Martin Lewis: Shining a light on the merits of installing solar power at home

A construction engineer checking solar panels at a solar farm  Photo: Ben Birchall/PA Wire
A construction engineer checking solar panels at a solar farm Photo: Ben Birchall/PA Wire
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As summer’s rays begin to fade, the 550,000 Brits with solar panels will stay smiling. Solar panels aren’t just an environmental boon, they cut your electricity bills and pay you for generating energy too.

However, the amount you can earn from them will likely soon drop again, so if you’re mulling it, it’s worth deciding whether it’s right for you soon. Let me take you through it…

How solar panels work

“Solar power? Hang on, we don’t live in California!” may be your first thought. Yet it’s not about the heat, it’s about daylight, so they still generate some electricity on gloomy days – vital in a country with weather as dull as eating rice cakes while waiting in for a delivery.

There are actually two types of panels: thermal which just heat the water, and photovoltaic (PV) which generate electricity, and it’s these that all the fuss is about, though you’ll usually need a reasonable sized, unshaded roof, facing south-ish.

How solar panels make you money

Financially, there are two reasons to do this:

You save on electricity bills. The Energy Saving Trust (EST) estimates a typical family can knock around £100/year off their bills, as it cuts the amount of electricity you need to buy. This depends on system size, location, whether you’re at home during the day and other factors.

You get paid for generating. You also get paid a ‘feed-in tariff’ for ALL the energy you generate. Crucially, that’s even if you’re the one using the energy, which once big home storage batteries become commonplace will be even better. The amount you get depends on your system’s size, but EST estimates typical payments of £500 a year (tax-free).

In June the rate dropped from 13.3p/kWh to 12.9p/kWh and may drop again from October 1 (in contrast, you pay 9p-13p/kWh for the electricity you use).

Yet once panels are installed, the government has said the rate is fixed for 20 years and rises with inflation, so signing up sooner pays more.

Does buying solar panels still add up?

Back in the day, solar panels were a no-brainer. When the Government launched the feed-in scheme, people typically got a gobsmacking £1,100+ per year in payments, not taking into account electricity savings.
 Then again, a typical system cost £12,000.

Yet now while you earn less, it also costs far less with the price coming down to £5,000-£8,000. For a full detailed analysis and more help, go to www.mse.me/solar, but in a flash...

Here’s some maths based on a typical house in Manchester with a typical 4kWp system:

Cost of panels: £6,500

Annual generation payment: £515

Annual bill savings: £120

Total: £635

Breakeven estimate: 10 years

Profit at 20 years: £6,200.

So with savings rates so low, for someone with a bundle of cash these are a good option to look at. And for some they can pay back even sooner.

The key need-to-knows

To see whether solar panels are worth it for you and whether you can get them, there are some important need-to-knows:

You need a south-facing roof: Panels need to be on a south-ish facing roof, which isn’t usually shaded. The feed-in rate could drop on October 1. To get the higher rate, you need to install the panels, register them and get your application for payments to your energy firm by September 30. Solar panel installers tell us this is doable, if you’re quick. Yet even if you miss it the maths will likely still work – just not as well.

You need a grade D Energy Performance Certificate (EPC): An EPC rates a building on its energy efficiency from A – highly efficient – to G. If you haven’t got grade D or above you get a lower feed-in tariff making it not worth it for most. Go to www.gov.uk/find-an-energy-assessor to find an accredited assessor.

You can still switch supplier: Don’t think this locks you into your energy provider. Your energy supplier doesn’t need to be the same supplier as the one that pays your feed-in tariff, so you’re free to switch. And with many people already overpaying by £250 a year that’s definitely worth doing – do a full comparison via my www.cheapenergyclub.co.uk or any Ofgem.gov.uk confidence code site.

The further south you live, the more you can make: The Energy Saving Trust estimates that you could earn £720/year in London, £635 in Manchester and £595 in Edinburgh – as the south gets more daylight. To predict the likely return for your home use the calculator at www.energysavingtrust.org.uk/solar.

Planning permission isn’t usually needed: The big exception is if you’ve a flat roof, your property’s listed or it’s in a conservation area – you may need to get approval from your council’s building team so check with your local authority.

Ensure your fitter’s a member of the Microgeneration Certification Scheme. You can check at www.microgenerationcertification.org

Aren’t they an eyesore? Will it impact the value of my house?

Beauty is in the eye of the beholder. Some people worry that ugly panels plastered all over their roof and the fact that you’re tied in to a contract that remains with the property once you’ve left could push the price of their house down or put off buyers.

Equally, a more efficient home generating its own energy and paying a feed-in tariff could attract buyers.

If you may one day sell the property, I wouldn’t let it put you off. If you’re selling soon, it’s unlikely to be worth doing as you won’t have time to recoup the amount you shell out.

Don’t some firms advertise free solar panels?

Some companies offer to fit panels free – but do that and they keep the bigger feed-in tariff payments. You just get the £100ish electricity savings, though prices are predicted to rise massively over 20 years.

The firms also maintain the panels and pay for insurance.

Yet you may not be able to buy out your contract, so bear this in mind – especially if you’re likely to move house – as this could be very unattractive to a future purchaser. I’ve full reviews of the free solar providers at www.mse.me/freesolar.

New tool to trick Amazon into giving you free delivery

The giant e-retailer used to give free delivery on its goods (not its third party Marketplace sellers) if you spent £10, but in May it increased that to £20. Delivery costs anything from £1.50 to £6, but a new tool (developed by a very clever chap called Adam who used to work for me), SuperSaverDelivery.co.uk scours Amazon for filler items.

For example, a £19.72 hairdryer comes with a £6.01 delivery charge so £25.74 total. But the tool shows how you can add a 33p Snickers bar so you’d only pay £20.05.