But is going solar in the UK a good investment?
In places like California and Spain, the ROI of a standard installation is very attractive. They have tons of sunshine all year round. But in a cloudy region like the UK, will you ever fully recoup the upfront cost of installing solar panels?
The answer is yes.
In fact, you’ll make your money back many times over. However, it’s important to distinguish between solar leasing vs. solar ownership.
With a standard solar lease, you receive a brand-new photovoltaic (PV) installation for free. And you pay a monthly fee for the clean electricity that your rented panels generate. Solar leases are structured so that those monthly payments are less than what you used to send to the utility company. So you enjoy instant savings.
A solar lease isn’t an investment. You’re simply buying cheaper and cleaner electricity for your home.
If you own your system (using cash or loans), the numbers work out in your favour even more. You enjoy instant savings, and it’s also possible to monetize the electricity that your panels generate.
Let’s take a look.
The Economics of Solar – Making Cash from Sunshine
The moment you install solar panels on your rooftop, you enjoy immediate electricity bill savings. With a large enough PV system, you can even reduce your monthly utility bill to £0.
As electricity rates rise over time, so do your savings. This is because your panels shield you from future price hikes:
- Today, your solar panels help you save £50 a month
- Next year, your panels help you save £75 a month
- 10 years from now, you’re saving £150 a month
Those monthly savings add up. And it doesn’t take long before they exceed the upfront cost of your PV installation. This is known as the solar payback period.
Let’s look at some numbers.
- You invest in a 4 kW PV system that costs £7,000
- Your panels shave an average of £50/month from your power bill
- In just one year, you end up saving £600
If electricity rates don’t change at all, it will take just under 12 years to fully recoup the upfront cost of your installation. And after that payback period, your electricity is 100% free for the remaining lifetime of your solar panels.
However, the true payback period is significantly shorter than 12 years. At today’s utility rates, the average solar payback period in the UK is closer to 9 years.
But it gets even better.
Thanks to a special solar incentive called the feed-in tariff, you can sell your excess electricity to the utility company at a profit. You’re not simply saving money, you’re actually monetizing the sunshine that hits your rooftop. With a 4kW installation, you can earn an average of £18,300 over a 25-year period.
That’s free money you’ve just generated from free sunshine.
According to Energy Minister Greg Barker, solar delivers higher returns than many pensions do. Speaking with the Telegraph, he offered that,
Solar is a really attractive financial proposition. You get a guaranteed tariff for 20 years, and if your panel is well-sited, it could yield 8% or more. That is more than an annuity, particularly if you are in your 50s or early 60s… Anyone considering retiring should seriously consider whether solar panels are right for them, because in some circumstances, they will get a higher return than from putting the money into an annuity.
The UK isn’t alone in this regard. Those who go solar in the US enjoy higher returns than they’d get on Wall Street’s S&P 500.
But it gets better still.
Earning Environmental Dividends from Solar
Going solar offers more than just financial dividends. Your panels also deliver environmental rewards as well. By installing a system today, you can dramatically reduce your carbon footprint and help decrease CO2 emissions. It’s hard to put a price tag on things like cleaner air and water. But most of us would pay any amount of money to live a longer and healthier life.
Solar makes that possible. And you can actually earn money in the process.
To learn more, request a free quote today.