We all know that Solar Energy is a fantastic alternative to fossil fuels and is becoming more popular as the UK moves toward its Net Zero goal.
In fact, at one point in May of 2022, 72.8 percent of the grid’s power came from renewable sources – though it averages to about 40% – 4% of which is Solar.
That’s the utility, or grid, produced solar power – domestic solar is a different issue.
But the question we need to answer is: Will I get a return on the initial cost?
What Is the Return on Investment on a Residential Solar Panel System?
We could just throw some numbers around and tell you that Solar Fast customers enjoy, on average, a 387% return on their investment.
Obviously, some people get more, and some get less.
How is that return on investment worked out? And are we trying to manipulate the data to make ourselves look good?
Well, to answer that latter question ‘No, this is real data, from actual customers.
As for how we work it out: We take the initial cost of the system, and the ongoing cost of replacing batteries/inverters, and compare it with the projected savings over the next 25 – 30 years.
After your initial investment, domestic solar systems are always going to give you annual savings on your bills and can even generate a little income.
Saving money on your electricity bills.
Solar panels save you money on your electricity bills, that’s a fact.
It doesn’t matter what your system size is, even if you just had one panel solar array it would produce some electricity and therefore reduce your bill a bit.
Of course, having one solar panel would be good in camper van, but not average domestic system would have 12 panels.
A 12-panel system would produce an average of 10,800 – 24,000 kWh per year – with a normal house consuming around 2,700 kW every 12 months – for at least 25 years.
Of course, that’s over the full year so most of that generation will be between April and October – which is why we recommend adding batteries for those darker months.
We’ve seen energy prices fluctuating a lot over the last few years, but we can also see that the overall trend will be ‘up’ for everyone’s energy bills.
Fossil fuel scarcity, fluctuating markets and international tension all add to the increasing price of energy.
In fact, over the 25 – 30-year lifespan of your solar energy system it’s predicted the cost of grid electricity will rise to around 45p per kWh.
With the current cost of electricity, which is due to increase again in October, we can confidently predict that a Solar Fast Energy System can save you up to 70% on your electricity bills.
As the price of energy increases, your solar payback period will get shorter.
Making money from exports
As well as saving money on your bills, the average PV system can also add extra income to the home.
The SEG, or Smart Export Guarantee, scheme puts a legal obligation on the energy suppliers to buy back any excess electricity domestic generators produce.
Before SEGs there was FiT – this system was fantastic for producers as the energy companies had to pay you for 50% of everything you produced.
Introduced in 2020, SEGs allow the energy companies to set their own prices for the energy they buy from you – so those prices vary widely.
Currently (June 2024) the export rate for electricity ranges from 27p on Intelligent Octopus Flux to E Energy’s flat 1p.
Does a solar energy system increase the value of your home?
Now, this is a contentious subject, as the price of your home can be affected by a huge number of factors.
However, one thing that is undeniable is that the EPC rating of your home is very instrumental to the salability and resale value of the property.
Anything that improves the EPC rating will improve the price of your home – from isolation and double glazing to heat pumps and, yes, a solar energy system – strictly speaking any kind of renewable energy.
A 4KW system adds up to 15 points to your EPC rating, so if you started at a low E it could bring you up to a low D. Even the smallest systems we provide can add 4 or 5 points to your rating.
EPC ratings are scored like this:
| EPC Rating | SAP Points | EPC Rating Colour |
|---|---|---|
| A | 92-100 | Green |
| B | 81-91 | Green |
| C | 69-80 | Green |
| D | 55-68 | Yellow |
| E | 39-54 | Amber |
| F | 21-38 | Orange |
| G | 1-20 | Red |
The average household rating in the UK is currently D (60 SAP Points), which denotes an energy deficit within the home. Consequently, new building regulations state that homes should be constructed to have a rating of at least C.
If your home is currently a D, a 4K system could take you into a C category and the price of your home would increase.
Various studies have come up with numbers ranging from 4% to 25% – Admiral money came up with the 25% figure.
The truth is, the price of your home is affected by everything from schools and location to the architecture and interior design, so it’s hard to put a figure on what solar would bring to the party.
Also, future electricity prices are set to rise, so a home that’s cheaper to run will always be more attractive. Solar is a very saleable home improvement whichever way you look at it.
We talk more about whether solar improves your home value over here.
What’s the Payback Period on Solar Energy Systems?
Between 8 and 11 years. That’s what we tend to see a payback time of. The most accurate way we can estimate the ‘break-even point’ at Solar Fast is to look at our own customers so that’s where our data comes from.
What does payback time depend on?
Payback time on solar energy depends on many factors:
- consumption
- size of system
- yield of system
- solar panel installation costs
- even the fluctuating price of energy.
That may sound a bit longer than you expected, but we really aren’t used to having ‘payback’ time on what is, essentially, a home improvement.
We never put payback time on double glazing, or a water feature in the garden, because they don’t save money
The fact that solar panels pay for themselves, in most cases, is a massive bonus.
Is it worth investing in solar panels?
If your home is suitable for a Solar Energy System, it’s absolutely worth investing in one. Installing solar panels will save you money on your electricity bills, earn you cash from electricity generated and even increase the value of your home.
What is the payback time for solar panels?
Payback time on Solar Energy Systems varies from installation to installation – but, here in the UK, the average solar payback period is between 8 and 11 years.
That is based on saving on your energy bills and selling back to the grid.
What is the return on investment for solar panels UK?
While we can’t give you a national average, as we don’t have the data for every installation in the country, we can tell you Solar Fast customers get an average of 378% ROI on their Solar Energy Systems.
Not a bad return for a long-term investment.
How much money can I make from solar panels?
Once again, this is a difficult question to answer as everyone’s installations are different, as is their energy use.
If you had a 4k system and sold everything you generate you could earn a fortune – but we don’t think that’s the way to get the best out of your system.
You’ll never be able to sell electricity back to the Energy Supplier for more money than they sell it to you. Which means you’ll ‘earn’ more if you use the energy you generate.
Ready to choose the solar way? We install solar panels all over mainland UK, including the north, south and midlands. Here are just a few locations we install in…
