If you are doing the maths on whether solar panels are worth it for your home, you are in the right place. Most buyers will install solar panels on their roof to save on their electricity bill and eventually get some free power. But even if you sprung for the best solar panels, working out the true ROI can be a daunting task. In this guide, we explore how much solar panels can save you on your energy bills, both immediately and over the long term.
It can take up to 13 years to break even on your investment, though this depends on your location (eg, do you live further south and do you have a south-facing roof), electricity usage, and installation costs. Other factors include whether you used your savings to buy them rather than borrowing and paying interest, and if you use a significant portion of your electricity during daylight hours. Solar panels can also last for 30 years or even more.
How much energy do solar panels generate – and how much can solar panels save you?
How much energy your solar panels generate depends on the size of the system you install, but the table below shows typical outputs for various system sizes.
There are a lot of variables to account for. In the table, we use an address in London, assuming a family of three and typical use (no heat pumps, high daytime usage or electric car charging).
Other assumptions include no shading on the panels, someone at home using electricity for roughly half the day, and an export rate such as Octopus’s 15p per kilowatt hour Outgoing Octopus tariff. Other than a new inverter, no other maintenance costs are assumed, and the use of savings rather than a loan is factored in. The roof is roughly south-east facing.
Much will depend on what price you get for your exported electricity. Tariffs vary widely. If you keep on top of things, however, you should be able to get the 15p per kilowatt hour rate we use below.
Do solar panels work on cloudy days – and does it affect how much they save?
Yes, they do. Modern panels work well throughout most weather, though their efficiency is reduced in overcast conditions. Direct sun will offer the most power. As you can imagine, you get less power at dusk and dawn, and zero at night.
How much can solar panels save on your electricity bill?
|
Household size |
System size in kW |
Array cost |
Electricity cost per year before solar |
Savings (energy used and sold from panels) |
Price after solar |
Pays for itself after |
|
3-bed |
3.6kW |
£4,990 |
2,900 kWh @24.5 pence = £710 |
£540 |
£170 |
9 years |
|
4-bed |
5.4kW |
£5,470 |
2,900 kWh @24.5 pence = £710 |
£780 |
-£70 |
7 years |
|
5-bed+ |
9.9kW |
£7,390 |
2,900 kWh @24.5 pence = £710 |
£1,370 |
-£660 |
5 years |
As you can see, with a bigger system you can be making instant savings. When calculating how much solar panels can save there are, of course, a number of variables to consider, but with a 5.4kW system you could potentially cover most of your annual electricity usage and even generate a modest surplus — around £70 per year, under ideal conditions.
Naturally these numbers will vary from year to year. Sunny years where you use more of your own power will see better returns. Less sunny periods and using more grid power mean it will take longer to recoup your money.
So, how much do solar panels save in real terms? It depends on your usage, location and how much energy you’re able to consume during the day.
These numbers also rely on there being no downtime. If your inverter breaks and you don’t notice for a few days, those are lost days with no power being used or stored.
Luckily the Energy Saving Trust has a neat tool you can use to work out how much you could save and how long it will take to recoup your investment.
Do solar batteries increase how much solar panels save you?
For many, the problem with solar power is that the energy is available during the day when it’s generally not needed as much. Using solar panels to charge a battery, which then powers your lighting, heating and appliances in the evening, could be a good idea. A solar battery can increase how much solar panels save you, particularly if you’re often away during the day and use more electricity in the evening.
Battery systems typically have a shorter lifespan than solar panels and can add up to 50 per cent to the overall cost of installation.
If you want to get off the grid, batteries are a good idea. As a purely money-saving investment, they’re harder to justify purely from a financial perspective.
If you can get a decent rate selling your unused energy to the grid and you don’t mind switching to get the best deal for that, then it may be best to wait until battery prices fall further.
