Some of the most common questions we get asked by UK consumers are:
- How much do solar PV panels cost?
- How long will they take to pay for themselves?
- How much can I earn over their lifetime?
- Are they really worth the investment?
This article aims to answer all these essential questions to help consumers decide for themselves whether going solar makes sense for them. The most common system installed in UK households is a 4kWp rated system, hence all figures on cost, payback period and earnings used will reflect the size of a 4kWp system.
Solar Panels Cost
The average cost of an installed 4kWp system according to the Energy Saving Trust is £6,700. This price includes the cost of MCS accredited components (panels, inverter, etc) and installation. Although this is the average price specified by the Energy Saving Trust, in reality, prices between solar panel installers vary significantly, so make sure to compare quotations from installers. Request 3 free quotes from our network of trusted installers to ensure you get the best price for your solar panel system.
Solar Panels First Year Savings
On average, a UK household will save £653 from their 4kWp system in the first year. Households in far south areas such as Portsmouth will have the greatest savings (£730) whereas households in the Shetland Islands will experience the smallest savings (£586) in their first year. This is in relation to the amount of sunshine the areas receive.
First year savings are calculated using the following method:
1st Y Savings = 1st Y FIT (Generation) + 1st Y FIT (Export) + 1st Y Bill Savings
Note that these figures are only for first year savings and not annual savings. Yearly savings will increase with time with inflation and rising prices of electricity. By the 20th year, the last year of the systems Feed-in Tariff eligibility, average annual savings from the system will have increased to £1,070!
Solar Panels Payback Period
The average payback period (the time solar panels take to pay for themselves) for a 4kWp system in the UK is 9 years 2 months. The shortest payback period is for Portsmouth and surrounding areas (8 years 4 months), whereas the longest payback period will be experienced by northern parts of Scotland, including the Orkney Islands (9 years 11 months) and the Shetland Islands (10 years 1 month).
Have a look at our blog post on UK solar payback periods to learn more.
Solar Panels Lifetime Earnings
Over their lifetime (25 years), solar panels have lifetime earnings of £18,271 in the UK. Earnings are calculated as:
Earnings = FIT (Generation) + FIT (Export) + Bill Savings
Savings for the Generation and Export Tariff have been calculated over 20 years (the lifetime of the FIT), while electricity bill savings have been calculated for the systems lifetime of 25 years.
Once again, southern parts of the UK, which receive the greatest amount of annual sunshine are expected to have the greatest lifetime earnings. Portsmouth and surrounding areas are estimated to have lifetime earnings of £20,444. In contrast, the Orkney and Shetland Islands are estimated to have lifetime earnings of £16,695 and £16,388 respectively.
For more details, read our blog post on UK solar PV earnings.
Solar Panels Lifetime Profit
Lifetime Profit is calculated as:
Lifetime Profit = Lifetime Earnings – Solar Panels Cost
The average lifetime profit from a 4kWp solar panel system in the UK is estimated to be £11,571. As expected, households in the most southern parts of the UK can generate the greatest amount of profit (£13,744). This decreases as we move towards the extreme northern regions of the UK that receive less annual sunshine, where this figure decreases to £9,688.
Read our blog post on the profitability of solar panels to learn more.
The Verdict – Are Solar Panels Worth IT?
The average Internal Rate of Return (IRR) from a 4kWp solar panel system in the UK over 25 years is estimated to be 10.2%. This can be as high as 11.7%, if you live in the most southern parts of the UK, or as low as 8.8%, if you live in the most northern parts of the UK.
So are solar panels really worth it? The answer is it depends. It depends on whether your current investments (property, stocks, etc) are expected to give a better rate of return over the next 25 years.
In our opinion, if you have a south, south east or south west facing roof, with £6,700 of spare cash, solar panels make sense. Regardless of where you live, solar panels provide better or comparable returns than most pension funds, property investments and stock market investments such as the S&P 500 index. If you live in an area other then the most extreme north part of the UK, then this really becomes a no brainer.
Another important point to note is that these figures have been calculated for a systems lifetime of 25 years. In reality, solar panels have been known to last longer. Although system output is estimated to decrease by 20% over 25 years, solar panels can last over 30 to 40 years. Although the money you earn from the Feed-in Tariff by generating and exporting electricity will expire in 20 years (FIT lifetime), you will continue to save money on your electricity bills. This can be as much as £300 per year in 25 years time.
Read our blog post on the return on investment of solar PV in the UK for more information.
To get started, request 3 free quotes from us today, and see how much you can save on the cost of your solar panel system.