Solar panels can mean big bucks. Photovoltaic panels generate electricity from the sun, and not only do they cut down on your energy bills, you can get paid for generating energy too.
While the rate you get for generating electricity has been cut, they may still be worth it. This guide takes you through whether solar panels are right for you, how much you can earn and whether free panels are worth it.
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!" True, but it's all about daylight, not sunshine. Panels can still generate some electricity on gloomy days, vital when the weather's as dull as watching Steve Davis watching paint dry.
Before you stick them on your home, understand these key need-to-knows:
There are two types of solar panel
The type we're talking about is photovoltaic solar panels – also known as solar PV – which catch the sun's energy and convert it into electricity that can be used to power household goods and lighting. The other type is solar thermal, which allows you to heat water and can cut down heating bills.
This guide shines a light on solar PV, as that's where you can earn money through generating your own electricity through the 'feed-in tariff', as well as save on your electricity bills. According to the Department of Energy and Climate Change, over half a million British homes have panels installed.
To maximise what your panels can make, you usually need a predominantly south-facing roof. If your roof faces south-west or west you'll still get some benefit, but it may be less effective and you might not get the maximum savings.
While some early or late shading from other buildings or trees is okay, your roof should be unshaded between 10am and 4pm.
An Energy Performance Certificate (EPC) rates a building on its energy efficiency, from A (highly efficient) to G (inefficient). Once you get one, it's valid for 10 years. The amount you get paid for generating electricity depends on your building's rating, and you'll need one to register for feed-in payments.
If you've got a grade D or above, you'll be able to bag the full feed-in payment of 12.92p/kWh, but if your property scores below a D you'll only be eligible for the lower rate, which is less than half at 5.94p/kWh.
The full rate could make you an estimated £515/year (typical rate for a home in Manchester), whereas the lower rate would only bring in around £235/year. So if you're assessed and rated E or lower, it's worth making the advised improvements to reach grade D before you register for the feed-in payments – remember, the feed-in rate is guaranteed for 20 years once you've registered.
The Government has an online tool to help find an accredited assessor.
You can still switch energy supplier
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 supported by a number of suppliers, as it's mandatory for those with over 250,000 customers. Ofgem has a list of all of them on its website. Yet you don't need your energy supplier to be the same as the supplier that pays your feed-in tariff, so you're free to switch around.
While you don't need a summer home in Hawaii to get some juice from solar panels, the further south you are can make a difference when it comes to their effectiveness. Remember, this is about daylight, not hours of sunshine. Northern homes get slightly less, so where you live needs to be factored in.
The Energy Saving Trust estimates that panels in Manchester could earn you and save a combined £635/year on bills, compared with around £720/year in London and £595/year in Edinburgh. See Does buying solar panels add up? below for full analysis.
Some people worry that ugly panels plastered all over their roof could push the price of their house down. However, equally, a more efficient home generating its own energy may be more attractive to buyers.
Solar panels are a fairly hefty investment and might not be suited to those planning to move in the next few years – certainly you shouldn't expect a big upfront investment to be immediately reflected by a jump in your home's value.
Be wary that being tied in to a contract that remains with the property once you've left could be unattractive to buyers, whereas a buyer's ability to benefit from the feed-in tariff once they move in might make your house more appealing.
Think about how visible the panels are and ask local estate agents for their experiences before installation. When we asked the National Association of Estate Agents for an overview, it told us:
Solar panels can indeed affect the value of a property, in both a positive and negative way. If the panels are new technology, show significant savings and are aesthetically acceptable, they may very well boost value. However, in some instances, the agreement which ties respective owners into old technology is onerous and could well affect the value of a property in a negative way.
You don't generally need planning permission for solar systems. The big exceptions are if your property has a flat roof, is listed or in a conservation area. You might need to get approval from your council's building control team, so check with your local authority. If you get a free system, your provider will normally do this for you – but always check.
In England and Wales, the Government's Planning Portal says that panels are likely to be considered as "permitted development".
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 – a gadget which is a key part of the mechanism – within about 20 years (£800ish).
Of course, though, things can go wrong. Check the installer warranty you get covers the 20 years you'll be getting the feed-in tariff. If the panels are damaged by something unexpected, like a storm, you may also be covered by buildings insurance – check with your insurer before you have them installed and bear in mind you may need to increase the sum insured.
Once you've got your panels installed and they're up and running, make sure you make the most of them by using them at the right time.
For example, in the winter, when there's less sunlight and you'll generate 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.
Does buying solar panels add up?
Buying solar panels is all about the payback time. Effectively, you're shelling out now and hoping to recoup the cost, and more, later down the line. The key is to think about how long it'll take to recoup the cost and when you can expect to start making money. Thinking caps on, here comes the maths bit...
Install solar panels and you can benefit in two ways:
Electricity savings. First and foremost, you can use the electricity your panels generate, thus reducing your electricity bills. The Energy Saving Trust estimates a typical 4kWp system can knock £120ish off a family's bills each year (this is based on solar panels in Manchester and will vary depending on how far north you are).
Savings depend on the system size, electricity use, whether you're at home during the day to use the energy you're producing and other factors. If you can use more energy during the day when the panels are generating, you'll save even more as you'll need less electricity from the grid.
The 'feed-in tariff'. You also get paid a 'feed-in' tariff for ALL the energy you generate – even if you use it, in which case you get the double benefit of savings too.
There are two elements to this – a 'generation tariff', which is payment for energy you produce, and an 'export tariff', for energy you don't use which is sent back to the grid (unless you have an export meter, it's normally assumed there's a 50:50 split). The rates for both depend on when your panels are installed and registered, but after that they're guaranteed for 20 years, and are index-linked, so they rise with inflation. The feed-in tariff is income tax-free and is paid quarterly by energy suppliers.
The Energy Saving Trust estimates that for panels installed and registered at a typical home in Manchester between 1 July 2015 and 30 September 2015, you could typically earn £515/year under the current feed-in tariff. That combines the rate for each unit you generate (12.92p/kWh) with the rate for what you send back to the grid (4.85p/kWh).
The feed-in tariff could change again, so go quick. As of 1 July, the feed-in tariff is being cut. But the rate could change again – the earliest it could happen is 1 October. While it's impossible to say for sure what'll happen then, given the trend in recent years has been downwards, you may want to go quickly.
(The feed-in tariff covers England, Scotland and Wales, but not Northern Ireland.) Read more about how payment works in Northern Ireland
While the feed-in tariff isn't available in Northern Ireland, you can still get panels and benefit. It's a bit more complicated than the feed-in tariff, but the Northern Ireland Renewables Obligation (NIRO) is a scheme that allows you to export back to the grid and be paid for it. According to the Energy Saving Trust, if you're eligible for the scheme you could make around £795/year, including payments and bill savings.
Details on NIRO and the application process can be found on Ofgem's website. The NI Government has announced plans to reduce rates from 1 October, so move quickly to bag the current rates if you're thinking of getting panels.
The Government may have slashed payments for generating electricity in recent years, but the price of a typical solar panel system, including installation, is now around £5,000-£8,000. In the scheme's early days, a system this size used to cost £10,000-£12,000.
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. 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 the DECC Green Deal website.
If you're thinking about installing solar panels, you're going to need to do the sums first.
You can start by doing back-of-the-envelope calculations based on typical prices for your area, though you'll need more precise estimates before going ahead with installation. We've sketched out the key figures you need to work out below (based on estimates from the Energy Saving Trust for a typical house in Manchester).
Of course, what you can earn can vary hugely depending on lots of factors – for example, how many panels you can fit on your roof and how much of the energy you generate you're able to use. The table below shows the Energy Saving Trust's estimates for a typical house in four locations – plug your details into its solar calculator for a more precise estimate.
How much can you earn and save?
|Income generator||Savings and/or earnings per year|
|Generation tariff (1)||£495||£460||£435||£410|
|Export tariff (2)||£90||£85||£80||£75|
|Electricity bill savings||£135||£125||£120||£110|
|Source: Energy Saving Trust. Correct from 1 July 2015. Payment scheme covers England, Scotland and Wales, but not Northern Ireland. (1) Amount paid for all energy produced. (2) Extra amount paid for energy exported back to the grid.|
Getting solar panels is a lofty investment, but over 20 years the feed-in payments and electricity savings could add up to roughly £12,700 (based on a home in Manchester), with you likely to break even in about 10 years. Here's how the figures stack up.
How much you can make over 20 years on a £6,500 system? (Manchester)
|Time||Total savings and earnings||Profit/loss|
|Source: Energy Saving Trust. Warning: these are estimates and assume panels don't develop faults. An £800ish inverter (which converts electricity into power for the home), is sometimes needed within 20 years. Based on a home in Manchester.|
According to the Energy Saving Trust's calculator, for a typical London house it'll take around nine years to break even, whereas in Edinburgh it's 11 years, though of course it could be quicker or longer based on your circumstances.
Back in the day, solar panels were a no-brainer. When the Government launched the feed-in scheme, people typically got a gobsmacking £1,100+ per year in payments. That cash was guaranteed for 25 years back then too, so that was at least £27,500 back – not taking into account electricity savings.
But while the feed-in tariff has dropped, the cost of panels has fallen too. A typical system now costs around £5,000-£8,000, rather than £10,000-£12,000. So you'll need to weigh up the pros and cons and look at the likely return for your home.
How to install solar panels
If you think solar panels are for you, here's how the installation process works...
Step 1: Find an installer
Call local installers to get the best price. Both the system and the installer should meet the standards of the Microgeneration Certification Scheme (MCS). Get at least three quotes before deciding.
As we're MoneySavers, not electricians, picking installers isn't our speciality. You can see the firms shortlisted for the British Renewable Energy Awards 2015, run by the Renewable Energy Association, or ask friends and colleagues for local recommendations.
As always, get at least three quotes, 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.
What else should I watch out for?
Make sure the installer is a member of the Renewable Energy Consumer Code (RECC). Plus you've 14 days to cancel after you sign up to buy.
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, so be vigilant.
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.
Step 2: Get them installed
Installation typically takes place up to four weeks after you've booked with an installer. Bear this timescale in mind when planning what feed-in tariff you'll be able to register for.
Fitting the panels themselves is a one- or two-day job.
Step 3: Register for feed-in payments
Once the panels are in, the installer will send you an MCS certificate. You can then register for feed-in payments with a licenced energy supplier.
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. If you send them by post, it's best to send them recorded delivery.
Pay with a credit card for extra safety
Pay by credit card for something over £100 and Section 75 laws supercharge your consumer rights. Unlike with 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.
Will solar panels make my meter clock backwards?
After having panels installed, you might find that your electricity meter starts running backwards when the energy you haven't used is exported back to the grid. This is because some analogue meters don't have backstop built in to stop them winding the wrong way.
If you notice this happening, the best thing to do is to get in touch with your energy supplier so it can exchange the meter for one which is suitable. For more information, see this Which? guide to meters clocking backwards.
Some companies offer to fit panels free, but crucially you won't get what's usually the biggest benefit of solar panels – the feed-in tariff. With free panels, the company that installs them gets to keep this. You do, however, get the benefit of saving money on your energy bills, and the firms also maintain the panels and pay for insurance.
Bear in mind you may not be able to buy out your contract, so once you've got the panels, the house is stuck with them – particularly worth bearing in mind if you're likely to move and are worried about how your home's value may be affected.
Before the payments to generate electricity were cut, there were a lot of free solar panel companies. Now many have pulled out, and it can be harder for some to get free panels. We've listed the main remaining free solar panel provider below.
Free solar panels for homeowners across much of England
A Shade Greener* has fitted free panels to over 55,000 homes to date. Panels are fitted free under the government's FiT Scheme, which launched in 2010 as a way to encourage people to use more renewable energy.
Who is eligible? A Shade Greener covers much of England – you can see a map of the areas it covers (excludes Scotland, Northern Ireland and most of Wales). It doesn't routinely cover inner London, the South East or Cornwall, though if you live there it advises you apply anyway to see if you qualify.
You need to own your home, or get the permission of the homeowner if you rent. Your roof must usually be around 24 square metres, facing due south, or within 55 degrees of south. Maintenance is included and A Shade Greener pays for the insurance. The company also says it will fix your roof in the event it is damaged by the panels.
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 says it has never had an insurance claim. But once you sign up, you'll need to agree to a 25-year lease. You can't buy the panels, but after 25 years, they are yours to do what you like with. Or you can ask A Shade Greener to remove them, which they'll do free of charge.
Can you buy the contract out? The panels and the 25-year agreement for them stay with the property – there's no buyout clause. It doesn't affect mortgages or re-mortgages, though – mortgage providers can terminate the lease at any time, thanks to a break clause in the agreement.
How much can you save? According to A Shade Greener, its customers often save much more on their bills than the £135 the Energy Saving Trust says is typical for solar panels in an average household.
The Energy Saving Trust bases its estimate on users consuming 25% of the energy they generate. A Shade Greener says its users consume a higher proportion and claims they save an average of 37% a year on their electricity bills, with a quarter saving as much as 50%. However, these figures are from research carried out in 2011 – A Shade Greener wasn't able to provide more recent figures.
How does the company make money? As with other companies offering free panels, A Shade Greener gets to keep the feed-in tariff. It also says the business has up to £500 million in funding from pension companies and investors and is financially in good shape. It has fitted around 55,000 systems in total and is currently making around 400 installations each week.
A new type of free solar is emerging
Some firms are how starting to offer free solar panels under a new model. There's still no upfront cost, but not only does the company get to keep the feed-in tariff, it also charges you for the energy you use that is produced by your panels (albeit at a lower rate, so you can hopefully save on bills).
One firm that does this is SunEdison. It says you can save up to 15% on energy bills, as the amount it charges for the electricity generated is cheaper than buying from the grid – so the more energy you use in daylight hours, the more you can save.
However, as it's a 20-year agreement, if you move house the buyer will either have to take the agreement on or you'll have to pay to have the panels taken off the roof.
This is a fairly new scheme, and we've had little feedback on it as yet – let us know what you think in the forum.
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 20+ 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".
Other 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.
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.
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 your old boiler's age, a shiny new efficient one could save you up to £300/year.
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 the 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.