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Are Solar Panels Worth it in 2024?

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Are solar panels worth it?

2024 is a very good year to invest in solar panels. Solar panels are already a common sight in the UK because they help the environment and save people money. However, with energy prices so high at the moment, the potential to save money is even better. 

If you invest in solar panels in 2024, you could pay off the investment quicker than ever before and make better future savings on your energy bills. 

Despite reductions in the energy price cap, people in the UK will still be paying far more for energy than they’re traditionally used to. The Energy Price Guarantee (EPG) will be set at £1,568 (from July 2004), but predictions are that prices are likely to stay high for the forseeable. 

You’d expect us at Switchable to say it, but it looks like 2024 could be a great time to invest in solar. Solar panels were a good investment before the energy crisis, but it makes more sense now than ever to invest in them.  

In this guide, we’ll:

  • Show you how much money solar panels will typically save different-sized households in the UK
  • Explain what factors determine the exact amount that a household will save and what people can do to increase the amount they save 

Estimated Savings with Solar Panels

There is no typical household and some solar panel systems are more efficient than others. Energy prices also change as well and additional factors, such as location and the weather, all have an effect. As a result, there’s no straightforward way to predict how much money a solar panel system will save. Nonetheless, we’ve done our best here to give you an indication of how much you could save with a solar panel system in the UK. 

The figures here are based on figures produced by the Energy Saving Trust, which is an impartial organisation. We’ve based the following predicted savings on their data for a household:

  • That qualifies for the Smart Export Guarantee (SEG)
  • Lives in a gas heated, 4-bedroom detached property in South East England where people are at home during the day
  • Owns a solar panel system featuring a solar diverter that powers an immersion heater (this is a basic but relatively typical solar panel system)

System SizeProperty TypeAnnual Electricity OutputBasic Cost (including installation fee)Potential Annual SavingsTime To Pay Off Investment
2kWSmall flat1580kWh£3,500£358Typical time to pay off the initial investment will be 9 ½ to 10 ½ years after purchase.
3kW2 bedroom flat/house2380kWh£5,500£536
3.5kW (UK Average)2-3 bedroom house2775kWh£6,000£625
4kW3 bedroom house3170kWh£7,000£715
5kW4 bedroom house3960kWh£8,500£894
6kW5 bedroom house4755kWh£10,000£1,072

As you can see, the potential savings are quite impressive. According to the Energy Saving Trust, it’s possible to pay off the initial cost relatively quickly and benefit from free electricity after just 10 years. With solar panels typically coming with a 25-year warranty, you could benefit from many years of free electricity for your home. 

What Things Affect The Amount You Can Save?

There are a number of different factors that determine the effectiveness of solar panels and the amount that a household will save with them. 

In some situations, they will be less effective than in our examples above and will not save as much money. That said, solar panels are effective in most situations. Where savings are reduced for any reason, solar panels are usually still more useful than a lot of people expect. While they won’t suit every household, there’s a good chance they’ll work for you. 

Let’s take a look at all the things that affect how much money solar panels save.  

Energy Prices

The amount you save from your solar panels depends entirely on how much you would otherwise spend paying for electricity. 

Energy prices are key, and they’re an unknown factor in the equation. They’re also something that’s beyond everyone’s control. If you have a look at the UK government’s statistics on energy prices here, you’ll see just how much more people are paying for energy now than they used to. Even if energy prices do fall further over the course of 2024, the savings are only small and energy prices will still be far higher than what we’re used to. 

With solar energy, you’ll be producing your electricity and you won’t need to pay these high prices. 

Now is a good time to think long-term and take action to reduce your energy bills. There’s little indication that energy prices will return to what we’re used to, and solar energy is the best way to get control of costs.    

Energy Use Habits

Another big factor that influences the effectiveness of solar panels, and one which varies from house to house, is a household’s energy use habits. Luckily, this is something that can be controlled, at least to some degree, by the way, you use electricity in your home. Also, if it’s difficult for your household to adapt to solar energy, then you might be able to find ways to work around the problem. 

The key thing here is how much electricity your household uses during the daytime. 

Solar panels (obviously) produce electricity during the day when the sun’s shining. The more electricity you’re able to use directly from your solar panels, the better. It is possible to export energy you don’t use during the day back to the grid, but you’ll save much more money if you’re able to use it yourself.

This can make a big difference. The potential savings we gave as an example are based on a household where daytime energy use is maximised. Where little effort is made to use electricity produced during the daytime, it’s possible that savings could be reduced by up to £250 per year. 

Why is it Better to Use Electricity Yourself, Rather Than Sell it to the Grid?

It’s unfair, but you pay more to buy electricity from the grid than you get for selling it to the grid. At the moment, typical electricity prices, if you buy it from the grid, are 34p per kWh. The most you’re likely to get for selling it is 12p, and you’re more likely to get something around 6p.   

Batteries and Diverters

Luckily, there are ways to optimise a solar panel system to make efficient use of the energy it produces during the daytime. It’s even possible to create solar panel systems for households where people are rarely at home during the daytime. 

The two most important pieces of technology here are batteries and diverters. 

Diverters

A diverter is a device that redirects excess power produced by solar panels. Rather than exporting excess power to the grid, a diverter will redirect it into an appliance in the house. Most often, that appliance is an immersion heater. As such, with a diverter, solar panels can be used to generate free hot water. 

The typical cost for a diverter is around £800. 

Batteries

Batteries, as with diverters, prevent excess energy from being exported to the grid. However, as you can probably guess, they store that energy up rather than redirect it. If you’re not able to use all the electricity that your solar panels produce during the day, you can install a battery that will save it for a time when you need it.  

Generally speaking, batteries are more effective than diverters. This is because, for various reasons, the energy a battery can store is usually more than a diverter can divert away from the grid. 

You’re likely to have a more efficient system, overall, with a battery. You will have to make a bigger initial investment, though. Batteries cost more than diverters, costing between £1,200 and £6,000.    

The Smart Export Guarantee (SEG) 

To benefit fully from your solar panels, you’ll need to qualify for the Smart Export Guarantee. This is the government scheme, which allows you to earn money by exporting excess electricity back to the grid. No matter what kind of solar panel system you have, you’ll always end up exporting some electricity back to the grid. 

Luckily, it’s easy to qualify for the SEG and doing so is usually just a formality. The two important criteria you need to meet are: 

  • You need a meter that provides half-hourly readings of exported electricity
  • Your solar panel system must be MCS certified. Your installer should provide you with a certificate that proves this

Once you qualify for the scheme, you can sign up for an SEG tariff with an energy company and begin to be paid for the energy you export to the National Grid. 

How Much Will You Earn? 

You won’t earn a great deal of money from the electricity you export to the grid. What you do earn will help, though, and will contribute to the total savings you make. 

The actual amount that you earn will depend on what you’re paid under the scheme you sign up for. Amounts vary and some schemes pay relatively well, while others pay quite badly. You don’t have to sign up for a scheme with your energy provider, so it could well pay to shop around. However, you might get a better rate from your own energy supplier. 

Rates can be as high as 12p or as low as 1 or 2p. However, as we said earlier, normal rates are around 5 or 6p. 

You can expect to earn around £100 per year from the Smart Export Guarantee. 

What is the Feed-in Tariff (FIT)?

The Feed-in Tariff is the scheme that was in place before the Smart Export Guarantee. Some people still receive payments under the scheme, but it only applies to people who had their solar panels installed before March 2019. Payments were more generous under the FIT, and people could be paid for the electricity they produced but didn’t export to the grid.   

Installation Costs

The initial price that you pay to have your solar panels installed will affect the amount of money that you ultimately save with your solar panels. Obviously, the bigger the initial investment, the longer it takes to pay off and the less you’ll save overall. 

Usually, installation prices are relatively similar and there aren’t many cases in which someone will have to pay an excessively high price. That said, regional differences in labour/installation costs and site-specific factors which push up the price of installation can make a difference. 

  • Labour costs vary in different parts of the country, with South East England being particularly expensive. For reference, labour costs for solar panel installation are usually between £300 and £500 per day 
  • Anything that makes the installation process more difficult for your solar panel installer could push the price up. Access difficulties, for example, or difficulties connecting your solar electricity to your domestic electricity could push the price up 

Other Factors

Here are some other things that could affect the amount you’re able to save with solar panels. 

System Size

You need to match the size of your solar panel system to the energy demands of your household. 

Most importantly, you need to build a solar panel system that produces enough electricity for your household. If your solar panel system doesn’t produce enough electricity, you’ll be left paying for electricity from your energy supplier. 

Solar Panel Quality

Another thing that people sometimes overlook is the quality of their solar panels. Some solar panels are more efficient than others and this can have an effect on overall savings over the lifetime of a solar panel system.

The two common types of solar panels are monocrystalline and polycrystalline. Put simply, monocrystalline panels produce more electricity and save you more money in the long run. On the other hand, they’re more expensive, they’re less environmentally friendly and they could have other issues. 

Have a look at our blog article on the subject here.   

Location 

Savings from solar panels are higher in some parts of the country because some places get more sunlight hours than others. Generally, the further north you go the less sunlight there will be (although ironically more northern points in the UK actually get longer hours of daylight). 

While this may be the case, the difference in term of savings from solar are nowhere near as much as you might expect. A comparison of the figures between London and Stirling, in Scotland, reveals that Scotland is still a good place to invest in solar. 

Stirling vs London Solar Savings Comparison

  • In London, the potential annual savings from solar (for a householder home all day and earning from SEG payment) is estimated to be £630
  • In Stirling, the potential annual savings on a similar basis would be estimated to be £525.

What About The Environmental Savings?

The last thing to mention, but something that often plays a big part in people’s decision to go solar, is the good that solar panels do for the environment. 

Here are some key facts:

  • One of the biggest benefits of going solar is that you’ll be helping the environment by reducing your carbon footprint
  • The Energy Saving Trust predict that the average household in the UK could reduce their annual carbon footprint by around 1 tonne with solar panels
  • That’s the equivalent of over 40 propane barbecue cylinders or 121,000 charges to your smartphone

Solar Panel Calculators

There are some helpful online calculators that you can use to get an estimate of how much money and CO2 you’ll save with solar panels. 

OVO Energy’s Solar Panel Calculator

If you’ve got an idea of what sized solar panel system you need for your house, you can use OVO Energy’s solar panel calculator to see how much they think it’ll reduce your carbon dioxide footprint by. You’ll also get an indication of how much money you’ll save as well. 

Have a look at the calculator here

Note that OVO’s predictions for CO2 emissions savings aren’t as positive as a lot of people’s. It’s possible that you could save more CO2 than they predict. 

The Energy Saving Trust’s Solar Energy Calculator

The Energy Saving Trust also provide a solar energy calculator, which you can see here

This will give you an indication of how much you could save with a very basic solar system under the Smart Export Guarantee. Note that you could improve these predicted savings by enhancing your solar panel system to optimise your daytime use of electricity.

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Oliver Creevy
Ollie Creevy has over three years of expertise in the home improvements and solar panels sectors by writing content across multiple websites. He is highly knowledgeable about the latest trends, technologies and practices in this industry, and is passionate about sharing his insights with others. Ollie's writing has been featured in numerous publications, including MSN, Bustle, and Realtor.com.

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