Are solar panels worth it?
The sun's been beating down over the last week, meaning the 550,000 Brits with solar panels are smiling. Solar panels aren't just an environmental boon, they cut your electricity bills and pay you for generating energy too. However, the amount you can earn from them has just dropped, resulting in many asking 'are solar panels worth it?'.
Martin Lewis is here to put solar panels in the spotlight.
What are solar panels and how do you earn from them?
There are two types of panel; one which heats water, and the other main type which is photovoltaic and catches the sun’s energy and converts it into electricity. But remember, this is primarily about daylight, not sunshine -panels can still generate electricity on gloomy days.
Financially there are two reasons to do this (full information in Martin’s Are Cheap & Free Solar Panels Worth It? guide).
a) You can use the electricity they generate to reduce your electricity bills (the Energy Saving Trust estimates this is typically £100+/year saved).
b) You also get paid a ‘feed-in tariff’ for ALL the energy you generate (it works differently in Northern Ireland) – crucially, that’s even if you’re the one using the energy (the Energy Saving Trust estimates this is typically £500+/year saved).
Last week the feed-in rate dropped from 13.3p/kWh to 12.9p/kWh and may drop again from 1 October (in contrast, you pay 9p-13p/kWh for the electricity you use). Yet once the panels are installed, your rate is fixed for 20 years, and rises with inflation, so signing up sooner pays more.
Yet of course this is all about how the amount you earn measures up against the cost of shelling out right now. A typical system is £5,000-£8,000 now. Here’s some maths based on a typical house in Manchester with a typical 4kWp system…
- Cost of panels: £6,500
- Annual generation payment: £515
- Annual bill savings: £120
- Total: £635
- Break even estimate: 10 years
- Profit at 20 years: £6,200.
So with savings rates so low, for someone with a bundle of cash, these are a good option to look at.
The key need-to-knows
To see whether solar panels are worth it for you and whether you can get them, there are some important need-to-knows:
- You need a south-facing roof: Panels need to be on a south-ish facing roof, which isn’t usually shaded.
- You need a grade D Energy Performance Certificate (EPC): An EPC rates a building on its energy efficiency from A - highly efficient - to G. If you haven’t got grade D or above you get a lower feed-in tariff making it not worth it for most.
- You can still switch supplier: Don’t think this locks you into your energy provider, you don’t need your energy supplier to be the same supplier as the one that pays your feed-in tariff, so you’re free to switch.
- The further south you live, the more you can make: The Energy Saving Trust estimates that you could earn £720/year in London, £635 in Manchester and £595 in Edinburgh – as the south gets more daylight.
- Planning permission isn’t usually needed: The big exception is if you’ve a flat roof, your property’s listed or it’s in a conservation area – you may need to get approval from your council’s building team so check with your local authority.
- Green Deal loans may be available: You may be able to get funding from the Green Deal as a loan to help pay for the panels.
Aren’t they an eyesore? Will it impact the value of my house?
Beauty is in the eye of the beholder. Some people worry that ugly panels plastered all over their roof and the fact that you’re tied in to a contract that remains with the property once you’ve left could push the price of their house down or put off buyers.
And the aesthetics are worth thinking about, but they may be able to be fitted without being too on show. Equally, a more efficient home generating its own energy and paying a feed-in tariff can be more attractive to buyers.
If you may one day sell the property, I wouldn’t let it put you off. If you’re selling soon, it’s unlikely it’s worth doing as you won’t have time to recoup the amount you shell out and it’s unlikely to add a similar amount to your house value.
Don’t some firms advertise free solar panels?
Some companies offer to fit panels free, but crucially you won't get the feed-in tariff as it’ll keep this. But you will save money on your energy bills, and the firms also maintain the panels and pay for insurance. You may not be able to buy out your contract, so bear this in mind – especially if you’re likely to move house – as this could be very unattractive to a future purchaser.