on the Ofgem website .
Once receiving the FIT, you will continue 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 is being 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.
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 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.
If you plan on installing your panels before the fit ends you will need a grade D or above EPC rating to be certain that you will receive the higher rate payment. Once you have this, you can earn money tax free, from the power you sell back to the grid.
*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
Buy them 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 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 considerabley 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
- This option for free solar panels is available to those people who either cannot take out a loan or don’t want to pay the high upfront costs associated with the initial purchase of the system. The maintenance costs are taken care of, but you will not receive any of the FIT payments for the 20 year period. You will however benefit from all the electricity they generate and if your home uses a reasonable amount of electricity during the day, then you will realise these benefits with up to a 50% reduction in your electricity bill.
Solar Panel Financial Information
Finance options for Solar Panels
There are a number of 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 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 renewable energy technology and the cost of installation in return for payments spread over a period of time. Depending on the type of agreement, the client may either come to own the technology at the end of the period, it may be sold by the company with the proceeds being split between client and company, or the company could retain it.
The arrangements offered by finance companies will vary, however, and each company will offer different advice. It is therefore advisable to obtain quotes and agreement terms from a range of companies, 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.
In some cases installation companies also offer finance solutions. Some companies also offer the free solar or rent-a-roof schemes discussed here, whereby a company will pay for the installation of a solar PV system on the roof of a home or business. The company will usually receive the Feed-in Tariff income, while the property owner will benefit from reduced energy bills and carbon emissions.
Look Here for some UK companies offering finance for renewable technologies.