Solar panels have become very popular in recent years, and their trend is only growing with every passing day.
If you are wondering about installing solar panels in your house, you may have many questions and queries. Are solar panels worth it? How much do solar panels save? Are they a good investment?
Solar panels may not provide a quick fix for increasing savings. However, they reap significant financial benefits from a long-term perspective. They are worth it only if you stay in the same house for long enough and your household generates enough electricity.
Additionally, solar panels can even increase the value of your property. This alternative energy system also helps you cut down your carbon footprint. Besides owing to the ever-increasing demand for cleaner energy, installing solar panels can attract more incentives from local governments.
This article will give you a financial picture of investing in solar panels. So, keep reading to find out if it is worth your money!
- 1 How is Solar Energy Used to Power Homes?
- 2 Costs Involved in Powering Your Home Using Solar Panels
- 3 Solar Panels Pay for Themselves
- 4 Financial Benefits of Going Solar
- 5 Information for Solar Energy Installation
- 6 Solar Panels and Property Value
- 7 Most Efficient Solar Panels
- 8 Prices and Returns on Solar Power
- 9 Exporting Electricity
- 10 Final Takeaway
How is Solar Energy Used to Power Homes?
A solar photovoltaic (PV) system converts sunlight into electricity. Solar panels installed on your roof traps the sunlight falling over your house and converts it to electricity. Then, you can use this electricity to power appliances in your home directly.
Additionally, you can use a battery to store the electricity to use it at night or when it is not sunny enough for electricity generation.
This technology has been around since the mid-1900s. However, it is only recently that it has become a viable option for everyone.
Solar panels are quoted in terms of their electrical output potential. This theoretical electrical output is measured in watts. A 3 kWh (kilowatt-hour) household solar panel system can produce 3 kWh x 24 hours per day x 365 days per year.
This equals about 3,942 kWh per year when you factor in a 15% capacity factor. The capacity factor is the difference between the actual output and the theoretical output. Generally, it can vary anywhere between 15% to 30%.
Costs Involved in Powering Your Home Using Solar Panels
Solar power requires a higher level of capital intensity. This means that you will have to spend more money initially on equipment.
Purchasing solar panels and other required elements can seem expensive. The solar modules will make up most of the overall expense. Additionally, you will have to invest in inverters for household appliances, wiring gears, cables, and metering equipment.
Installation and maintenance cost
In addition to the equipment cost, you must also include the installation cost while calculating the overall price. The price can vary widely depending on the size of the solar power system. Plus, it can vary depending on where you live.
Although solar power systems do not require you to spend a lot on maintenance, you still have to consider it. You will have to spend on maintaining a PV solar array. Additionally, batteries and inverters require regular replacements after a few years of usage.
If you do not want to clean the panels yourself, you may have to pay for a cleaning service.
Is it really expensive?
Many people assume that solar panels are expensive and stay away from them. However, to assess if they are feasible for you, you must factor in all the aspects, including its long-term benefits. Solar panels are not very expensive overall due to the money they can help you save in the long run.
The prices of solar panels are coming down with every passing day. For instance, if you compare the price of solar panels from 20 years ago with the current price, you can notice a huge difference.
Solar Panels Pay for Themselves
Yes! Solar Panels can pay for themselves later in their years. The average payback period in the UK is between 15 to 25 years. However, it can vary widely from one region to another.
The solar payback period is similar to the payback periods of any other investment. It is the estimated time before the investor ‘breaks even’ on the solar energy investment. The payback period is denoted as a percentage of ROI (Return of Investment).
Many factors affect the payback period. It includes the amount of electricity you use, the location of your house, and the money you receive under the smart export guarantee.
Calculating the Solar Payback Period
You can calculate the solar payback period using the cost of solar panels, the money you save in terms of electricity bills, and net incentives.
For example, if the solar panel system you install in your house has a payback period of 10 years, it means you can save enough on your electricity bills to cover the cost of 10 years. You will see the real benefits after ten years.
Besides, the savings will be massive when you use the system for over two decades or more. You can save up to tens of thousands of pounds using the solar power system.
Factors Affecting the Payback Period
Many factors affect the payback period of your solar power system, as mentioned earlier. Some of them are listed below:
- Cost of the system (including panels, inverters, and batteries)
- Energy production in your house by the solar power system
- Cost of electricity in your location
- Average use of electricity in your home
- Incentives by the Government
Financial Benefits of Going Solar
Installing a solar energy system is becoming increasingly affordable these days. Besides, governments around the world are encouraging people to switch to this eco-friendly powering method. So, it’s no surprise that it comes with a lot of financial benefits.
Below are a few ways these systems can benefit you financially:
1. Electricity bill savings
Solar panel systems can cut a great deal when it comes to paying electricity deals. You can save on the cost of electricity which is on the rise with every passing year. Further, by installing solar panels, you can make your house self-sufficient during tough times.
2. Tax deductions
Solar panels can provide you tax benefits from the Government. If you install solar panels on your roof, you will be eligible for up to a 5% tax reduction according to the UK’s latest VAT pricing system for energy-saving products.
3. Increases property value
Installing solar panels can potentially increase the financial value of your home. Owing to its long-term energy-saving benefits, it can increase the evaluation of your property. Additionally, other factors such as tax deductions, long-term value, and environmental benefits add to the property value.
Your house will depend less on the National Grid for electricity. So, you can enjoy electricity at cheaper rates than the rest. You can also invest in a battery storage system to reduce dependence on the grid.
5. Long-term value
Generally, solar panels can last for up to 20 to 25 years. The long-term benefits will mitigate the cost of instalments and other fees. For instance, you can save thousands of pounds on electricity bills over the years.
If you treat your solar panel system properly and maintain it regularly, it can last over 30 to 35 years. Besides, if you invest in a high-quality design, it can last for up to 40 years.
6. Solar panel systems strengthen the local economy
Solar panels can not only save you money; they can save money for your community as well. Since traditional sources of energy are not renewable, and it causes considerable damage to the environment. Thus, investing in solar panels can cut down your dependence on the community’s traditional sources of electricity.
It opens employment opportunities for installers, manufacturers, and designers. Further, it contributes towards a greener and cleaner community.
Information for Solar Energy Installation
The price of solar panels for a house of average size can cost around £6,000. So, here is some important information you should know before you commit.
Houses in cloudy Britain can use solar panels
Contrary to popular belief, solar panels are not advantageous only in sunny areas. Solar panels harness daylight and not only sunshine. So, it can generate electricity in gloomy regions too.
The panels work in the exact same way in Britain as in any other part of the world. Although more sunshine can generate more energy, you can still use panels to power your house.
Permission for panels
You do not need any planning permission for solar panels. However, you will have to check with your local authorities if your house is in a conservation area. You may also have to check with the local council if you have a flat roof.
A South-facing roof
To maximise the energy production of your panels, it would be best if the roof is facing the South direction. If the roof faces west or south-west, it can still be fine. However, other directions may not get the required savings.
The roof should remain unshaded for a few hours between 10 am and 4 pm. Also, the shading of trees or other buildings is fine to an extent.
Where do you live?
The further south you live, the more energy you can reap using solar panels. While you can still use solar panels effectively in northern regions, you can maximise the efficiency in the South of the UK. This is because the South receives more direct sunlight.
For instance, you can save anywhere between £100 to £240 in London. Whereas, if you live in Manchester, you can save about £95 to £230.
Solar Panels and Property Value
As mentioned earlier, the installation of solar panels can increase property value. However, there are some cases where the panels can push the value down. It is possible because some people may consider the panels plastered on the roof unappealing to the eyes.
Furthermore, if you are planning to move in a few years, it would be best not to invest in solar panels. The panels require you to pay a hefty amount, so it does not make sense economically to move after investing.
If you want to make sure they impact the property’s value, you have to ensure the panels employ the latest technology. Plus, they should be aesthetically pleasing and show significant energy-saving solutions. Therefore, steer away from old technology panels.
Besides, you will have to maintain the panels properly so as to not turn them into a liability for yourself or the new owners. Hence, take time out to maintain the solar panel system periodically.
Quick Tips for Solar Panel Maintenance
Here’s how you can take care of them to ensure the impacts of solar panels are positive on your property value:
- Document the performance: Note down the performance of the panels on a daily or weekly basis. With this data, you can see if the results are inconsistent and contact your manufacturer if necessary.
- Keep the shade away: Energy production can become inefficient over time if there is too much shade on the panels. Therefore, keep the solar panels away from shade.
- Use a monitoring system:: A monitoring system can help you track the panel’s performance and environmental impact. So, install systems that can tell you and the prospective home-buyers how much money they can save on electricity bills.
- Check the inverter regularly: If there are no flashing green lights on the inverter, the panels are not contributing towards saving money.
- Clean the panels regularly: Solar panels need cleaning, although this time varies depending upon the model. Besides, the dirt on the panels can hinder its performance. You can contact your manufacturer for advice on cleaning your panels.
- Professional Servicing: Depending on the model, the panels may require servicing once in a year or a decade. During a professional service, the installer will conduct several tests on the panels, inverters and meter. Plus, regular servicing will ensure your solar energy system runs smoothly.
Most Efficient Solar Panels
You can ensure good ROI only if you invest in the correct type of panels. These panels are available in various types. These are two of the most efficient types of solar panels: Photovoltaic Cells and Thermal.
The photovoltaic cells are the most common type of panels that people use to power their home appliances. On the other hand, the thermal panels can also help you heat water. Furthermore, incentives are focused on photovoltaic cell panels.
Prices and Returns on Solar Power
Solar PV systems can cost anywhere £1400 to £1750 of installed capacity. The precise amount will vary depending on the size of the house and the complexity of the system. Plus, the mounting system, cable length, and roof access also affect the total cost.
An optimal south-facing solar panel system can generate up to 985kWh per kWp. This reading is calculated by MCS calculator for solar panels on a roof of slope 30 degrees.
The size of the system also impacts the Investment Rate of Return. The larger the system, the higher the IRR. For instance, the IRR for a system size of 30 kWp can generate annual electricity of up to 25,968 kWh. This can save up to £3000 which means the IRR is 14%.
At the same time, a system size of 50 kWp can give up to 16% IRR. It will generate 42,993 kWh annually and save up to £4,955.
Once you have the system installed, every unit of electricity that the panels generate is free.
The average peak electricity cost in the country is currently 16p per unit. It is expected to rise to 30p per unit on average over the next two decades. Thus this is the best time to invest in a solar power generation system for your home.
Generally, you can use between 50% to 70% of what the solar panel system generates. You can use numerous assistive technologies like automated devices to maximise electricity. You can even export the energy into the national energy grid.
The Government launched a new scheme that will pay households that install solar panels in January 2020. This scheme is called SEG (Smart Export Guarantee).
You may be eligible for SEG if you have solar PV on your roof and meet their criteria. Under this scheme, electricity suppliers will pay small-scale generators for the electricity they produce using low carbon methods to the National Grid.
To qualify to receive payments from energy suppliers under this scheme, you will need the following:
- MCS (Microgeneration Certification Scheme) certificate
- A smart meter (SMETS 2 meters or certain SMETS 1 meters) that can track the amount of electricity export (the meter should send the data to the supplier every half hour)
- Solar panels with capacity less than or equal to 5MW
A solar panel system is an excellent investment for your home. It comes with a substantial long-term benefit for individuals as well as the community. No wonder it is becoming so popular these days!
Although the instalment costs are high, the overall advantages make it more feasible for modern homeowners. Besides, the panel will pay for themselves in a few years.
The advantages do not end there. Solar panels make your house more independent, increase property value, and last for decades.
It is rather profitable as long as you have plans to stay in the same house for a long time. Additionally, it will allow you to play your part in making the planet cleaner and greener.