Solar panels

Solar panels – are they worth it?

How much can you really save?

As well as saving you money on your energy bills, solar panels can also earn you cash. And don't worry, panels can still generate some electricity on gloomy days, vital when the weather's as dull as dishwater. But with solar panels costing an average of £7,000, there are a few things you need to understand to work out if 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. Thanks to trade association Solar Energy UK, and solar specialists GB Solar and The Eco Experts for their feedback on this guide.

The solar panel maths is getting better.

As the price of energy has rocketed, generating solar power and using it yourself can mean big savings. Under the smart export guarantee (SEG) scheme, which launched in January 2020, households in Great Britain get paid for solar energy they 'export'. This is electricity you generate, but don't use yourself, which is then pumped back into the national energy grid. The prior feed-in tariff scheme (which closed to new applications in March 2019) was far more generous, with higher rates, and you got paid for generating energy, even if you used it yourself.

However, if you've got savings you can use to pay for the panels, it's worth doing the numbers for yourself as the SEG scheme can work out well for some (we've full analysis of how much you're likely to save, and how much you're likely to get paid, below).

The biggest gain comes from using what you generate – you could save up to £420/year on your bills

First and foremost, you can use the electricity your panels generate, and so reduce your bills. 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.

But based on Energy Saving Trust estimates, a typical household with a 3.5 kilowatt-peak system can knock between £175 and £420 a year off bills at the current Energy Price Cap rates.

You could get paid £145/year for any excess energy you generate, but SEG tariffs differ widely (though you're free to switch between 'em)

The smart export guarantee (SEG) scheme works by requiring energy suppliers with 150,000+ customers to offer 'tariffs' to households in England, Scotland and Wales, which pay a set rate for each kilowatt hour (kWh) of electricity you generate from solar panels, but DON'T use yourself.

Crucially, the amount you get back depends on the company and ranges from just 1p per kWh to 16p per kWh (Octopus Agile Outgoing can pay more than this, but the rates fluctuate every half an hour) – so make sure you go for the best-paying tariff you can. Although it doesn't have to be the same firm that supplies your energy, but with some, it helps you get a better rate if you are a customer already. And keep an eye on the rate you're getting as many are variable.

The Energy Saving Trust estimates a typical household based roughly in the middle of the country could make between £100 and £145 a year based on a rate of 5.5p per kWh (though of course, the better the rate, the more you'll make).

If you had solar panels installed before 31 March 2019, it's likely you'll be on a feed-in tariff (FIT). If so, you might already be getting paid more than what's below, but if you're currently on a variable SEG tariff, you're free to switch to another provider that'll pay you more.