IMPORTANT: This article is out of date.
Solar panels used to be a no-brainer, but Government subsidy cuts firebombed the gain. Some of the info here may be useful, so we're retaining this as an archived guide, but please be careful relying on it. For more ways to cut energy costs and pay for improvements, see the The Green Deal Mythbuster and Cheap Energy Club.
Solar panels are not just about group hugs and saving the planet, some have been able to make big bucks from them. Yet government subsidy cuts have firebombed the gain.
The logic is currently in a state of flux. Some may still be able to make cash from buying solar panels, though the 'free panels' option may have been killed off. This guide will take you through the logic.
In this guide
While every effort’s been made to ensure this article’s accuracy, it doesn’t constitute legal advice. If you act on it, you acknowledge you do so at your own risk. We can’t assume responsibility and don’t accept liability for any damage or loss which may arise from your reliance upon it.
Solar panels used to be a no brainer, but Government's feed-in cuts totally changed the maths. The Department for Energy and Climate Change (DECC) halved the feed-in tariff, which pays people to generate electricity, for anyone who installs and registers from 3 March 2012.
People who install from 1 April also need to produce an energy performance certificate of grade D or above to qualify for the full payments. The Government estimates about half of all properties already qualify. (There may be free cash to help - see Home & Energy Grants.)
The Government will also almost halve subsidies again by April 2013 in three further stages (see Solar subsidies may fall further news story). The first cut will be on 1 August, and rates will drop again on 1 November 2012.
How does the solar subsidy work?
Solar panels save the typical home £90-£180/year in electricity. But the real boon's that the Government guaranteed for 25 years you'd get a high 'feed-in tariff', ie, be PAID to generate energy, even if you use it yourself, at over 3x what we pay. So on £10,000 panels, you could have earned £1,000+/year for 25 years.
But in Oct the Government announced the rate would soon be more than halved for new sign-ups.
The Government lost its appeal
The Department for Energy and Climate Change (DECC) planned to halve the feed-in tariff for anyone who installed and registered after 12 Dec 2011, even though the consultation on the plans ran until 23 Dec. The Court of Appeal upheld a High Court ruling that these ‘retrospective’ cuts were unlawful.
This meant homeowners who get panels up and running before 3 Mar could lock in the higher payments for 25 years.
Here’s a quick Q&A on how things stand ...
How much are the solar payments now?
The feed-in payments for generating energy have been more than halved for new sign-ups. Anyone who installed before 3 March will get the original top tariff.
- Installed before 3 March 2012. Feed-in payments will be 43.3p per kWh, meaning typical payments of £1,100/year. (Though this may fall to 21p for those who installed from 12 December 2011, if the Government wins an appeal in its bid to revert to the original timetable.)
- Install on 3 March or later. Payments will be 21p per kWh, slashing typical earnings to £550 a year.
Is it still worth doing once the feed-in rate’s halved?
The new rates completely change the maths. The feed-in has been cut by just over half from 1 April 2012 for panels installed and registered on or after 3 March (those who already had them keep the high rate). This means the profit over 25 years plummets.
From 1 April your home will need an energy performance certificate of grade D or above to qualify for full payments. The Government estimates about half of all properties qualify. (There may be free cash to help - see Home & Energy Grants.)
The cost-to-return ratio is much less attractive and it's far from a guaranteed win at this level, though there are, of course, environmental benefits. See is solar still worth it?
Can I still sign up for free solar?
The new lower tariff may kill off most 'free solar' deals, where you get the panels and electricity savings, but the supplier keeps the big feed-in gain. Already, Eon, British Gas and EvoEnergy have pulled free solar. However, HomeSun, Isis, A Shade Greener and others say they are still taking new sign-ups for the time being.
Though much could change rapidly, so be careful. It is worth questioning any free solar companies about their business's stability, as you would not want the company to go under while the solar panels were only half-installed. See Free Solar panels.
You put solar panels on the roof to generate energy from the sun. There are two types of panel: solar photovoltaic (PV), which generate electricity and solar thermal, which heat water. This guide focuses on solar PV.
"Hang on, we don't live in California" may be your first thought. Yet solar panels don't need sunshine to work, just daylight, so you can still generate some electricity on gloomy days – important in a country with weather as dull as watching Steve Davis sleep.
PV roof tiles convert the light into electricity, which you can use to power your home during daylight hours. Any energy you don't use is pumped back to the grid. If you use more than the panels generate, the excess comes off the grid, exactly as it did before the panels were fitted.
In the winter, when solar power is less, you'll take more power from the grid. It's a good idea to set appliances to run while it's light outside, staggering them to max the savings. For tons more top tips from solar nerds, read the forum's Make the most of solar panels thread.
What's in it for you?
Done, right solar panels save you cash. You save in two ways:
- Electricity bill savings. The Energy Saving Trust (EST) estimates a typical 2.9kWp system can knock £90 to £180 off a family's bills, depending on system size, electricity use, whether you're at home during the day and other factors.
While solar panels can produce 50% of a home's electricity, often much of this gets pumped back to the grid. If energy prices rise significantly over 25 years as they are predicted to, you'll save more.
- Feed-in tariff payments. Back in 2010 the Government ditched grants for solar panels and replaced them with a scheme that pays for all the solar energy you produce, even if you use it yourself.
The amount you earn depends on your system's size - do your sums first. A typical payment could be £550/year under the new tariff or £1,100/year under the old tariff.
Who are they suitable for?
You usually need a roof which faces within 90 degrees of south, with little shade from buildings or trees. While some early or late shading is okay, the roof should be unshaded between 10am and 4pm.
Of course, northern homes get slightly less sun, yet solar panels are still worth it in most areas. Ideally you'd also be planning to stay in your house for a number of years. Call your local Energy Saving Trust Advice Centre on 0800 512 012 for more advice on whether solar panels are for you.
Should you pay or get 'em free?
Warning! When it comes to installing, in the past you had two clear options: get solar panels fitted for nowt or, if you could stump up a typical £10,000, buy your own system and get payments from a government scheme.
However, currently the free solar industry is currently in a state of flux. Some are still taking applications, but be careful - see latest news.
- Free electricity. You could typically slice your electricity bill by £90- £180/year – more if you're at home during daylight hours or prices jump significantly, which they could well do over 25 years.
- Make your home greener. Free solar panels let you make a contribution to reducing your home's carbon footprint, without stumping up your own cash. But not everyone's convinced about solar panels' benefits – see George Monbiot's Guardian article.
- Free maintenance. Usually the free solar panel company maintains the panels and pays for insurance (always check your contract).
- They keep the feed-in tariff
The free solar panel company keeps the feed-in tariff, typically £550 a year under the new tariff and £1,100-ish under the old tariff. If you've spare cash, you may be better off paying for your own system. Yet if you don't have spare cash for panels, you wouldn't been able to get this anyway.
- Buyout fees
This is best for those settled in their forever home. While some providers have reasonable buyout fees, with others, it's cheaper to buy out Lionel Messi.
- Potential buyers may be wary
Do bear in mind a leased roof could ring alarm bells for prospective buyers. Richard Webster of Richard Webster & Co Solicitors says: "I can't see any real problems for the average buyer with the free panels scheme, other than the look of the house, if that's a concern.
"Most people will appreciate even a small saving on electricity costs. Of course, there is always the chance that some buyers may worry; being tied to some third party in a contractual situation, however harmless, could frighten some."
- Roof repairs could be costly
Free solar panel companies usually fix your roof if it's damaged by the panels. But if you want to fix your roof for a reason not connected to solar panels, free solar panel companies sometimes make you cover their feed-in payments in the meantime (always check).
Full info in the free solar panels section.
- You keep the feed-in payments. As an example, if you put in a £10,000 system, it could net you £13,750 over 25 years under the
new feed-in tariff or more like £27,500 under the old tariff.
These sums totally depends on system size, location, sunshine etc.
- You save on electricity. On top of this, you could typically slice your electricity bill by £90 to £180/year – more if prices rise.
- It could tempt would-be buyers. Buyers may be attracted by the electricity savings and feed-in payments. Though others may be put off by the look of the things, so do ask local estate agents for their experiences.
- The Government could end/change it early. The Government says the feed-in scheme will run for 25 years, but it can do anything it wants. There's nothing to stop future governments ditching it – the Government can say it owns France if it wants to.
However, the recent announcement is proof that it'll change the scheme for new subscribers only - but it's worth being aware anything's possible.
- You will have to pay for upkeep. The Energy Saving Trust says little maintenance is required on a properly installed, well
designed solar PV system, though you'll likely need to replace the inverter within 25 years (c. £1,000). Of course, though, anything could go wrong.
You also need to check your home insurance covers the system and add it if not.
Full info in the buying solar panels section.
Route 1. Buy your own panels
If you've £8,000 to £12,000 knocking about, you could get this back in payments for the energy you produce. Some firms will also let you buy solar panels on credit. However, if you don't have the cash upfront, panels aren't for you. The interest on the loan could dwarf the savings.
This is all about the Government's feed-in tariff scheme, which it has slashed this for newbies - see latest news. It means electricity companies must pay people who produce electricity from renewable energy sources such as wind or the sun.
The Energy Saving Trust (EST) says a typical new £10,000 2.9kWp (kilowatts peak, the rate it generates electricity on a sunny day) system could earn £1,100/year in payments under the old feed-in tariff and or £550/year under the new tariff.
These figures are not guaranteed and depends on system size, location etc. Yet the key to this is:
A typical system costs £10,000 but over 25 years, the feed-in payments under the old tariff could be £27,500.
Though it's just £13,750 under the new tariff. The Government says the feed-in tariff payment for solar panels will run for 25 years from the date that a system is installed and registered, and will rise with inflation (linked to the Retail Price Index).
Is it still worth buying solar panels?
Solar panels used to be a no brainer, but Government's feed-in cuts totally changed the maths. For new solar users who installs between 3 March and 1 Aug 2012, a £10,000 outlay could get back around £13,750 in payments over 25 years, compared with £27,500 for those under the old feed-in tariff.
The saving for installations on the new tariff rise to to £17,250 if you include energy savings. The rates will drop again on 1 Aug and 1 Nov 2012.
The cost-to-return ratio is much less attractive and it's far from a guaranteed win at this level, though there are, of course, environmental benefits. On the plus side the feed-in payments will rise with inflation (linked to RPI), plus you'll save more if energy prices jump significantly, which they could well do over 25 years.
If free solar companies do survive, the reduced payments for owners mean the free schemes will be an even more attractive option.
Yet this will be a fine balance. You should do your sums very carefully and explore other options, for example Fixed Rate Savings.
New energy efficiency requirement
People who install from 1 April need an energy performance certificate of grade D or above to qualify for full payments. The Government estimates about half of all properties qualify.
The certificates grade homes on energy efficiency. This will be another outlay if you don't already meet requirements (there may be free cash to help - see Home & Energy Grants). Homes on lower grades will get less than half the standard payments.
How feed-in works
Households with approved solar panel schemes are paid for the electricity they generate, even if they use all of it themselves. These payments are in addition to bill savings.
For solar panel users on the old tariff, the feed-in tariff is 43.3p per kWh (kilowatt-hour, one unit of electricity) of energy generated. Those on the new tariff will get 21p per kWh.
Then there's a 3.1p bonus for every unit you don't use and pump back or 'export' to the grid (this is the same for new and existing installations).
Whenever you are a new or existing customer, the feed-in payments are considerably more than the typical 13p per unit it costs to buy electricity from your provider.
Here's an example of what a typical domestic 2.9kWp solar electricity system could earn:
|Savings per year
|Savings per year
| Electricity bill savings
|Source: The Energy Saving Trust|
Plug your details into the Energy Saving Trust's (EST) solar calculator to see how much you'll gain. Go to Decc for a full list of feed-in tariffs. The feed-in scheme covers England, Scotland and Wales, but not Northern Ireland.
If your energy supplier doesn't hook you up with an import/export meter, it assumes you pump 50% of electricity back to the grid. (Your electricity bill savings will depend on how much you actually export, usually over 50%.) The vast majority of energy suppliers don't currently supply meters, because of the cost, plus the Government is still deciding meters' requirements.
Will the scheme definitely last for 25 years?
Any changes should not affect those who signed up for solar panels before they were announced. Philippa Heap, senior press officer for the Department of Energy and Climate Change, confirmed "there will be no retrospective changes". Though remember ...
25 years is a long time – there's nothing to stop future governments changing feed-in tariffs. Though it's very unlikely for existing users.
How to pick a fitter
To get the feed-in tariff, both the system and the installer should be members of the Microgeneration Certification Scheme (MCS).
As we're MoneySavers not electricians, picking installers isn't our speciality so instead here are the results of the British Renewable Energy Awards 2011, run by the Renewable Energy Association.
As always, get at least three quotes before signing up and get 'em in writing. When comparing quotes, check the following is included: scaffolding; removal of the existing roof and other roofing works; internal wiring works; connection agreement with the energy supplier; electrical connection work; and a generation meter.
Finally, ensure the installer is a member of the Renewable Energy Assurance Limited (Real) scheme. Plus you've seven days to cancel after you sign up to buy.
Finally, never borrow from solar companies to pay for panels. Some installers let you buy solar panels on credit. If you don't have the cash upfront, paid-for panels aren't for you. The loan's interest could dwarf the savings.
Ensure you shop safely
While MoneySavingExpert.com endeavours to check deals are valid, we don't check companies' finances - even huge names like MFI and Woolies have folded - so it's very important you use the right strategies to stay protected where possible.
Pay by credit card for something over £100, eg, flights, kitchens, sofas, and Section 75 laws super-charge your consumer rights. Unlike debit cards, cheques and cash, pay in full or part (even just £1) on a credit card and by law the lender's jointly liable with the retailer.
This means you have exactly the same rights with the card company as you do with the retailer, so if it goes bust, you can simply take your complaints there instead and get money back if no delivery. See the Section 75 guide for a full explanation.
Solar panel sellers:
A Which? investigation
A Which? magazine investigation showed many solar companies are using dodgy sales tactics and giving poor advice to people looking to buy solar PV panels.
In an undercover investigation, the magazine found three quarters of companies overestimated how much energy the solar PV panels would produce and most of them underestimated how long it would take for the system to pay for itself.
Posing as customers, Which? asked several companies to survey a house in southern England and quote for installing a solar PV system (see chart).
Seven out of the 12 salespeople visiting the Which? undercover house even recommended installing solar PV panels on a shaded part of the roof and eight companies didn’t question customers about how much energy they used.
The companies highlighted in purple overestimated the annual output of energy from the PV system, and therefore underestimated the payback time. (Though Which? says this is because the way Microgeneration Certification Scheme members are supposed to calculate the payback time under government regulations is flawed, as it takes no account of where you live in the UK.)
System size (kWp)
Final price incl discount
|Sainsbury's (Brit Gas)||
|Igen (House Choice)||
|Solar PV Power||
|Green Home Company||
|Solar 4 us||
|Homebase (Eon) (1)||
|Companies in brackets are subcontractors working on behalf of the company. kWp = kiloWatt peak, or the maximum amount of energy you can generate. Prices quoted inclusive of VAT . 1) Did not send a quote despite being chased.|
Route 2. Get 'em free
Warning! 31 Jan 2012. Free solar market in state of flux
The free solar industry is currently in a state of flux and many are not currently taking applications - see latest news.
However, HomeSun, Isis and A Shade Greener say they are still taking new sign-ups for the time being. Though much could change rapidly, so be careful.
If you're in England, Wales or, in a few cases, Scotland, panel firms will fit a state-of-the-art system to your home for free, possibly cutting your leccy bill by £90 to £180 a year.
Why do they do this?
Normally the homeowner grabs the big-money feed-in cash, but, in return for the free solar panels, they keep this. So you get cheaper leccy bills, they get the payments.
The £1,000s in feed-in payments dwarf the electricity savings, so if you have the cash, consider buying the panels outright.
Warning! What to watch out for with free solar
This is a relatively new industry. Your home is your most valuable asset, so think very carefully about what it means to sign up for a 25-year commitment. Don't read this as a "don't do it", instead a "be prepared that if you do, it may not be plain sailing". Read these points to bear in mind.
- Ask the right questions
Are you really sure it's for you? Read Consumer Focus's list of questions to ask before you apply and get the contract checked by a solicitor. Plus have a butchers at the Real Assurance Scheme's (set up by the Renewable Energy Association) list of info the free panel company should give you.
- Check with your mortgage provider
Solar leases do vary, so officially mortgage providers treat each one on a case-by-case basis. Yet we asked several of the big lenders and they said they were usually happy with the leases in principle, as long as the buildings insurer is informed and you have planning permission (always check with your lender).
Mortgage companies may charge an admin fee to grant consent for a free-solar-panel lease.
The free solar panel companies
The solar panel companies say the buyout fees they gave us are fixed, although, of course, they vary according to system size. Yet always ask it to include a schedule of these fees in your contract, and to confirm the charges will not rise.
This is a relatively new industry, so while we have info from the providers, what we don't have is much feedback from MoneySavers who've been through it. Please add your feedback to the companies' threads if you sign up.
ISIS SolarCovers all of England & Wales
- Lease length? 25 years
- Typical buyout fee (yr 13): £15,700
- Roof requirements: Pitched, unshaded roof of 25m2 or more
- Areas covered? All England and Wales
- Feedback: ISIS
ISIS installs in England and Wales.
Installing in England and Wales, ISIS requires a pitched, unshaded roof of 20m2 or more, and it must be orientated between 230 and 130 degrees. If your property is tricky to scaffold on, there's a £175 fee.
If you want to take over the panels, buyout fees are reasonable (see chart). Always ask for a buyout fees breakdown before signing up.
A Shade GreenerEstablished free solar company, though you can't buy out
- Where: Parts of N England, Midlands, SW England.
- Typical buyout fee (yr 13): You can't buy out
- Roof requirements: Roof must usually be 24m2 & due south or within 55 degrees of south
- Lease length: 25 years
- Feedback: A Shade Greener
A Shade Greener has decent feedback from forumites, though you can't buy the panels out.
If you live in North England, the Midlands or SW England, established free solar panel player A Shade Greener is well worth a look. It has some fab feedback from forumites and there are no charges at all, ie, even if you need non-standard scaffolding. Though once you sign up, you can never buy out the panels.
Who is eligible?
A Shade Greener covers parts of North and South West England, plus the Midlands. See a map of the areas it covers.
Watch to watch out for
Unlike other companies, there's no option to pay a fee to buy out the contract. So only consider this if you're in it for the long haul.
HomeSunEstablished free solar installer
- Where: Everywhere south of Hull including Wales
- Typical buyout fee (yr 13): £15,000
- Roof requirements : 20m2 of clear, unshaded space and the roof can't be too flat or steep
- Lease length: 25 years
- Feedback: HomeSun
HomeSun is an established free solar installer, but its buyout charges are on the high side.
Free solar panel firm HomeSun installs everywhere south of Hull, including Wales.
Who is eligible?
You need 20 square metres of clear, unshaded space and the roof can't be too flat or steep. The roof must also be south east to south west facing. Use its tool to check if your home is a contender.
How much to buy out?
The cost depends on system size value and, like others, the value depreciates over 25 years. It's fees to buyout the system are on the high side; do ask it to break down examples for you when you sign up. (See chart.)
Check others before signing up to SolarShare
HomeSun also offers another product called SolarShare. This is when it's expensive for HomeSun to put the solar panels on, eg, there's a lot of scaffolding or you've a slate roof, which is harder to fix solar panels to. There is an initial fee of £100 to £500 sign up.
SolarShare is not such good a deal. Check out the free solar panel companies first and if they will add an extra charge, plus ensure you'll save enough in electricity to recoup the cash.
Solar panels: key warnings
This week the Government announced it will cut feed-in payments to just under half for newbies. The new rates completely change the maths - see govt announcement update.
There are some important checks to do before you buy panels or sign up for freebies ...
- Check if you need planning permission
You don't generally need planning permission for solar systems. The big exceptions are if you've a flat roof, the property is listed, or it's a conservation area.
You might need to get approval from your council's building control team though. Check with your local authority. If you get a free system, your provider will normally do this for you - but always check.
- Tell your mortgage provider and insurer
As with any home improvement, you should contact your insurer and mortgage provider. If you go for the free option, check that the company will liaise with lenders and insurers.
- What if the solar company went bust?
If the free solar panel firm went bust, it's likely the panels would stay on and be maintained. The rights to collect your feed-in tariff would be creditors' biggest asset, so chances are they'd sell this right on to another company.
Yet this is a totally new business model, and things could change if the Government withdraws the feed-in scheme, so it's impossible to predict all eventualities.
- Converting your loft could be tricky
Here's a list of commonly asked questions. (Also see the the Solar Panel Q&A forum thread, where efficiency advice body the EST kindly answered users' questions about solar panels and feed-in tariffs.)
What happens if I sell my house?
Hopefully potential buyers will be pleased about the electricity savings and, if you paid for the system, the potential feed-in tariff profit. Yet there is always the chance that they won't like the look of them – it's worth asking local estate agents for their experiences.
Can I keep/change electricity providers?
Yes. You're not tied to any electricity provider; the feed-in tariff is a universal arrangement that Ofgem runs across all providers.
Do you have to own the house?
You probably wouldn't want to pay £12,000 for a new system if you didn't own your home.
If you are living in rented accommodation (including local authority), you can take advantage of the free schemes. You would need the permission and co-operation of the landlord or freeholder who owns the roof.
Who pays for the feed-in tariffs?
Electricity suppliers fund the payments. It's generally accepted that they will pass costs on to customers.
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Crucial tips to save £100s on energy bills
Obviously there's absolutely no point at all in installing a swanky solar panel system if you haven't tried other ways to save first. Here are our top tips:
Switching energy is easy: nothing changes other than who bills you. If you've never switched before you can save £200+/year. While the cheapest online deals for typical users are around £900 a year, those on a standard tariff typically pay around £1,150.
For full info on the top comparison sites and how to get extra cashback, get £40 cashback or a case of wine, see the full Cheap Gas & Elec guide.
Pay by monthly direct debit
Set up a monthly direct debit to pay your bill and you'll usually save around 5-10% extra, yet it's crucial to make sure the energy company doesn't set it too low or too high. Either the supplier keeps hold of your cash unnecessarily or you end up with a big bill at the end of the year. Full details in the Energy Direct Debits guide.
Do a meter reading regularly
Every time you receive a bill, do a meter reading. Don't rely on your energy provider's estimate; these are often way out. If they're under-billing, you'll have a big whack to pay at the end of the year. If they're over-billing, then they've unfairly got your cash.
If your direct debit is way off kilter, call up and request it's changed. You have a range of rights to ensure it's correct. See the full Energy Direct Debits guide for template letters to help.
Switch to an internet tariff
Switch to your company's internet billing. It will usually save you up to 10% over the standard tariff, and all it really means is you get your bills emailed.
Grab £1,000s of grants
There's a vast range of grants available for improving home heating and insulation. The best place to start is the Government's Energy Saving Trust (EST). It has an advice and information helpline, call 0300 123 1234 (0800 512 012 in Scotland and Wales).
For more grants available for all types of home improvement, see the full Grant Grabbing guide.
Please feed back on how you find this info and if anything needs improving.