How much do solar panels cost and are they worth it?

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  • This guide aims to answer your questions about the cost of solar panels. And crucially, if it’s worth it to you. Does spending on every new kit mean savings in the long run? And when can I get my money back?

    Everyone’s situation is different, but this guide aims to provide a clear example of whether your particular situation can benefit from investing in solar panels for your home.

    Obviously, solar is a more environmentally friendly option. And in the future, as electric vehicles put more strain on the grid, their value will continue to rise. But they will pay first, so is it worth the investment? Or is it just too much hassle because returns simply aren’t enough?

    Solar panels mounted on the roof of a new family home with tile

    Image Credit: Getty Images/iStockphoto

    How much does it cost to buy and install a solar panel?

    If you’ve considered solar panels before and are visiting this guide now, be aware that prices are now cheaper than in the past. In fact, the price has dropped by 70% since its massive launch in 2010. You are referring to the initial cost of panels and installation.

    Previously, there were government subsidies that provided free solar panels to businesses. This has since ended mostly with only a few left. The idea is that they installed and supplied the panels and paid for the electricity. They took the profit of the excess power sold back to the grid, usually on a 20-year contract.

    The difference is the following government incentives: Smart Export Assurance (SEG), that the cost can be covered upfront. This means that the energy produced can be sold back to the grid for profit. As mentioned, this is now more possible than ever, since panels are cheaper. And you can stand up for money in the future.

    • It would have cost you £15,000 in 2010, but now you only get £60 back. It’s a big difference that many people couldn’t afford before to get solar panel ownership.
    • Consider that, on average, a £5,940 setup could save you £339 per year. But let’s be more specific.

    How much does a panel cost?

    You can buy the panel itself. Although this is not recommended, it does mean that you have the option to install it yourself. You can also get an expert to do the job with the panels you have purchased.

    Let’s take a look at the LG NeON R for its premium panel. This panel comes with a 25-year warranty and, thanks to its 20% efficiency, produces almost 4% more power than the competition, producing up to 440W. Another factor to check is what the efficiency will be after a 25-year warranty. 85% or more is at least what you want. For LG, 90% is impressive.

    • An average household of three in the UK needs to produce 3,000 kWh per year. This means you will need about 10 panels, which will require about 20 square meters of roof space.
    • The LG model costs £318 per panel, which means 10 panels will cost £3,180 including installation.

    How much does a solar panel installation cost?

    Most companies that install solar panels don’t advertise their prices on their statements. You just need to get the final price including panels and installation. That’s why it’s important to know what panel you’re going to supply to ensure they get the panel they want. Ideally, you want a 25-year warranty and at least 20% power efficiency.

    Based on the LG solar panels above, priced in 10 pieces, the average quote for these or similar products is £5,520. This means an installation cost of £2,340 is required. But with other components, wiring and installation materials at that price, the labor cost will actually be under the £2,000 mark.

    Three Case Studies of Solar Panel System Costs

    • If you want to start small and have a minimal installation of a 1kW system that requires about 8 square meters of roof space, it will cost you around £1,840. That amount of electricity is minimal and could cover the bills of a single person.
    • Moving in pairs with a 2kW system would require about 12 square meters of roof space and a system that would cost £3,680. Again, this can cover your electricity bill, but it doesn’t produce too much to pay for your SEG.
    • Go to the larger three-bed family home. It’s closer to the 4kW system you want if you’re going to cover your bills and make money from SEG. It requires 20 square meters of roof space and costs around £6,000.

    Where you install this will most likely not change the price significantly, but depending on the amount of sun you receive, it can save your bills and affect the cost of selling electricity back to the grid. This varies widely, so it’s best to get a local free estimate to explore the potential in your area.

    roof with solar panels and chimney

    Image Credit: Getty Images/Westend61

    How much can I get paid for electricity generated by solar panels?

    (Smart Export Guarantee) Government-subsidized SEG tariffs mean you can make a lot of money by selling energy back to the grid. When you factor in the money you’re saving on your electricity bill, it can be an amount you’ll have to pay for a panel install quickly.

    The price a supplier pays for power varies from company to company. In most cases, you will need to install a battery system, so you need to consider the cost in advance. The best option at the time of publication is social energy, which provides 20p per kilowatt-hour (limited to 1,000 kWh). Then Tesla is 12p/kWh and EDF Energy goes down to 1.5p, but many companies offer around 5p.

    According to the Energy Saving Trust, the average household can earn between £65 and £125 per year on a rate as low as 3.99p per kWh.

    Another factor to consider is the value you can add to your asset. Eco Experts’ Josh Jackman told Ideal Home: A recent study found that a home with solar panels typically sells for 4.1% more than a home without panels.

    What can affect how much you get paid for solar energy?

    The main factor that affects what you receive is the amount of energy you produce. Then you pay for it. But of course, the amount of energy you produce to sell is not the same as the energy produced by solar panels. Usage should also be considered.

    This is important because what you use can determine the balance you can resell. So if you use most of your power during a solar day, you can produce more power than at night, depending on whether you have battery storage or not. Otherwise, power is lost and the grid is billed as needed during the dark hours when it is not generating power.

    As mentioned above, the company that sells is also important, as payment rates vary widely, from 1.5p/kWh to 20p/kWh.

    Of course, your initial spending also affects all of this. If you spend more and get the maximum number of solar panels, you will be able to sell more because you will be generating much more power than you need. However, it will still take time to repay the initial cost of solar panels, as the average price for electricity is higher than what they paid to buy it back.

    How long will it take to break even given the cost of my solar panels?

    Even taking into account the cost of solar panels and the cost of installing them, it can take years. With a typical 3.5 kWh system that costs around £4,800 to be fully installed and ready to use, it could take 9 to 21 years to pay back your principal.

    This depends on a number of factors including where you live, how much electricity you use, and when you use it. Then, of course, under the SEG, you get paid for the energy you resell.

    • If you live in London, you can save up to £440 on your electricity bill and export up to £125 on SEG. A system fee of £4,800 can be repaid within 9 years.
    • Moving further north to Stirling may be different. From there you can save up to £412 on your bill and earn up to £95 on SEG. Payable within 10 years based on the same cost of installing solar panels.

    These two examples use a favorable example with the biggest bill savings and the highest SEG payments.

    Can I get help with solar panel costs?

    The government at one time offered a variety of plans to pay for solar panels in part or in full. Because panel prices have dropped so much, their latest plan, SEG, returns money on sales of electricity, but doesn’t cover the initial cost of solar panels.

    However, there is an opportunity to use the Green Home Grant until March 2022. This provides up to 2/3 of the cost of installing solar panels in your home (up to £5,000). For low-income households, the amount can be up to £10,000 and in some cases cover the entire cost. However, this has been phased out, so if you are reading this now, this is not something you should target.

    The only other option is to get a personal loan to pay the initial cost. Because solar panels save on electricity bills and make money from offering SEG, you can pay off those loans over the years. However, keep in mind that this is a long-term money-making solution, so a loan with an interest rate may take longer to cover your expenses.

    Another option is to install it yourself to save on upfront costs. However, Eco Experts’ Josh Jackman does not recommend this. ‘Our calculations show you’ll pay around £3,000 more for the basics if you do it yourself,’ he says. ‘Also, assuming you are not personally an approved Microgeneration Certification Scheme installer, you will not be eligible for Smart Export Guarantee payments.’

    Country house with solar panels on the roof, terrace and swimming pool

    Image Credit: Getty Images/iStockphoto

    3 Reasons Why Solar Panels Are Valuable

    1. Become an Eco Warrior

    We are helping the environment by generating electricity from sustainable sources. This means long-term benefits worldwide.

    2. You don’t pay bills

    You will no longer have to pay a penny for your electricity bill, so factor it into your price right away. Given energy price hikes, this could become even more important in the coming weeks and months.

    3. Make money

    With SEG, you can make money on the excess electricity generated by solar panels in the short term. But as more power becomes available, prices rise, and electric vehicles expand rapidly, they could make more money in the near future.

    3 Reasons Solar Panels Are Not Right for You

    1. I need cash

    The upfront costs are still modest, and even if you offset your bills and make money selling electricity, it will take at least close to 10 years to pay off.

    2. You can’t stand maintenance

    The fact that solar panels need to be cleaned and maintained is unavoidable. Additional fees may apply if problems arise or you have to pay a professional to check your settings.

    3. You may not need sunlight.

    In any case, if you use very little power, the cost of the panels and installation may not be worth what you pay your bill.

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