Solar panels can mean big bucks. They reduce your electricity bill and pay you for generating power. While the 'feed-in tariff' you get for generating electricity has been cut, they can still be worth it, plus you can install them for free.
This guide takes you through whether solar panels are right for you, how much you can earn, if free panels are worth it and how to 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.
1Want solar panels? How to install
Install solar panels and you get paid a 'feed-in tariff' for the energy produced, even if you use it yourself. The tariff you get depends on when your panels are fully installed and registered. Once you've done that, your rate's guaranteed for 20 years.
Every now and then, the Government lowers this tariff, and the last cut was on 1 April 2014. Full feed-in cuts info
The amount depends on your system's size, but the Energy Saving Trust estimates a typical payment of £630 a year under the current feed-in tariff, rising with inflation. It was £650 but this dropped to £630 on Tue 1 Apr. If you registered the panels before 1 April this year, you'll still get the higher feed-in tariff.
The feed-in tariff covers England, Scotland and Wales, but not Northern Ireland. (See Buy solar panels for full analysis on if it's right for you.)
Here's how the installment process works...
Step 1: Find an installer. Call local installers to get the best price. Both the system and the installer should be members of the Microgeneration Certification Scheme (MCS). Get at least three quotes before deciding.
Step 2: Get them installed. Installation typically takes one or two days, roughly two to four weeks after booking, depending on the installer. Double-check that they will be able to install the panels in time for the deadline.
Step 3: Register for feed-in payments. Once panels are in, the installer will send you an MCS certificate. You then register for feed-in payments with your energy supplier to get the current feed-in payments.
Send a completed application form with the MCS certificate, Energy Performance certificate, proof of purchase and ID. Sometimes you can ask your installer to email these documents to you, so you can forward them to the supplier. They can also be sent by post.
Call your supplier to check it's got the application. Write down the date, time and who you spoke to.
2You 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.
3You save on electricity bills
The Energy Saving Trust estimates a typical 4kWp system can knock £125 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.
4Panel prices have dropped
The Government may have slashed payments for generating electricity, but the price of a typical (4kWp) solar panel system, including installation, has dropped to about £7,000 (£6,000-£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 our full analysis - should I 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. In return, it keeps the feed-in tariff cash. You just get the £125ish electricity savings (though energy prices are predicted to rise).
It's tough to meet the eligibility creteria, though, and these deals are getting rarer now the feed-in tariff is being cut. To check 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 a grade D Energy Performance Certificate 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.
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, E.on manages 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.
The key to all this is that with the current feed-in tariff:
A typical system costs £7,000, but over 20 years, the feed-in payments and electricity savings could add up to roughly £16,000.
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 £630 a year is typical (at current feed-in rates), rising with inflation. Payments are now only locked in for 20 years, paying out £13,000 in total.
At the same time, solar panel prices have dropped. A typical system now costs around £7,000 rather than £10,000.
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. You should do your sums 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 buyers may be attracted by 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 gain or call it on 0300 123 1234 for more advice.
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 on the current feed-in tariff would be just £340/year.
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.)
If you 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).
If you installled and applied for payments on or after Tue 1 Apr this year, the feed-in tariff will be £540/year on a typical 4kWp system.
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. Most energy firms don't 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. Payments for panels installed before and after Tue 1 Apr are shown:
The second table shows estimates of how much you could make over 20 years if you install a £7,000, 4kWp system. It also shows when you start making actual gains from paying upfront.
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.
Can the Green Deal help pay for solar panels?
The Government's Green Deal is a way of paying for many home energy-efficiency measures from the 'savings' you'll make on energy bills. It can be used for around 45 home improvements, one of which is solar panels.
The amount you can finance through Green Deal will depend on how much a home is expected to save on its electricity bill. If this is not enough to pay for the full cost, you can still use Green Deal finance to pay for part of the cost. Your Green Deal provider can calculate this.
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 Department of Energy and Climate Change Green Deal website.
Will the feed-in payments definitely last for 20 years?
The Department of Energy and Climate Change has confirmed there will be no retrospective changes to feed-in payments. Previous changes suggest it'll alter 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: Don't be fooled
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 also unearthed poor practice in 2013.
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, but be vigilant.
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 Switching 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 it doesn't.
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.
Can you get free solar panels?
It's possible to find companies that offer to fit panels worth £7,000 for free. However, you don't get paid - it keeps the lucrative feed-in tariff. So if you have £7,000 knocking about, you may be better off buying panels yourself.
With free panels, you still get the £125ish 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 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, while they only install in certain areas anyway.
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. It also insures you, so repairs won't cost you a penny. A Shade Greener also says it has never had an insurance claim.
But once you sign up, you can never buy the panels - A Shade Greener will always own them.
How does the company still make money?
A Shade Greener says the business is funded up to £380 million by pension companies and investors, is financially in good shape and is still making around 350 installations each week. The company has fitted around 31,000 systems in total, and it's still receiving the high Government feed-in payments for those homes.
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". It's a "be prepared that if you do it, it may not be plain sailing".
Read these key free solar panel points
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 look 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 contract for two decades
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 the 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 the solar panels, free solar panel companies sometimes make you cover their feed-in payments in the meantime, so always check.
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 £100s each 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 usually up to £30 extra if you switch gas and electricity 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 - or '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 they have to help certain groups save energy.
New boilers alone typically cost £2,300, so this is a fantastic freebie. A boiler is a big contributor to your energy bill - so 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. (These figures may be revised in March.)
Wall and top-up loft insulation can slice up to £160 off energy bills per year. You could qualify if you get tax credits or income-based benefits, such as pension credit or income support.
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.