Solar panels: are they worth the investment?

However, installing solar panels does still “come at a cost”, said Hickey in The Observer. The average installation cost reaches almost £5,000 and “rising labour bills and shortages of photovoltaic panels mean prices are going up”. The average price for an installation of a 3.5 kilowatt-peak (kWp) system is £4,800, including labour. “This tends to be about 12 panels.” For a 3.5kWp system you need room for 15-20sqm of panels. 

A 4.2kWp domestic solar photovoltaic system costs around £6,500, said the Energy Saving Trust. Panels on top of the roof are the cheapest option, while tiles are the most expensive for the equivalent system. “Costs can vary between installers and products, so we recommend getting quotes from at least three installers.”

In the Spring Statement, Rishi Sunak announced that households will now pay 0% VAT on energy-saving equipment such as solar panels and heat pumps. The chancellor said this could cut the cost of solar panel installation by up to £1,000. 

How much money can solar panels save you? 

Solar panel “maths” is “getting better”, though they’re “not as lucrative as they once were”, said Andrew Capstick on MoneySavingExpert. The price of having solar panels installed has “dropped over the years”, but with energy bills rocketing, “generating solar power and using it yourself gives a far bigger saving now than it used to”.

The biggest gain comes from “using what you generate” – you could save up to £440 a year on your bills, Capstick added. Based on Energy Saving Trust estimates – “which we’ve added an uplift to, to update for the energy bills spike” – a typical household with a 3.5kWp system can knock between £170 a year and £440 a year off bills.

In addition, with incentives like the Smart Export Guarantee (SEG), “you can even earn money for surplus energy exported back to the grid”, said Tamas Vekony on GreenMatch.co.uk. 

The SEG, which launched on 1 January 2020, is a government-backed initiative. According to energy regulator Ofgem, the SEG requires some electricity suppliers (SEG licensees) to pay small-scale generators (SEG generators) for low-carbon electricity which they export back to the National Grid, providing certain criteria are met.

The verdict: are solar panels worth it? 

There are a number of eco-friendly ways to reduce running costs and add value to your home – but one “outlier” is solar panels, said estate and lettings agent Barrows and Forrester. Despite being one of the most common ways of improving the carbon footprint of a home, it seems they “do very little” in terms of added value. “Installation is expensive, around £5,875, while the value added is estimated to be £1,916, a loss of -£3,959. However, there are obvious savings to be made from reduced utility bills, so if the owner is planning to stay in the home for many years to come, solar panels can still offer good savings.”

“Yes”, solar panels “are worth it”, said Jackman on The Eco Experts. How profitable your solar panels are “depends on where you are in the UK, because the sun shines more in different regions”. It makes sense that all the regions would have different break-even points. For example, it takes 10.21 years to break even in East Anglia compared to 14.84 years in northern Scotland. 

Even if it requires a “significant amount upfront”, said Tamas Vekony on GreenMatch.co.uk, investing in solar energy can have a “great return in the long run”. 

Article source: https://www.theweek.co.uk/business/personal-finance/956333/solar-panels-are-they-worth-the-investment