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Solar panel energy bill savings estimate cut

The Energy Saving Trust has cut its estimate of how much money the average household will save on its electricity bills by installing solar panels to £70 a year from £120, shrinking free solar panels' gains.

The energy advice body previously assumed about 50% of a solar power system's energy was used in the home. But its latest research shows this is actually nearer 25%, and 75% of the energy is pumped back to the grid.

Key Points

  • Energy Saving Trust cuts estimate of a typical home's annual electricity bill savings from solar systems to £70/year
  • This has a big effect on whether free solar panel schemes are worth it
  • The change has little impact for buy-your-own solar systems

This has a big effect on whether free solar panel schemes are worth it, as with them the homeowner's only perk is bill savings.

The solar company keeps the big-money payments from the government's 'feed-in' scheme - where households get paid for the energy they generate (see the Solar Panels guide).

The Energy Saving Trust now estimates bill savings at £70 a year for a the most common solar panel system - '2.7 kWp'.

However, this still depends on location, system size and other factors.

Buying panels is still hugely lucrative

The change has little impact for buy-your-own solar panels, as the feed-in scheme pays panel-owners a mammoth c.£1,000 year for generating electricity – whether they use it or not.

People can get back double their spend in the long-term, eg, a £12,000 system could net £25,750 in payments over 25 years.

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Rosalyn Foreman, the Energy’s Saving Trust’s data services manager, says: "We followed trials of other technologies which you’d expect to export much less back to the grid than solar panels, but they showed lower levels of electricity used on site than expected, so we’ve altered our expectations of solar PV accordingly.

"While these are typical estimates, it's quite possible that someone could save more than £70 if they were at home in the day or set all their appliances to run in daylight hours."

Electricity costs predicted to rise over long-term

Martin Lewis, creator of MoneySavingExpert.com, says: "This does tip the financial scales against the free panel deals to an extent, as with those your only gain is the saving on electricity; you don’t get the big feed-in tariff payment. Those who own their panels do.

"Yet it's still worth remembering over the long-term, five to 20 years, energy prices are predicted to rise significantly, as regulations push providers into being much more sustainable. If that does happen, the savings from free panels should increase. Even so, the decision is less clear-cut than it was.

"One interesting new option from energy provider Eon lets you effectively try before you buy. The panels cost £99, rather than the usual £10,000+, though, again, you only get the electricity gain. However, it allows you to buy them out at a much lower cost after a few years if you have the cash."

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