Can I Make Savings with Solar Power?

As of January 2020, the government has launched a new scheme that changes the way people are paid for generating renewable energy. Previously, households who had solar panels fitted benefitted from a feed-in tariff (FiT) which gave them two streams of income from the government: a ‘generation tariff’ which paid customers for all the electricity that households generated, and an ‘export tariff’, which paid customers for surplus energy exported to the National Grid.

Under the new scheme, all energy suppliers with at least 150,000 domestic customers will be required to buy surplus solar, wind or other renewable energy generated by its customers under the Smart Export Guarantee (SEG). The companies will be able to set their own price for this energy, and – unlike the old scheme – customers won’t be able to secure fixed rates with long-term contracts. Instead, short-term fixed rates will be available, or you’ll be able to choose a variable tariff that will pay the market rate for exported energy. These factors make the scheme a much less lucrative proposition than the FiT.

How Do Solar Panels Work?

Photovoltaic solar panels, which are the type usually fitted to domestic properties, work by catching the sun’s energy and converting it into electricity that can be used to power household goods and lighting. They work with daylight, not sunlight, so they can still generate energy on a grey and gloomy day.

Is It Still Worth Getting Them?

It’s still the case that generating your own electricity through solar panels will save you money on your energy bills. However, you will of course have to pay for the initial installation of the panels, which usually costs between £5000 and £8000. The move to the SEG scheme means it is likely to take decades before you get close to recouping that outlay through savings on your bills and selling your excess energy.

The maths will vary based on the size of your property, where you live, how much energy you use and how long you’re planning to stay in the property. It’s essential that you do some thorough research on the kind of savings you can expect to make, how long the solar panels will last and how much the initial outlay will be before you make your decision.

The Environmental Impact

Many people view the green credentials of solar panels as the most important factor. So, if you like the idea of a clean alternative to fossil fuels and making back your money isn’t the only reason you’re interested in solar panels then it’s certainly worth looking into.

Are There Any Other Considerations?

There are a few additional few things you should factor into your decision-making process:

To maximise what your panels can make, you need a predominantly south-facing roof. If your roof faces south-west or west you can still generate energy, but your panels may be less effective and you might not get the maximum savings.
Because solar panels work with daylight, houses in the south of the country tend to get the most benefit from solar panels. So the geography of where you live definitely needs to be factored into your research.
While you don’t generally need planning permission to install solar panels, if your property has a flat roof, is listed or in a conservation area you may need permission from your local authority.
You have to use the energy you generate immediately, unless you install a battery system to store the energy for later use. However, a battery system usually costs around £4000, so the ability to store energy comes at an additional cost. To avoid the need for this, you need to think about when you use energy – for example, trying to use most of your energy while it’s light outside to minimise how much chargeable energy you take from the grid.
Solar panels are generally low maintenance. You need to keep them clean, which costs around £100 a year, and you will need to replace the inverter after approximately 25 years at a cost of around £800. It’s worth checking the warranty your installer will provide you with and speaking your buildings insurer to make sure your panels will be covered in the event of unexpected damage.