Solar panels: are they worth the investment?

With the cost of living rising and energy bills rising dramatically from this month, households across the UK will be looking for ways to reduce their monthly outgoings. Savings can be made with a few short-term changes around the house, but many people try to find long-term solutions to lower their electric bills.

As UK energy prices “soar” homeowners are “looking to the skies to try to ease the pressure on their budgets”, Shane Hickey told The Observer. One “glimmer of hope” is to install solar panels.

According to a government report in 2020, more than 970,000 UK homes have solar panels – and the numbers are “rising rapidly”, Amy Cutmore told Ideal Home. “You have probably noticed an increasing number of solar panels popping up on rooftops all over the UK. And it looks like this trend is only going to continue.

Demand is growing as more people work from home, but “does the installation expenses pay off?” asked Hickey. Here we take a look at what the experts are saying about installing and investing in solar panels in 2022.

What are the advantages of solar panels?

Solar panels take advantage of “one of nature’s most powerful and free resources” – the energy produced by the sun, Attila Tamas Vekony told GreenMatch.co.uk. They use semiconductor technology to convert energy from sunlight into electricity that can power your home. There are two main types: photovoltaic panels, which produce electricity, and solar thermal panels, which are used for heating purposes.

The main advantages of solar panels are:

  • Electricity all year round
  • Reduce your carbon footprint
  • Increase the market value of your property
  • Earn money from the excess energy you generate

Lowering electricity bills is another key benefit of solar panels, the Energy Saving Trust said. “Sunlight is free, so once you’ve paid for the initial installation, your electricity costs will be reduced.”

How much does the installation of solar panels cost?

As more and more people “choose to go sustainable,” solar panels have “grown in popularity,” said Josh Jackman on The Eco Experts. Installations have increased by 45% over the past three years and “a growing number of households are seeing the value of solar power and are taking advantage of it.” The cost of solar panels has fallen 88% since 2010, according to government data, and “just at the right time”.

However, installing solar panels “always comes at a cost,” Hickey told The Observer. Average installation costs are almost £5,000 and ‘rising labor bills and shortages of PV panels mean prices are rising’. The average price for installing a 3.5 kilowatt-peak (kWp) system is £4,800 including labour. “It tends to be around 12 panels.” For a 3.5 kWp system, you need space for 15 to 20 m² of panels.

A 4.2kWp home solar PV system costs around £6,500, the Energy Saving Trust said. Rooftop panels are the cheapest option, while tiles are the most expensive for the equivalent system. “Costs can vary between installers and products, so we recommend getting quotes from at least three installers.”

In the Spring Statement, Rishi Sunak announced that households will now pay 0% VAT on energy efficient equipment such as solar panels and heat pumps. The Chancellor said it could cut the cost of installing solar panels by up to £1,000.

How much money can solar panels save you?

The “mathematics” of solar panels are “getting better”, although they are “not as lucrative as they once were”, Andrew Capstick told MoneySavingExpert. The price of installing solar panels has ‘come down over the years’, but with skyrocketing energy bills, ‘generating solar power and using it yourself saves a lot of money. more important than before”.

The biggest gain comes from “using what you generate” – you could save up to £440 a year on your bills, Capstick added. Based on Energy Saving Trust estimates – “to which we have added an increase, to account for soaring energy bills” – a typical household with a 3.5 kWp system can reduce their bills by between 170 and £440 per year.

Additionally, with incentives like the Smart Export Guarantee (SEG), “you can even earn money for excess energy exported back to the grid,” Tamas Vekony told GreenMatch.co.uk.

The SEG, launched on January 1, 2020, is a government-backed initiative. According to the energy regulator Ofgem, the SEG obliges certain electricity suppliers (SEG licensees) to pay small generators (SEG generators) for low-carbon electricity, which they re-export to the national grid, at provided certain criteria are met.

The Verdict: Are Solar Panels Worth It?

There are a number of eco-friendly ways to cut running costs and add value to your home – but solar panels are an “exception”, says James Forrester of real estate and lettings agent Barrows and Forrester . Although they are one of the most common ways to improve a home’s carbon footprint, they seem to “add very little” in terms of added value.

“The installation is expensive, around £5,875, while the added value is estimated at £1,916, a loss of -£3,959. However, there are obvious savings to be had from lower utility bills, so if the homeowner plans to stay in the house for many years to come, solar panels can still offer good savings,” said the agent.

“Yes,” solar panels “are worth it,” Jackman said on The Eco Experts. The profitability of your solar panels “depends on where you are in the UK, as the sun shines more in different areas”. It makes sense that regions have different break-even points. For example, it takes 10.21 years to break even in East Anglia, compared to 14.84 years in Northern Scotland.

Although it requires a “significant upfront amount”, Tamas Vekony told GreenMatch.co.uk, investing in solar power can have a “great return over the long term”.