With energy costs rising, and uncertainty due in 2023, it makes sense to think about ways you can reduce your bills. One of the best ways of reducing energy bills is with solar power. 

Installing solar panels on your house will nearly always save you money in the long term. However, it makes sense to work out exactly how much you’ll save and how long it will take to pay off the investment. To do this, first you need to know how much it will cost to have them installed. After that, you need to know how much they’ll take off your energy bills. This guide is here to help.

The exact cost of a solar panel system depends on the size of the system, whether or not it has any additional features and a few other things. However, in the UK, the average solar panel system is 3.5kW in size and costs between £5,000 and £7,000.

Remember that, as well as saving you money, solar panels also help you to reduce your carbon footprint. A 3.5kW system will reduce your carbon footprint by almost a tonne every year (around 900kg to be precise).

Solar panel systems vary in size. The larger the system, the more it will cost. A very small, 1kWp system could cost as little as £1650, whereas a larger 6kW system will cost around £10,500.

So, How Much Do Solar Panels Cost Exactly?

As we said, the exact cost of a solar system depends on a few things. The main things that affect the price of a solar panel system are:

• The size of the system
• Whether or not it features any additional components
• The type of solar panels installed
• Factors affecting the installation cost

Usually, the bigger the investment you make at the start, the more you’ll save in the long run. 

Let’s have a look. 

Note that some of the cost will depend on the difficulty of installation and where you live in the country. Labour costs for installation are usually between £300 and £500 per day. However, prices do vary. The cost of installation will always be higher in some parts of the country (such as in the South East) and it may be higher if the process of installation is difficult. 

You can start looking into how much a solar system could cost you here. 

System Size (kW)

The most important thing that will affect the cost of a solar panel system is its size. The bigger the system, the more it will cost. While this is true, bigger systems will obviously generate more electricity and, usually, save you more money in the long run. As we’ve already said, you could spend as little as £1,650 for a 1kW system or as much as £11,500 for a 6kW system.

Will Building a Really Big System Save Me More Money?

While bigger systems naturally produce more energy, building a system that produces a lot more energy than you need won’t actually save you more money. You need to match the system to the energy demands of your household. The reason for this is that it doesn’t prove cost effective to sell large amounts of excess energy back to the grid.

Additional Components

One very important thing to consider when installing a solar panel system is whether you’ll add a diverter or a battery to it. These both help to make more efficient use of the electricity your solar panels produce. 

Diverter 

A diverter is a device which redirects excess power generated by your solar panels into electrical devices in your home. 

What often happens with solar panel systems is that, at certain times (during the day), they produce more electricity than the household needs. This is particularly true when people are out during the day and at home in the evenings. What happens by default is that this excess electricity is exported back into the grid. While you can be paid for this energy, it would actually be better to use it in your home. 

What diverters do is divert excess energy into a device in your home instead of exporting it to the grid. Typically, this device is an immersion heater, and so diverters are usually used to produce free hot water.  

The typical cost of installing a diverter with your solar panel system is around £800. 

Solar Battery 

As with diverters, solar batteries also find a more efficient use for excess power generated by your solar system. Again, if no one’s at home during the day to use the electricity that your solar panels produce, then a battery could be useful. Batteries, as you can guess, just store excess energy so you can use it when you need it. 

Batteries are more expensive than diverters and have a shorter lifespan. Usually, the lifespan of a battery is less than that of your solar panels, at between 5 and 15 years. This means that you’ll probably have to replace it during the life of your solar panels. In addition to this, batteries are also more expensive than diverters. As we said earlier, the average cost for a solar battery in the UK is £4,500. However, prices range from £2,500 to £6,000. 

However, overall, batteries are probably better than diverters… 

Diverter vs Battery

Batteries often end up working better than diverters because they are more powerful, and they can usually store more energy than a diverter can use to heat an immersion heater. That said, what turns out to be the best choice will depend on your particular requirements. 

The Type of Solar Panels

The two main types of solar panels used for domestic solar energy in the UK are monocrystalline and polycrystalline. 

Both of these types of solar panel are made using silicon photovoltaic cells. The difference is that monocrystalline panels are made from a single silicon crystal, while polycrystalline cells are made from a number of pieces of silicon crystal fused together during manufacture. Without going too far into the details, monocrystalline cells are more efficient and ultimately produce more electricity. There are, however, some upsides to polycrystalline panels.  

Monocrystalline Panels

• Produce electricity more effectively
• Have a longer lifespan
• Work better in low light conditions
• Take up less space
• Are less environmentally friendly and may not work as well in high temperatures
• Cost more than monocrystalline panels

Polycrystalline Panels

• Are more affordable
• Are more environmentally friendly
• May work better in high temperatures
• Produce electricity less effectively
• Take up more space

What About Solar Roof Tiles?

Solar roof tiles basically work in the same way as solar panels. They’re just solar panels made to look like roof tiles. While they might be less noticeable, they cost considerably more than solar panels. Prices for a 3.5kW solar tile system, for example, will start at around £10,500. That’s instead of £5,500 for solar panels. 

Integrated Solar Panels

One alternative to solar roof tiles, that people often haven’t heard of, is integrated solar panels. These are solar panels that are embedded into the roof of a house. You can learn more about integrated solar panels here. 

Installation Costs

As we said earlier, the cost of installing a solar panel system for your house will also depend on how difficult the installation process is and where you’re located in the country. 

If it’s difficult to install solar panels on your property, for any reason, this will add to the price. Access difficulties or problems mounting panels to your roof, for example, might push the price up. It’s also worth remembering that not everyone chooses to have solar panels built on their roof, which may cause prices to vary. Ground mounted systems are possible, as well. Prices for ground mounted systems can be unpredictable, and you’ll need to get a quote from an installer. 

As well as prices varying slightly from property to property, they also vary from region to region, in the UK. London and the South East, for example, is likely to be more expensive than elsewhere. Similarly, you might end up paying slightly more if you live in a remote location with poor access. 

Is it Possible to Build Your Own Solar Panel System?

While it is possible to make your own solar panel system, it’s usually not a good idea. If you’re going to invest in a solar system, you want to make sure it works properly and that it lasts. Professionals know what they’re doing and add a huge amount of knowledge for what’s actually a small cost. 

Not only this, but even if you do install your own solar panels, you still need to have your system certified by a professional in order to qualify for the Smart Export Guarantee (SEG). 

Is Your House Even Right for Solar Panels?

One thing to note is that you’ll need to make sure that solar panels will actually work on your house before you invest. Here are some things to consider:

• It’s best if you’ve got a south facing roof – Definitely don’t write off the idea if you’ve got an east or west facing roof because it will probably still work. You might need to get some advice first, though. North facing roofs usually don’t get enough sunlight to make solar panels worthwhile. 
• It’s best if your roof doesn’t get much shade during the day – The best time for solar panels to produce electricity is between 10am and 4pm. It’s best if your roof is unshaded at this time. 
• Your roof needs to be big enough – Solar panels take up a good amount of space, and your roof needs to be big enough for them. Have a look at the chart at the top to see how big the different systems are. 
• Your roof needs to be in good condition – If your roof is old or damaged, it might not be able to support solar panels. One good idea is to have it inspected by a professional before the solar panels are fitted to make sure it’s strong enough. 

How Much Money Will Solar Panels Save You?

Now that you know roughly how much a solar panel system is going to cost to build for your house, you’ll want to know how much money it’s going to save you on your energy bills. The good news is that you’ll notice the difference in your energy bills straight away, and there will be a substantial difference. You’ll also have the satisfaction of knowing that the electrical devices in your home are being powered by your own panels at a minimal cost to the environment. 

Ultimately, you’ll need to work out how long it’ll take to pay off your initial investment. After that, you’ll be getting free electricity.

The Energy Saving Trust recently produced some helpful information for working out how much money solar panels will actually save. You can have a look at this information here. 

Things to Consider When Working Out How Much Solar Panels Will Save You 

It’s not always obvious how much a household in the UK will save on their energy bills with solar panels. Like working out how much it will cost to install a solar panel system in the first place, there are a few things which make a difference. 

The main factors that will affect how much you save are: 

• The type of solar system you have
• How you use the energy it produces 
• The Smart Export Guarantee and the Feed-in Tariff (FIT)
• Your location

Your Solar Panel System

The type of solar panel system you have will determine how much energy you produce and how efficiently you’re able to use it. Usually, it’s fairly straightforward – a solar panel system that’s well matched to the needs of a household with additional features that make it more efficient will save more money on energy bills.

Household Habits 

The way that a household uses the energy produced by its solar panel system can have a significant impact on the amount of money it saves. 

Households where people are at home during the day to use the electricity produced by their panels will usually save more money. If you or someone in your household works at home, for example, solar panels could be a good investment.  

One recent estimate by the Energy Saving Trust suggested that households in London, with an average size solar system, where the occupants are at home during the day could save as much as £715 on their energy bills per year. This compares to savings of £485 for households where the occupants are out until 6pm. In other parts of the country, such as Manchester, the maximum savings are slightly less (at £660), but are still significant.  

Batteries and Diverters are Important

Note that batteries and diverters (or other technology that might be introduced in the future) can really help with this issue of maximising energy savings. It’s worth speaking to a solar panel installer to decide what will work for you. 

Estimates of savings made by systems that don’t have a battery or a diverter, in households where the occupants are out during the day, suggest that significantly lower savings will be made. It’s important to make sure you maximise your savings by looking at how energy is used in your household and how a diverter or battery could help. 

The Smart Export Guarantee and the Feed-in Tariff

One particularly important thing to know about in 2023 is the Smart Export Guarantee. The SEG is a government backed initiative that requires some electricity suppliers to pay small scale generators (you, if you’ve got solar panels) for energy they export into the National Grid. You can use the SEG to earn money from excess energy you produce. Ultimately, the money you receive will contribute to what you save from having solar panels. 

Rates under the SEG vary from supplier to supplier, and you don’t have to use the company that supplies your energy. You’re free to swap. However, it often helps you to get a good rate if you’re an existing customer. 

Solar Energy UK released a price comparison early in 2023, and you can see it here. 

The Feed-in Tariff is similar to the SEG, but applies to people who had their solar panels installed before 31^st March 2019. The conditions of the Feed-in Tariff scheme were actually better, with solar panel owners often receiving money for exporting electricity to the grid when they actually used it themselves. 

Your Location

Your location will impact the amount you save by affecting the initial cost of installation, as well as the efficiency of your solar panels and the amount that you earn for exporting electricity to the grid. 

So, How Much Money Will Solar Panels Save You?

Here’s a summary of the savings predictions from the Energy Saving Trust. 

These are predictions for households with different energy requirements in different parts of the UK. These are the Energy Saving Trust’s predicted savings for a household:

• That qualifies for the SEG
• Lives in a gas heated, 4 bedroom house
• Has a solar panel system featuring a diverter used to power an immersion heater 

This is a fairly normal arrangement. However, it’s worth noting that these figures don’t take into account the improved efficiency savings offered by installing a battery with a solar panel system. Installing a battery could make an improvement. 

Note that we have calculated the time to pay off the investment based on the household installing a 4kW solar panel system at a cost of £7,000. This is a typical example, although it’s worth noting that the price could be slightly cheaper or more expensive, based on household needs.