Solar panels

Solar panels – are they worth it?

How much can you really save?

As well as saving you money on you energy bills, solar panels can also earn you cash. Under a new incentive, suppliers now pay you for any electricity you pump back in the energy grid. But do the sums add up? 

This guide doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you do so at your own risk.

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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 paint dry.

But before you stick them on your home, understand these need-to-knows:

  1. Solar panel payments have been revamped

    In January 2020, the Government introduced a new scheme to pay households that install solar panels.

    The scheme, known as the smart export guarantee (SEG), pays households for solar energy they 'export'. This is electricity you generate, but don't use yourself, that is then pumped back into the national energy grid.

    The scheme works by requiring certain energy suppliers to offer 'tariffs' that pay a set rate for each kilowatt hour (kWh) of electricity you export. The amount you get varies by supplier, and you're free to shop around to get the best rates.

    The SEG isn't as generous as the previous scheme – known as the feed-in-tariff (FIT) scheme – which closed to new applicants in March 2019. But if you're thinking about installing solar panels, you can still save up to £360/yr, and claw back your investment in 15 years depending on your circumstances – see Can you make your money back.

    • To be eligible to receive payments from energy suppliers through the smart export guarantee, you'll need:
       

      • Solar panels with a capacity of five megawatts or less.

      • Solar panels that are certified by the Microgeneration Certification Scheme (MCS).

      • A meter that can track how much solar electricity you export, and send this automatically to your supplier every half hour.
    • Unfortunately, no. The smart export guarantee is only available on what's 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.

      Solar thermal, which allows you to heat water and can cut down heating bills, isn't covered. However, help is available for these types of solar panels under what's known as the domestic renewable heat incentive scheme.

      This guide shines a light on solar PV, as that's where you can earn money by selling the electricity you don't use back to suppliers, as well as save on your electricity bills. According to the Department for Business, Energy & Industrial Strategy, well over half a million British homes have panels installed.

    • If you already get feed-in-tariff (FIT) payments, don't worry – you still get this. The scheme has only ended for new applicants.

      Feed-in-tariff payments are guaranteed to last at least 20 years from when you signed up.

      Unlike the SEG, households with FIT contracts receive two separate types of payments – one for every kWh of solar energy they generate and another for each unit they export back to the grid.

  2. You need a smart meter to get the smart export guarantee payments

    To get a SEG tariff, you'll need a smart meter that's capable of tracking how much solar electricity you're exporting to the grid.

    This includes what's known as 'SMETS 2' meters – the second-generation of smart meters – and certain 'SMETS 1' meters (the first generation).

    If you're not sure what type of meter your have, you can contact the supplier you're thinking of using for your SEG tariff. It should be able to help you find out what type of meter you have, whether it supports the SEG, or arrange an appointment to get a new meter installed if needed.

    For more on these types of meter, see our Smart Meters guide.

  3. A south-facing roof will work best

    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 OK, your roof should be unshaded between 10am and 4pm.

  4. You can still switch energy supplier

    If you have solar panels, don't think this locks you into your energy provider so you can't get cheaper bills – you can join the MSE Cheap Energy Club to stick on permanently low prices.

    Your energy supplier doesn't need to be the same as the supplier that pays for your solar-generated energy, so you're free to switch.

    What's more, the smart export guarantee is supported by a number of suppliers, as it's mandatory for those with over 150,000 customers. Ofgem has a list of all of them on its website.

    • If you get FIT payments, you're also free to switch your energy supplier. Like the smart export guarantee, your FIT supplier doesn't need to be the same as your energy supplier.

      You are also free to change your FIT supplier if you want, though the rates are set by the regulator and depend on when you joined the scheme, so you'll get the same amount regardless of who you're with.

  5. The further south you live, the more you can make

    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 save you between £95 and £230 each year on your electricity bills, compared with around £100-£240 in London and £90-£220 a year in Stirling. See Does buying solar panels add up? below for full analysis.

  6. Panels could push your house's value up or down

    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.

    When we asked NAEA Propertymark (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.

    Quick question

    • If you get solar panels installed and later decide to move home, you can't take the panels, smart export guarantee or feed-in tariff payments with you.

      Solar payments are paid to the owner of the property where the solar panels are installed, so normally when you move, the new owner will receive the payments.

      While you could physically remove the panels from your old home and install them on the new one, you still wouldn't receive payments, as the panels would be considered 'second-hand' and so not eligible for the scheme.

      It's also worth noting solar panel installations are tailored to each home – to fit the roof and be positioned to maximise the level of sunlight they receive – so it's likely they wouldn't perform as well if you installed them on a different home.

  7. You shouldn't need planning permission

    You don't generally need planning permission for solar PV 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.

    In England and Wales, the Government's Planning Portal says that panels are likely to be considered as "permitted development".

  8. Solar panels are generally low maintenance

    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 25 years (£800ish).

    Of course, though, things can go wrong. If so, check the installer warranty you get – it can cover you for up to 20 yeas. 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.

  9. Use your solar panels at the right time and you'll max their value

    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.

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How much do solar panels cost?

The price of a typical solar panel system is about £4,800. In the scheme's early days, a system this size would have cost £10,000-£12,000.

Under the smart export guarantee, there are two main ways to recoup your outlay on solar panels:

  • Electricity savings – for solar panels installed at any time. First and foremost, you can use the electricity your panels generate, thus reducing your electricity bills. The Energy Saving Trust estimates a typical four-kWp system can knock between £90/year and £240/year off your bill (kWp stands for kilowatt peak – how the power produced by panels is measured).

    Savings depend on 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.

  • Smart export guarantee tariffs. This is money paid to households in England, Scotland and Wales for the electricity you generate from solar panels, but DON'T use. This electricity gets exported back to the national grid for use in other homes and businesses.

    What you get depends on the supplier you choose, and ranges from just 1p per kWh to 5.5p per kWh.
  • How much can you save without moving firm? Companies' standard tariffs vs cheapest tariffs

    SUPPLIER
    SEG TARIFF RATE/KWH
    Social Energy  Smarter Export

    5.6p

    Octopus Energy  Outgoing Fixed 5.5p
    E.on
    Fix & Export Exclusive v1 5.5p
    Bulb Export Payments

    5.38p

    Ovo Energy Ovo SEG Tariff 4p
    Scottish Power Smart Export Variable Tariff  4p
    SSE Smart Export Tariff 3.5p
    Shell Energy SEG V1.1 Tariff  3.5p
    Green Network Energy SEG Tariff 3.5p
    British Gas Export & Earn Flex 3.2p
    Utilita Smart Export Guarantee 3p
    Avro Smart Export Tariff 3p
    Utility Warehouse UW Smart Export Guarantee 2p
    EDF Energy
    Export+Earn
    1.5p
    E Energy  E SEG January 2020v.1 1p
    Correct as of November 2020. 

Can you make your money back?

If you're thinking about installing solar panels, you'll need to do the sums first. It's all down to how much electricity you use and when.

Yet these are estimates for a typical house – plug your details into a solar calculator for a more precise estimate.

How much would I save if I had solar panels installed?

  AVERAGE ESTIMATED SAVINGS PER YEAR
TABLE_CELL_STYLE London Aberystwyth
Manchester Stirling
Electricity bill savings (1) £100-£240 £100-£230 £95-£230  £90-£220
Smart export guarantee payment (2) £90-£120 £80-£105 £75-£105 £60-£95
Cost of system £4,800 £4,800 £4,800 £4,800
Years to break even 15-22 16-24 16-24 18-26
Correct at November 2020. Source: Energy Saving Trust. (1) Savings vary depending on how often you're home, how much electricity you're using and when. (2) Based on a rate of 3.99p/kwh.

If you're at home all day, it will take you less time to recoup the outlay – between 15 and 18 years on average, depending on where you live. In comparison, if you're only home during the evenings it's between 22 and 26 years.

This all about how much electricity you're using. If you're home all day, you'll be using a lot more electricity, so the savings will be greater from using solar. You'll make less from the smart export guarantee (SEG), but the electricity bill savings outweigh this.

Conversely, someone at home only in the evenings could make more from the SEG than the savings on their electricity bill. 

However, this is based on the SEG being available for the next 20+ years. While there are no plans to the end the scheme anytime soon, there's also no guarantee the scheme will last this long.

  • The feed-in tariff isn't available in Northern Ireland. There was a similar scheme, but this was closed to new solar panel installations in April 2017, so you can no longer get payments for generating electricity. The Energy Saving Trust still estimates you can get about £85/yr from export payments, and make savings of £105/yr to £260/yr on your bills, depending on how often you're home.

    Depending on the cost of installing solar panels, it may no longer be worth it if you're thinking of getting them.

    If you submitted an application for the scheme before 31 March 2017, you'll still get paid for generating electricity for the full 20 years.

    Details on the Northern Ireland Renewables Obligation can be found on Ofgem's website.

If you already get the feed-in tariff you'll still get the payments

If you already have solar panels and get the feed-in-tariff, the closure of the scheme won't affect you. Depending on when your panels were installed and certified you're guaranteed to get the payments for at least 20 years:

  • 25 years if installed and certified before 31 August 2012
  • 20 years if installed and certified between 1 September 2012 and 31 March 2019
  • In addition to electricity bill savings, anyone who installed their panels before the payment scheme's closure on 31 March 2019 gets what is known as the 'feed-in tariff' and the 'export tariff':

    • The 'feed-in tariff'. This is money from the Government (but paid via an energy supplier) to households in England, Scotland and Wales for ALL the electricity they generate – whether they use it or not. The final rate before the scheme ended was 3.79p/kWh (kilowatt hour).

      The feed-in tariff is income tax-free, guaranteed for 20 years and index-linked, so rises with inflation. The Energy Saving Trust estimates panels registered to someone in a typical home who signed up just before the scheme ended would earn between £130/yr and £165/yr on average under the feed-in tariff, depending on where you live.

    • The export tariff. This is a payment for energy you don't use that is sent back to the grid (unless you have an export meter, it's normally assumed 50% of energy produced is exported). The final rate before the scheme ended was 5.24p/kWh (kilowatt hour).
  • What you get depends on where you live, how much electricity you use, the size of your system and when you signed up to the feed-in tariff. According to figures from the Energy Saving Trust, combined savings and earnings can amount to between £305/yr and £495/yr.

    The rates you get under the feed-in tariff also change every three months – our estimates are based on the final rates for January to March 2019.
     

    How much you can earn & save on average (before March 2019 changes)

    INCOME GENERATOR SAVINGS AND/OR EARNINGS PER YEAR
      London        
    Aberystwyth    Manchester    Stirling          
    Feed-in tariff payment (1) £165 £145 £140 £130
    Export payment (1) £110 £100 £95 £90
    Electricity bill savings (2) £100-£240   £100-£230 £95-£230 £90-£220
    Total per year £375-£515 £345-£475 £330-£465 £310-£440
    Payment scheme covers England, Scotland and Wales, not Northern Ireland. Source: Energy Saving Trust. (1) Based on a four-kWp solar PV system. (2) Savings vary depending on how often you're home, how much electricity you're using and when.

How to install solar panels

If you think solar panels are still for you and want to get them installed, here's our key need-to-knows...

Finding 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 2018, 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.

Installation typically takes place up two to four weeks after you've booked with an installer.

Fitting the panels themselves is a one or two-day job.

  • 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 a 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.

  • Make sure the installer is a member of the Renewable Energy Consumer Code (RECC). You've 14 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.

Registering your panels

Registering your panels is a must – you'll need a MCS certificate, which you'll use to register for SEG payments with a licensed energy supplier.

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 in 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 there's 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.

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 what you're currently paying and shows you the cheapest deals on the market. Plus we'll keep monitoring your tariff and the market to ensure you're always on the cheapest deal.

It's the same gas, the same electricity and the same safety. All that changes is the customer service and the price you pay.

Can you switch energy with solar panels?

Yes. You don't have to get your electricity supply and smart export guarantee 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.

You can even pair solar panels with a renewable energy tariff, if you want to be fully green – see our Cheap Green Energy guide for full info.

There are more ways to cut energy costs, such as always paying by direct debit, which shaves £80 off your annual bill. For a full list of tips, see our Cheap Gas & Electricity guide. 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/yr.

Wall and loft insulation can slice up to £470 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 & Insulation and Home & Energy Grants guides for a full list of hidden cash.

Do the energy-saving basics

Sensible changes can save you large, from draught 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.

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