Solar panels can mean big bucks. They reduce your electricity bill and pay you for generating too. Recent cuts may have reduced their earning potential, but costs have dropped too - some can even get free solar panels.
This guide takes you through whether solar panels are right for you, if the money adds up, whether free panels are worth it and how to ensure you get them fitted safely.
In this guide
We've made every effort to ensure this guide's accuracy, yet it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you do so at your own risk.
Solar panel need-to-knows
"Solar power? Hang on, we don't live in California!" Yet it's all about daylight, not sunshine, so panels can still generate some electricity on gloomy days - vital when the weather's as dull as watching Steve Davis watching paint dry.
Yet before you stick them on your home, understand these key need-to-knows.
1You need a south-facing roof
You usually need a roof that faces roughly within 45 degrees of south, with no shade from other buildings or trees. While some early or late shading is okay, the roof should be unshaded between 10am and 4pm. If your roof doesn't fit this criteria, you may not be able to get maximum payments with solar panels.
2You save on electricity bills
The Energy Saving Trust estimates a typical 4kwp system can knock £150 off a family's bills each year. Electricity prices are predicted to rise massively over the next 20 years, which means the amount you'd save would as well. The savings depend on the system size, electricity use, whether you're at home during the day and other factors.
3You get paid to generate electricity
This is the interesting bit. Install now and for the next 20 years you get paid a 'feed-in tariff' for the energy produced, even if you use it yourself. The amount depends on your system's size, but the Energy Saving Trust estimates a typical payment of £650 a year, rising with inflation (on a 4kwp system). Read more
The feed-in tariff covers England, Scotland and Wales, but not Northern Ireland. It has dropped massively during the past 18 months. Before March 2012, you could get £1,100+ for a typical system, so it's fallen by nearly half. People normally get the payments from their current supplier, or one of the other major suppliers. See who pays the feed-in tariff?
There's another point to consider: the feed-in for generating electricity used to be locked in for 25 years, now it's just 20.
The tariff may drop again in January 2014. That's because the Government tracks solar panel usage. If it finds panels are generating more than a certain amount, it'll cut payments for newbies who install AFTER 1 January 2014.
It's not definite, but if you're considering installing, be aware that a cut is possible. See Buy solar panels for full analysis on how it works and if it's right for you.
4Panel prices have dropped
While the Government has slashed payments for generating electricity, the price of a typical (4kwp) solar panel system, including installation, has dropped to about £7,000 (£6,500 in some cases). A system this size used to cost £10,000 to £12,000.
So while the feed-in's less each year, getting panels has become cheaper. See full analysis - should you buy solar panels?
5You may be able to get solar panels free
If you live in certain parts of England and have a suitable roof, a company may offer to fit panels free, but it keeps the feed-in tariff cash. You just get the £150ish electricity savings (though energy prices are predicted to rise). The eligibility criteria are tough, though. Read more
In the past, several companies offered this, since the feed-in tariff was cut, many pulled out. To see if it's right for you and what to watch out for, see Free panels.
How exactly do solar panels work?
You put solar panels on the roof to generate energy from the sun. There are actually two types of panels. Thermal panels just heat water, while photovoltaic (PV) panels, which generate electricity, have sparked all the fuss.
The panels 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.
Do I need to live in a sunny area?
It's not essential. Remember, this is about daylight, not hours of sunshine. But you do need a roof that faces roughly within 45 degrees of south, with no shade from buildings or trees.
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.
You also need an Energy Performance Certificate of grade D or above to qualify for full payments.
Who pays the feed-in tariff and how often?
Your energy supplier will normally make the feed-in payments to you every three months, either straight into your account, by cheque, or transferred as a credit to your electricity account.
You normally have to provide meter readings, by phone or online, to your supplier every three months to get the payments. But this is not like a normal meter reading. Every solar PV system comes with a generation meter, which measures the amount of electricity you generate. You take a reading from this and give it to your feed-in tariff provider every three months. Beware, a previous Which? survey has exposed payment delays among some suppliers.
Strangely enough, some get feed-in payments from a different company to their current supplier. For example, EON manage some feed-in payments for other suppliers' customers. See below for full info on how much you can earn via the feed-in payments.
Should you buy solar panels?
If you've £7,000+ knocking about, you could get some of this back in electricity savings and feed-in payments for the energy you produce.
A typical solar panel system saves the average household £150/year on electricity bills (for a 4kwp system - that's kilowatts peak, the rate it generates electricity at when it's sunny).
Plus a Government scheme guarantees for 20 years you'll get a feed-in tariff, ie, get paid to generate energy - even if you use it yourself. The Energy Saving Trust (EST) says a typical system could make £650/year in feed-in payments, rising with inflation. This depends on system size, location, etc. The key to this is:
A typical system costs £7,000, but over 20 years, the feed-in payments and electricity savings could add up to roughly £16,000.
Is it worth getting solar panels?
Solar panels used to be a no-brainer. When the Government launched the feed-in scheme, people typically got a gobsmacking £1,100+ per year in payments. The cash was guaranteed for 25 years, so that was at least £27,500 back - not taking into account electricity savings.
The Government slashed these payments, so now £650 a year is typical, though it rises with inflation. Plus payments are now only locked in for 20 years, rather than 25, paying out £13,000 in total.
Yet at the same time, solar panel prices have dropped. A typical system now costs £7,000 rather than £10,000. Solar panels also save a typical home £150/year in electricity. Some experts think energy prices could rise to between £4,000 and £6,000 for a typical annual bill, in 20 years.
The cost-to-return ratio is less attractive now and it's far from a guaranteed win at this level, though there are, of course, environmental benefits. It is a fine balance. You should do your sums very carefully and explore other options, for example Top Savings accounts.
Who is this best for?
Ideally, you'll be planning to stay in your home for a few years to recoup some of the cost, though potential buyers may be attracted by the electricity savings and feed-in payments.
Whether it's right for you depends on system size, location, whether you're at home during the day and other factors. Use the Energy Saving Trust's Solar Panel Calculator to estimate the potential gain.
You also need an Energy Performance Certificate of grade D or above to qualify for full payments. The Government estimates about half of all properties qualify. If your home doesn't make Grade D, it may not be worth it - typical payments are just £340/year. Call the Energy Saving Trust on 0300 123 1234 for more advice on whether solar panels are for you.
How much can I earn via the feed-in tariff payments?
Households with approved solar panels are paid by a supplier for the electricity they generate, even if they use all of it themselves. (The system and installer must be approved by the Microgeneration Certification Scheme.)
For those who install now, the feed-in tariff is 14.9p per kWh (kilowatt-hour, one unit of electricity) of energy generated. Then there's a 4.6p 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).
These feed-in payment rates are more than the typical unit rate it costs to buy electricity from your provider.
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. The majority of energy suppliers don't currently supply meters, because of the cost, while the Government is still deciding how meters should work.
Here's an estimate of the money a typical domestic 4kWp solar electricity system could make:
|How much can you gain?|
|Income generator||Savings and/or earnings per year|
| Electricity bill savings
|Source: The Energy Saving Trust (figures have been rounded up)|
The second table shows estimates of how much you could make over 20 years if you install a £7,000, 3.5kwp system. It also shows when you start making actual gains from paying upfront.
|How much you may make over 20 years on a £7,000 system|
|Time||Total savings and earnings||Profit/loss|
|Warning - these are estimates and assume panels do not develop faults. A new c.£600 inverter (which converts electricity into power for the home), is sometimes needed after 10-15 years.|
Plug your details into the Energy Saving Trust's (EST) solar calculator to see how much you'll gain. The payment scheme covers England, Scotland and Wales, but not Northern Ireland.
Payments may change from Jan 2014
The Government is due to review the payments again at the end of 2013, so another cut is possible.
It's because the Department of Energy and Climate Change (DECC) tracks solar panel usage each quarter. If it finds that the amount of electricity generated by panels goes over a certain level, it'll cut payments for newbies who install AFTER 1 Jan 2014. But if you install and register before 1 Jan 2014, any cut won't affect you.
The cut's not guaranteed, but if you want to take advantage of current payments, as it takes time to sort, consider investigating now. Not only must your panels be fitted by the deadline, but you need to install and register your Microgeneration Certification Scheme (MCS) by then.
Talk to your supplier about this. Installers estimate it usually takes about six weeks from initial phone call to getting the panels up and running. This depends on application though.
Once they're installed, you apply to your energy supplier to get the payments, so there's another potential delay. Payments are backdated to when you applied for them.
The Green Deal - pay for solar panels from energy savings
The Government's new Green Deal is a way of paying for many home energy-efficiency measures from the 'savings' you'll make on energy bills. The Green Deal can be used for more than 40 home improvements, one of which is solar panels.
However, you may not be able to borrow the full amount to pay for solar panel installation. That's because you can only get a full loan for an improvement if the energy savings start to pay for itself within 10 years.
This will depend on how your Green Deal provider works out your loan. If it factors in the savings AND the payments, you may be able to borrow the full amount. If the provider factors in only the savings, it's doubtful.
The loans are complex, so we've a big Green Deal Mythbusting guide to help you decide, with full pros and cons. You can search for Green Deal loan providers which will help fund solar panel purchases on this DECC Green Deal website.
Will the feed-in payments definitely last for 20 years?
The Department of Energy and Climate Change confirms "there will be no retrospective changes" to feed-in payments Previous changes suggest it'll change the scheme for new subscribers only. Though remember...
20 years is a long time. There's nothing to stop future governments changing feed-in payments, though it's very unlikely for existing users.
How can I make the most of solar panels once I've got them?
In the winter, when there's less solar power, you'll take more energy 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.
How do I 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 2013, run by the Renewable Energy Association: EcoHill was best installer of the year, while Feed It Green was highly commended. As with any provider, you'll have to check if they install in your area.
As always, get at least three quotes before signing up, and get 'em in writing. When comparing quotes, check the following are included: scaffolding; removal of the existing roof and other roofing works; internal wiring works; sorting out a connection agreement with the energy supplier; electrical connection work; and a generation meter.
Make sure 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.
Pay with a credit card for extra safety
Pay by credit card for something over £100 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.
If paying by debit card, there's also valuable hidden protection that means you may be able to get your money back if something goes wrong. It's called 'chargeback', and applies to most debit and charge cards, as well as Visa, Mastercard and Amex credit cards - though it isn't a legal requirement. See the Chargeback guide.
Solar panel fitters: A Which? investigation
A Which? magazine investigation back in 2011 showed many solar companies were using dodgy sales tactics and giving poor advice to people looking to buy solar PV panels. The Office of Fair Trading has also unearthed poor practice around mis-selling of solar panels and energy efficiency items.
In 2011, there was a rush to provide solar panel systems when the payments to generate electricity were an eye-watering £1,100+/year. Some companies have pulled out, and things have changed since then, so some info below could be out of date, but we've included it to help you be vigilant.
In its undercover investigation, Which? 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 italics below overestimated the annual output of energy from the PV system, and so underestimated the payback time. The ones in red didn't. Which? says underestimations occur because the way firms are supposed to calculate the payback time is flawed, as it takes no account of where you live.
|Which?'s investigation (prices from 2011)|
System size (kWp)
Final price incl discount
|Sainsbury's (British Gas)||
|Igen (House Choice)||
|Solar 4 us||
|Homebase (E.on) (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 at the time of being chased.
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, so it's worth asking local estate agents for their experiences.
Can I change electricity providers?
Yes. Don't, for heaven's sake, think this locks you into your energy provider so you can't get cheaper bills (join the MSE Cheap Energy Club to stick on permanently low prices). The feed-in tariff is a universal arrangement that Ofgem runs across providers. See switch energy provider.
What if the solar panels break?
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 about 20 years (£600ish). Of course, though, anything could go wrong. You also need to check your home insurance covers the system and add it if not.
Do 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.
Free solar panels - if buying isn't worth it
It's possible to find a company that offers to fit panels worth £7,000 for free, but it keeps the lucrative feed-in tariff - you just get the £150ish per year electricity savings.
By setting your appliances to use energy during daytimes you can increase this sum, plus prices are predicted to rise hugely over 20 years, which means your savings will rise too. Another bonus is that the firm maintains the panels and pays for insurance.
Before the payments to generate electricity were cut, there were a lot of free solar panel companies. Now many have pulled out.
But with so few providers, which only install in certain areas anyway, it's now harder for some to get free panels. That's before you even factor in criteria including the requirement for a south-facing home.
One free provider we were able to check out, which has an established track record, is A Shade Greener*. There are a few smaller companies doing the same which may well be legitimate, but it's harder to check them out.
Who can get this?
A Shade Greener covers parts of north and south-west England, plus the Midlands. See a map of the areas it covers. You need to own your home. If you live in Cornwall, Kent, East Anglia or London, check if you're eligible.
Your roof must usually be 24 square metres due south, or within 35 degrees of south. Maintenance is included and A Shade Greener pays for the insurance.
Is it any good?
It has some good feedback from forumites and there are no charges at all, even if you need non-standard scaffolding. Though once you sign up, you can never buy out the panels - A Shade Greener will always own them.
How does the company still make money?
A Shade Greener says the business is largely funded by rich pension companies, is financially in good shape and is still making around 300 installations each week. The company's has fitted around 23,000 systems in total, so it's still receiving the high Government feed-on payments for those homes too.
What to watch out for with free solar
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.
Check with your mortgage provider
Officially, mortgage providers treat solar leases 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 knows and you've got planning permission (always check with your lender).
Mortgage companies may charge an admin fee to grant consent for a free solar panel lease.
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.
Have a butchers at the Real Assurance Scheme's list of info that free panel companies should give you. The scheme's been set up by the Renewable Energy Association.
Check your contract carefully
Read your contract carefully before signing, preferably seeking legal advice.
You are signing up for a 25-year contract
Some free solar panel companies used to let you buy them out if you came into the cash later. However, with a Shade Greener, there's no option to buy out the contract.
What if the free 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 fairly new business model, and things could change if the Government withdraws the feed-in scheme, so it's impossible to predict all eventualities.
Roof repairs can be tricky
A Shade Greener says it will 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).
Potential buyers may be wary
Bear in mind a leased roof could ring alarm bells for prospective buyers. Richard Webster of solicitors Richard Webster & Co 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."
Crucial tips to save £100s on energy bills
Solar panels are a big move. First ensure you're on the cheapest energy tariff and do the energy-saving basics.
Switch energy provider
Ditch and switch energy provider and you can save over £100s a year. Our Cheap Energy Club checks you're on the cheapest deal and if you're not tells you the best deal. Plus we'll keep monitoring your tariff and the market to ensure you're always on the cheapest deal. To encourage you, there's up to £30 extra if you switch via the club.
It's the same gas, the same electricity, the same safety. All that changes are the customer service and the price you pay. Normally, switch and you risk the provider hiking prices, or giving you a cheap deal for 18 months then ramping costs. So every month, without you doing anything, we do a comparison for you, and alert you when it's worth switching again.
Can you switch energy with solar panels?
Yes. You don't have to get your electricity supply and feed-in tariff from the same company. That means solar panel users can switch freely on Cheap Energy Club, just like everyone else. After switching, payments still come from the current feed-in tariff provider, so nothing changes.
If you want to switch to a different company that pays you the feed-in tariff, contact your feed-in provider to see if it's possible. Usually, if you want to get the payments from a different supplier, you'll have to switch energy to that company too. As feed-in payments are fixed and therefore the same across every provider, it may not be necessary.
At application stage, you can't choose a feed-in provider you want, you have to get the feed-in payments from your current energy supplier. A full list of feed-in tariff providers - also called 'licensees' - is on Ofgem's website.
There are more ways to cut energy costs, such as always paying by direct debit, which shaves £100 or up to 8% off your annual bill. For a full list of tips see Cheap Gas and Electricity. If you're on Economy 7, you can slash costs even further by using storage heaters, washing machines and dishwashers through the night. See our Economy 7 guide for full info.
Free insulation and boilers
The big energy providers are giving wads of freebies to people on benefits, from new boilers to insulation. It's because of efficiency obligations to people in certain groups.
New boilers alone typically cost £2,300, so this is a fantastic freebie. Boilers are one of the biggest contributors to your energy bills - the more efficient your boiler, the more heat it produces from each gas unit. Depending on its age, a shiny new efficient one could save you up to £300/year.
Cavity wall and loft insulation can slice up to £300 off energy bills per year. You could qualify if you get tax credits or income-based benefits, such as pension credit or income support. To speedily uncover these crocks of gold, including a rundown of current offers, see the Free Boilers and Insulation guide. Also see Home and Energy Grants for a full list of hidden cash.
Do the energy-saving basics
If you wander round the house in boxers or bra 'n' knickers with radiators on full and windows wide open... STOP IT!
Sensible changes can save you large, from draft excluders to setting washing machines to 30°C, and low-energy light bulbs to notching down the thermostat. Get more energy-saving tips in our energy mythbusting guide.