In the UK, an increasing number of households are opting for rooftop solar panels, driven by feed-in-tariffs and other attractive incentives. As the interest in solar panels grows among homeowners, businesses, and investors, it’s vital to grasp the associated costs and the potential return on investment (ROI).
While the upfront cost of buying and installing solar panels can be significant, the long-term rewards, such as reduced electricity bills, greater energy autonomy, and a reduced carbon footprint, offer substantial benefits for both individuals and the environment.
In this article, we’ll break down the costs and ROI of solar panels in the UK, exploring the factors that can impact the financial viability of solar energy investments.
Costs and ROI of Solar Panels in the UK: Key Statistics
- Up to 64% reduction in electricity bills is achievable with solar panels, translating to yearly savings of £330 to £780 for most UK homes
- £6,800 is the average cost for the popular 4 kW solar panel system in the UK, including installation
- Nearly 12,000 solar panel systems are installed across the UK every month
- 7.8% of the UK’s electricity output in 2023 comes from solar energy, with over 1 million solar PV installations
- Utility-scale solar PV is the leading economical choice for new power generation, given current investment rates.
- A standard 250W solar panel in 2023 is priced between £400 and £500 in the UK, with variations based on system type and size
- Between £5,000 and £11,000 is the starting investment range for solar panels in the UK
- 117% of your electricity needs can be met by solar panels under optimal conditions
- £2,500 is the average annual household energy bill in the UK from October 2022 to April 2023
- Green energy from solar panels significantly reduces carbon emissions, promoting environmental sustainability
The Basics of Solar Panel ROI in the UK
Considering the installation of solar panels? There are numerous factors to weigh, especially efficiency and its influencing elements. Let’s dig into the essentials of return on investment for solar energy.
Definition and Importance of ROI for Solar Panels
Return on Investment, or ROI, gauges an investment’s profitability. For solar panels, ROI calculates the duration required for the savings they produce to cover the initial cost. This metric is crucial for potential solar panel investors, guiding them in assessing the investment’s financial worth.
How to Calculate ROI on Solar Panels
To calculate the ROI on solar panels, you need to know the initial cost of the solar panels, the expected savings generated by the solar panels, and the expected lifespan of the solar panels. For a streamlined calculation1:
- Deduct the total installation cost from the cumulative energy savings over the solar system’s lifespan.
- Divide the obtained value by the total installation cost.
- Multiply by 100 to derive the ROI in percentage terms.
In a definite format, the formula is:
ROI = (Total savings – Initial cost) / Initial cost x 100
For example, if the initial cost of a solar system was £10,000 and it generated savings of £1,000 per year for 20 years, the total savings would be £20,000. The ROI would be:
ROI = (£20,000 – £10,000) / £10,000 x 100 = 1
This means that the investment would generate a return of 100% over the course of 20 years..
Average ROI on Solar Panels in the UK for 2023
Solar panels offer a solid return on investment over time, influenced by various factors. Current data indicates the following ROI trends for solar panel investments:
- Every month, the UK witnesses the installation of around 12,0002 solar panels.
- An average-size residence investing in a 4kW solar setup allocates between £6,000 and £8,0003.
- With solar panels, households annually save an impressive £1,1904 on average.
- A 3MW solar project with a £3,750 expenditure achieves ROI in 6.5 years, delivering a 54% or £2,040 return after a decade. In contrast, a 5MW project at £6,250 recoups in 7.25 years, offering a 40% or £2,480 ROI in 10 years5.
- As of 20236, a standard 350W solar panel’s price tag stands at £786, subject to quality and configuration variations.
Factors Influencing Solar Panels ROI Across UK Regions
It’s essential to understand the several factors affecting ROI and costs of solar panels. These factors include:
- Geographical Location: The amount of sunlight a region receives directly affects solar panel efficiency. For instance, in areas like London, homeowners with photovoltaic systems can anticipate yearly savings ranging from £100 to £270 on their energy bills. In contrast, places like Manchester and Stirling might offer yearly savings between £90 and £2303.
- Panel Type: The efficiency and cost of solar panels can vary based on their type7. Monocrystalline panels, known for their high efficiency, tend to be pricier than polycrystalline panels. Their superior sunlight-to-energy conversion might lead to more significant long-term savings.
- Government Incentives: The UK government actively supports solar energy adoption. Programs like the SEG8 reward homeowners for the surplus energy they produce and export. Moreover, homes equipped with solar panels can fetch a 14% higher price on average in the property market.
Sources: Solarplanet1, Independent Advisor2, Greenmatch3, Eco Watch4, SolarPowerPortal5, The Eco Experts6, Spirit Energy7, Federation of Masters Builders8, The Eco Experts9
The Cost of Solar Panels in the UK
Solar panel prices in the UK fluctuate based on various determinants. Key factors influencing the cost include the type of solar panel and system size. We dive into the detailed breakdown in the next sections.
Average Cost of Solar Panels for UK in 2023
In the UK, a solar panel system has an average capacity of 4 kilowatts. A panel of each generally costs between £100 and £5001.
Text: In the UK, solar panels average 4 kilowatts and cost between £100 and £500 each.
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For a deeper understanding, the table below presents the three most popular solar panel types, detailing their prices, kilowatt output, and efficiency rates. This information offers valuable insights to help you decide your best choice.
| Features | Monocrystalline | Polycrystalline | Thin-film |
| Kilowatt Output | 4kW System2 | 4kW System1 | 4kW System3 |
| Price | £6,4O02 | £5,5002 | £4,1603 |
| Efficiency Rates | ~20%4 | ~15%4 | ~7-10%4 |
Types of Solar Panels
Below are the three main types of solar panels:
- Monocrystalline Panels: With an average efficiency rate of approximately 20%4, these panels rank as the most efficient. They come at a higher price, costing between £1 and £1.50 per watt1.
- Polycrystalline Panels: These panels present a more cost-effective option, priced between £0.90 and £1 per watt1. Their efficiency, at an average of around 15%4, is lower than that of monocrystalline panels.
- Thin-film Panels: Due to their ultra-light and slim design, these panels are generally the most economical, with prices ranging from £0.34 to £0.55 per watt5. With an efficiency rate averaging of around 7-10%4, they lag behind both monocrystalline and polycrystalline panels.
Factors Influencing Solar Cost in the UK
These factors include the following:
- Panel Type: The brand and type of solar panels influence their cost. Efficient panels, while pricier, yield more electricity from the same sunlight.
- Installation Costs: Installation expenses encompass labour charges, which fluctuate based on location and the installer’s hourly rate. The ease of installation, panel count, panel angle, and roof strength also affect the cost.
- Additional Equipment: Components like solar storage batteries and PV diverters add to the system’s overall cost. As a household’s energy needs grow, the panels must produce more power, raising the expense.
- System Size: The solar panel system’s size directly impacts its price. While larger systems might have steeper installation fees, they often offer a more economical price per kilowatt (kW). For instance, a 4kW solar panel system in the UK typically costs about £6,000.
UK Solar Panels Installation Costs
Installation cost is generally a combination of various factors. These include the labour, materials, and miscellaneous costs. For this section, we will base this analysis on the installation costs of the two top solar panels variants: Monocrystalline and Polycrystalline.
Solar Panels Installation Setup Costs6
| House Size | System Size | Monocrystalline Setup Cost | Polycrystalline Setu Cost |
| Small Array for Terraced or Flat | 8m² (1kW – 1.5kW) | £2,500 – £3,000 | £3,500 – £4,500 |
| Small to Medium Semi-Detached | 15m² (2kWp – 2.5kW) | £4,000 – £6,000 | £5,000 – £8,000 |
| Medium to Large Semi-Detached | 21m²- 28m² (3kW – 4kW) | £5,000 – £9,000 | £6,000 – £12,000 |
| Large Detached+ | 28m²+ (4kW – 6kW) | £5,000 – £14,000 | £8,000 – £18,000 |
Solar Panels Maintenance Costs
Solar panels need minimal maintenance, but keeping them clean is crucial for optimal performance. The maintenance cost for solar panels depends on the system’s size and the kind of upkeep needed.
Below are some of the estimates of solar panels maintenance costs.
| Service Type | Low Cost (£) | High Cost (£) | Average Cost (£) |
| Solar Panels7 | £4 | £15 | £9.5 |
| Inverter Replacement (25 years)7 | £800 | £1,000 | £900 |
| Annual Service7 | £100 | £200 | £150 |
Even when you cannot ignore these maintenance costs to ensure your solar panels perform efficiently, the savings from these solar panels make it a good investment.
Sources: Independent Advisor1, GreenMatch2, The Eco Experts3, GreenMatch4, This Old House5, Complete Connectrix6, Skills Training Group7,
UK Government’s Solar Panel Grants and Incentives for 2023
The available grants and incentives for solar panels in the UK can provide significant savings for homeowners. For instance, the ECO4 scheme provides free or partially free solar panels to eligible homeowners. On the other hand, the reduced VAT rate helps to reduce the overall cost of solar panel installation.
UK Government’s Solar Panel Grants and Incentives for 2023
| UK Grants/Schemes | Overviews |
| Energy Company Obligation 4 (ECO4)1 | All UK homeowners, whether they own or rent their property, can access this scheme. It offers free or partially free solar panels from April 2022 to March 2026. Energy suppliers determine eligibility based on individual circumstances. |
| LA Flex2 | As an extension of ECO4, this scheme covers up to 100% of solar panel costs. Local authorities determine eligibility. The scheme is active from April 2022 to March 2026. |
| Feed-in Tariff2 | This scheme ended on April 1, 2019. However, those who registered before the expiration date will still benefit from their 20-year commitment. The scheme offers a generation tariff ranging from 6.38p to 13.88p per kWh and an export tariff of 4.77p per unit. Owners of solar panels, wind turbines, and micro-CHP systems are eligible. |
| Residential Renewable Energy Tax Credit3 | This scheme grants a tax credit covering up to 26% of solar panel installation costs. It remains available until December 31, 2023. |
| Smart Export Guarantee (SEG)4 | This is the only currently active scheme accepting new applications. Energy suppliers with more than 150,000 customers must provide a tariff for electricity that small-scale low-carbon generators, like solar panels, export to the grid. Suppliers set and pay the tariff rate for each kWh of electricity exported. |
| Reduced VAT rate1 | From 2022 to 2027, the VAT rate for solar panels is 0%. This reduction supports the UK government’s initiative to promote energy efficiency and cut carbon emissions. |
How Government Incentives Impact ROI
The impact of government incentives on ROI is significant. For instance, solar panel grants can greatly enhance the ROI for homeowners who opt for solar installations. These grants lower the initial installation costs, making solar panels more accessible and reducing the time it takes to recoup the investment.
With time, the energy bill savings from solar panels lead to a favourable ROI. To add to that, certain government incentives, such as the Feed-in Tariff, offer monetary benefits for producing renewable energy. This further boosts the ROI.
Solar Subsidies in the UK
Solar power in the UK has been gaining momentum due to public subsidies and falling solar equipment costs. The UK government actively supports renewable energy, aiming to meet the EU’s 32% renewable target by 20305.
Meanwhile, the UK’s solar industry thrived on feed-in-tariffs that ensured fixed power generation prices. The policy weakened in 20166, allowing the industry’s growth to decline sharply.
Presently in the UK, only six solar incentives exist, with the Smart Export Guarantee (SEG)5 being the only one accepting new applications.
Sources: Ideal Home1, Independent Advisor2, The Eco Experts3, GreenMatch4, iea5, Reuters6,
UK Best Solar Panel Brands and Manufacturers
Below are some of the best solar panel brands and manufacturers in the UK. The cost, performance, and power output give the overview why they are classified as best in the UK.
| Brand/Manufacturer | Cost (£) | Power Output | Efficiency |
| Project Solar Evolution Elite 400/Project Solar1 | £8,000 per household | 395W to 415W | 20.2% to 21.22% |
| SunPower Maxeon 3/SunPower1 | £300 to £350 per panel | 415W to 430W | 21.9% to 22.7% |
| JA Solar JAM60S20/JA Solar1 | £100 to £206 per panel | 370W to 395W | 21.0% |
| Sharp SunSnap ND-F2Q235/Sharp1 | £300 per solar panel | 325W | 14.4% |
| LG NeON H BiFacial/LG1 | On Enquiry | 350W to 400W | 19.8% to 22% |
| Project Solar UK Evolution Titan 445/Project Solar2 | On Enquiry | 445W | 21.4% |
| SunPower Maxeon 6 AC/SunPower2 | On enquiry | 420W to 440W | 22.8% |
| Jinko’s Tiger Neo 420W N-Type 54 Cell/Jinko2 | £170 per panel | 400W to 420W | 20.48% to 21.51% |
Sources: Architectural Digest1, Independence Advisor2,
Solar Power Systems and Their Components
Solar panel systems primarily consist of solar panels, batteries, inverters, electrical panels, the power grid, and mounting structures. They work together to capture and transform the sun’s energy into electricity for residential and commercial use.
Cost and ROI of Solar Batteries in the UK
Solar batteries store extra energy from solar panels for later use. Their prices fluctuate based on their capacity, chemical composition, and lifespan. In the UK solar batteries cost about £4,000, but this can range from £1,200 to over £6,0001. The most prevalent materials in these batteries are lithium-ion and lead-acid.
The return on investment (ROI) for solar batteries in the UK hinges on factors like the solar panel system’s size, electricity costs, and the battery’s price. Research indicates that solar batteries last between 10-152 years and can cut electricity bills by approximately 50%.
Cost of Solar Inverters in the UK
Solar inverters transform DC power from solar panels into usable AC electricity. There are three primary solar inverters: string inverters, microinverters, and power optimizers3.
String inverters are the most prevalent and affordable. Microinverters, though pricier, ensure efficiency even with shading. Power optimizers, installed at the panel level, enhance each panel’s output similarly to microinverters.
The price of a solar inverter in the UK usually ranges from £500 to £1,2004 for common household systems. This cost is influenced by the brand, capacity, and additional features.
Solar Farms Potential in the UK
Solar farms, or solar power plants, are expansive setups of solar panels that produce electricity for the grid. In the UK, solar power contributes to 7.8%5 of the total electricity as of 2023, with over 1 million solar PV systems in place. Even with rising investment costs, utility-scale solar PV remains the most cost-effective choice for new electricity generation.
The growth of solar farms in the UK depends on government policies, land access, grid infrastructure, and community backing. These farms offer ample opportunities. It can help the UK’s government meet its renewable energy goals, cut down carbon emissions, and foster job growth in the green energy sector.
Sources: GreenMatch1, The Eco Experts2, Solar.com3, Spirit Energy4, iea5
Conclusion
Solar panels in the UK present significant economic and ecological benefits. Even when the initial costs might differ, the long-term reductions in energy bills and potential earnings from the SEG scheme make them a smart investment. Moreover, their environmental impact, combined with potential UK government grants, boosts the overall appeal of solar panels.
FAQs
Yes, solar panels are a valuable investment in the UK. They offer low-carbon, renewable energy, which can lead to savings on energy bills and a reduced carbon footprint.
Solar panels typically have a 25-year warranty, and they often outlive this period. Impressively, even after these 25 years, most panels still produce electricity, though at a slightly reduced efficiency.
Solar panels can enable self-sufficiency in the UK, but success depends on the system’s size, your energy consumption, and sunlight exposure. For nighttime use, consider adding a battery storage system.
Solar panels operate during the day and not at night. With a battery storage system, you can use the electricity they generate during the day at night.
Solar panels need sunlight to produce electricity. They can operate on cloudy days, but the brighter the sun, the more power they generate.
Notable solar panel suppliers in the UK include Project Solar, SunPower, Sharp, and Jinko.
