Have you wondered how much money home solar panels could actually save you?
With the soaring price of energy hitting all households in the pocket, it’s understandable you may be looking for ways to cut the costs.
Domestic solar energy systems generate power for your home, meaning you spend less on buying energy from the grid.
In some cases they may bring your household energy bill down to virtually zero, saving you hundreds of pounds a year.
But solar panels don’t come cheap and require a big upfront investment to get started.
So how long then does it take for your solar panels to pay for themselves, and start saving you actual money?
I’ve asked myself this question a lot, and so turned to my dad Chris Corbett, who had solar panels installed on his home!
He has provided me with a comprehensive look at his own solar panel system, how much it cost and how much it is saving him.
And this article is going to show you exactly how to calculate how long it would take for solar panels to make you a saving.
This can be used to help you make the big decision on whether to invest in a system for your home.
Can you install solar panels on your home?
This has to be the first thing you ask yourself – along with whether you actually have the cash to hand to pay for a solar panel system.
In order for your solar panels to actually work, and generate power, you will need:
- A south facing roof. You get more energy generated the longer solar panels directly face the sun. A north facing roof won’t cut it in the UK, but west or east facing can still be considered – and you can use both together if you have such a roof design.
- A large garden. If the roof is not facing the right way, then you could consider placing ground panels on your property.
- Space for the system. It’s not just the panels that need room on your home! Other components in a solar energy installation also need space: storage batteries, control boxes, inverters, perhaps electric car chargers all need wall mounting. Lofts or garages can be considered for most components. Some components like storage batteries can be installed on outside walls.
- No shade. Anything that causes shade on your roof during the day can impact how beneficial your solar panels will be.
How much do solar panels save on energy bills per month?
The solar panel system on my parents’ house – a four-bed detached property – has saved them as much as £229.10 in a month.
But it can also save as little as £75 in a winter month. This is when usage is generally higher and the solar panels produce less energy due to the weather.
Remember that every household’s usage will be a little different – due to the size of the property, number of people living there, what devices they use in the house and how they use energy.
So you can use my parents’ case study as a guide, but you’ll need to crunch the numbers using your own existing energy costs to figure out how much it can save you.
How much do solar panels save you per year?
My parents will save around £1,710 annually on their electricity bill with their solar panels.
How much you save in total depends on a number of things, as with how much you can save per month, such as how much energy you use and how many panels you get installed.
The Energy Saving Trust estimates a typical household with a 4.2kilowatt-peak system can save up to £514 a year.
However that doesn’t take selling energy back to the grid into account – the trust says this adds another potential £110 a year to the savings.
You can use the Energy Saving Trust solar energy calculator to figure out a more exact estimate of the savings for your individual property and circumstances.
How much do solar panels cost?
My parents’ solar panel system cost £18,300 for all equipment and installation.
But it’s important to note theirs was not a typical installation. They have included additional features like car chargers for their electric cars and a battery that can store energy from the solar panels to run the house overnight.
You can see the solar panels in the image, but this is only part of the system installed!
They purchased an 8kw system. A smaller, cheaper system would generate less energy, therefore would not have as high potential savings on your energy bills as the bigger 8kw system.
A typical 3.6kw set-up would cost around £7,000 – this would feature around nine solar panels.
Domestic systems tend to range from 1kW in size – which will be far cheaper than the 3.6kw standard system.
So, a smaller system will generate much less power but cost you less. A bigger system will generate more potential savings on your energy bills, but cost you more up front.
How long does it take for solar panels to pay for themselves?
Based on a saving of £1,710 on electricity bills a year, this means it will take around 10 years for my parents to recoup their costs, and then start to make a real saving.
But it’s important to note that both have recently purchased electric cars, and so part of the installation was to add car chargers and a battery that stores energy so the cars can be charged overnight.
If you take note of the saving on fuel – which was around £150 a month for two cars – then that speeds up the time it takes for the system to pay for itself to around five years.
The Energy Saving Trust estimates an average household can now pay off the cost of solar panels in five years. From there onwards it’s all savings in your pocket!
If you can afford a bigger capacity solar power system, it will generate more power but have cost you more up front. So you’ll make bigger savings, but you’ll have a bigger bill to pay off.
On the other hand, once it has been paid off you will reap the rewards of big savings on your energy bills going forward.
So it’s well worth investing in a quality system that generates a decent amount of energy if you can.
Having said all of that, investing in a system that may take several years to pay for itself is only worth doing if you plan to stay in the house for that time. It’s unlikely you’ll recoup the cost of the solar panels in the house price if you sell.
How to calculate how much money solar panels will save you
A big part of your decision on investing in solar panels will be investigating cost vs benefits.
Can you actually save money over a reasonable timeframe?
First of all, you will need installation prices for the solar equipment, and costs for your electricity per unit, which will depend on the tariff you currently use.
You can use the typical price of £7,000 for a 3.6kw system to calculate your estimated costs.
On a typical south facing roof, such a system could generate around 3,500kWh (kilowatt-hours) per annum in the UK.
You can find more information about how much electricity solar panels can produce here.
Calculating potential benefit goes something like this:
- At the time of writing, the typical cost for 1kWh of electricity is 34p.
- If you can generate 3,500kWh per annum using solar, then you will save about £1,190 a year.
- This means it will take about 6 years to recover the costs of installation.
Remember though, those savings will be less if your solar panel set-up cannot generate as much energy and depends on the cost of energy, which fluctuates. So it will all depend on your specific circumstances.
Your energy provider should be able to give you your annual usage over the past few years. Use these figures to get a better understanding of what you specifically could save.
What about selling power back to the grid?
You may be able to make a little extra saving by using the ‘Smart Export Guarantee’ (SEG).
All suppliers must agree to buy surplus electricity from you under the SEG agreement.
How you benefit depends on how much surplus you are likely to generate, and the price you will get from your supplier.
The amount you get will not as good as the price 1kWh is sold to you, in fact it is typically around 1/10 of that.
For example, a supplier offering 1kWh for 28p to the consumer, buys back 1kWh at 3.2p.
How much can you make selling back to the grid?
This chart tracking my parents’ own solar panels since they had them installed shows you their monthly grid charge, what they actually used, and how much the got from selling energy back to the grid – the “buy back”.
There’s a total amount saved each month in the final column.
| Month | Grid charge | Home usage | Buy back | Amount saved |
|---|---|---|---|---|
| Feb | £9.65 | £21.91 | £0.16 | £12.42 |
| Mar | £92.05 | £236.43 | £5.59 | £149.98 |
| Apr | £32.28 | £218.59 | £7.80 | £194.11 |
| May | £34.28 | £256.95 | £6.44 | £229.10 |
| Jun | £26.93 | £219.87 | £12.50 | £205.43 |
| Jul | £26.94 | £201.23 | £15.77 | £190.07 |
| Aug | £72.24 | £281.05 | £8.04 | £216.85 |
| Sept | £87.88 | £220.33 | £5.01 | £137.46 |
| Oct | £164.05 | £337.80 | £0.74 | £174.49 |
| TOTALS | £546.30 | £1,994.17 | £62.04 | £1,509.91 |
Where to buy solar panels
The different suppliers of solar panel systems can fall broadly into three categories:
- Large nationwide suppliers – including big energy firms such as E.ON.
- Regional companies.
- Small local companies.
- My parents sought quotes from three different companies falling under each category.
Who you purchase from is of course up to you.
My dad found the local supplier, who visited in person to properly assess and measure the property, provided a quote that was cheaper than the national supplier he had contacted, but more expensive than the regional supplier.
However he notes there was not a significant difference.
What is the process of installing solar panels?
These are the steps you need to take to get your panels installed:
- Submit G99 application to electricity supplier (for the domestic user, if your solar panel system produces above 3.68kWp, then you must gain G99 approval from your electricity company.)
- While awaiting results of application, supplier orders components
- Once G99 is approved, and a day or 2 prior to installation, scaffolding is erected
- Solar Panels installed on roof; inverter, controllers and battery installed in agreed location
- Connection of all components to local network and configuration of Apps for management and control.
- Scaffolding is removed, 1 or 2 days after installation.
If the system you install generates no more than 3.68kW peak, then the G99 application steps do not apply.
The G99 application can be the longest activity, as it took my dad around 10 weeks to receive notification of approval.
What does a solar panel system actually look like?
What your system ultimately looks like will depend on what you choose to order, however I can show you what my parents’ system is comprised of and how it runs.
DC power from the solar panels enters a Solaredge Inverter, whose job is to convert the DC to 240V AC in phase with the power from the National Grid.
The 240V AC from the inverter connects into a Tesla Gateway, which also takes the power input from the National Grid.
The job of the Gateway is to provide the facility to power the house from battery or solar power if the National Grid fails.
Additional connections to this Gateway provide battery power via a Tesla Powerwall, output to a ‘Zappi’ intelligent car charger. And finally output to the existing Consumer Unit that connects (and protects) the lighting and power circuits of the house.
An ‘Eddi’ unit has been installed on the existing immersion heater power line to allow surplus Solar energy to heat the house hot water tanks.
Each of the devices shown are monitored and managed using an app my dad has access to on his phone.
Via software Apps, these connections allow monitoring and control of the whole solar installation, as described in the table below:
Pros and cons of getting solar panels on your home
| Pros | Cons |
|---|---|
| Cheaper energy bills | Installation is expensive |
| Green energy is better for the planet | Your roof may not be suitable |
| Reduces your carbon footprint | It takes a few years to regain your investment |
| You can sell electricity back to the grid | Weather impacts their performance |
| Your home can run without the grid | Moving house means you lose the panels or pay to move them with you |
Final thoughts
You can use the information here to guide you in the potential savings solar panels can offer.
But to get a really accurate picture you need to get a professional installer to look at your home and provide you with a quote for costs, along with a guide to the type of system you can afford.
There are lots of benefits to having a solar panel system – with the cheaper energy bills and helping to save the planet being the ones that stand out the most for me.
If you’re looking for other ways to save money then you may like my frugal living tips and tips for saving money on food.
