What Is the Cost of Solar Panels in the UK?
How Much Do Solar Panels Cost per kW System?
A standard 250W solar panel in 2022 costs £400-£500, but can vary depending on the type and size of the whole system. One of the most common domestic sizes is a 4kW solar panel system, which costs around £6,400 and will cover around 29 square metres of your roof.
With advancements in solar energy technology, the cost of solar panels has fallen drastically over the last few years. In the table below, you can see the breakdown of the average prices of solar panels, the roof space they require, the average savings on your electricity bills, and the savings you can expect after 20 years.
|System Size||Estimated Costs||Number of Panels||Roof Space||Annual Electricity Bill Savings||Savings after 25 Years with SEG|
|3kW panel system||£5,000 - £6,000||12||22 m²||£160||£5,993|
|4kW panel system||£6,000 - £8,000||16||29 m²||£270||£9,240|
|5kW panel system||£8,000 - £9,000||20||32 m²||£320||£11,088|
|6kW panel system||£9,000 - £11,000||24||43 m²||£430||£14,533|
*The figures in this table are calculated based on 250W panels and the national average household energy consumption (2021). The table makes a broad estimate and figures may vary according to size, type, and quality of the solar panel system, as well as export tariffs.
Generally, the more electricity your system can generate, the higher the initial installation cost will be. However, the savings will also be higher in the long run. For example, a 3kW solar panel system will be cheaper to install, but you will not be able to earn as much as you could with a 6kW system over the course of 25 years. And since April 2022, you can also save on VAT as the VAT on energy efficient measures was scrapped temporarily by the UK Government.
What Are the Labour Costs?
When you are given a quote for your solar panel system, labour costs are typically included. There are two common ways of calculating the labour costs for solar panel installations in the UK.
One way is to calculate approximately £300-£500 per person, per day. As it usually requires two people to install the system, a final installation fee is normally £600-£1,000. If you are installing a larger system, it may take more than one day and the costs will naturally rise.
Another way to calculate the installation fee is to charge 20 pence per watt. So, for a 4kW system, you would be paying 20 pence for 4000 watts, resulting in £800.
Factors Affecting Solar Panel Costs in the UK
The estimated costs of solar panels mentioned in the table are typically what you can expect based on the system you choose. However, the cost of installing solar panels for your specific home will depend on the following factors:
1. System Size
Solar panels come in various sizes and the right size would depend on the size of home and individual electricity consumption requirements. Simply put, the larger the solar panel system is, the higher is the installation cost. An average system size of 4kW will cost around £6,000 to install. It’s also important to note that generally, the price per kW decreases the larger your system size is.
2. Type of Panels
The three most common types of solar panels used for domestic purposes are monocrystalline, polycrystalline, and thin-film solar panels. Monocrystalline panels have the highest efficiency, but it also comes at a higher cost. If you’re looking to go with affordability, then polycrystalline may be the right type for you. The more efficient monocrystalline solar panels cost £1 to £1.50 per watt, whereas a polycrystalline panel costs £0.90 to £1 per watt.
3. Installation Process
Another factor that affects the cost of solar panels is the ease of installation. It is possible to either install the solar panels yourself or to hire a solar panel professional. When installing it yourself, you have to take into account the number of panels, the angling of the panels and the strength of the roof.
However, despite being possible to do the installation yourself, you would still need to hire a professional to certify your solar panel system if you would like to benefit from the Smart Export Guarantee to earn money when you send energy back to the grid.
4. Additional Components to the System
If you’re looking to install additional components while installing the solar panels, this will increase your cost of equipment but can decrease the installation costs. Whether you’re planning to install a solar battery storage system or additional features like pigeon proofing your panels, it is best to club them with installing the panels, so that you can decrease the installation cost.
5. Location and Labour Costs
The price of installing solar panels will usually include labour costs, however, this will change based on the location and the per hour rate of labour in that area. Typically it costs between £300-£500 for a person per day and this can be higher or lower based on your location in the UK.
How Much Do You Save with Solar Panels?
You can cut down on your electricity bills with the use of solar panels. The electricity that you use when your panels are active is entirely free, and it can result in annual savings of £160-£430. Of course, the specifications of every household are necessary in order to be precise in the estimation.
The ultimate savings from solar panels comes in the long-term when you save money through the Smart Export Guarantee (SEG). Your savings after 25 years with SEG can range from £5,993 to £14,533 depending on your system and tariff.
*The figures in this table are calculated based on 250W panels. The table makes a broad estimate and figures may vary according to size, type, and quality of the solar panel system, as well as export tariffs (2021).
Overall, how much you can save with solar panels will depend on a few factors:
- Your household electricity consumption
- If you use your appliances during the day when your panels are active
- How efficient your type of solar panel is
- If you generate an income from solar panel funding schemes
You can increase the savings on your bills by using your appliances (washing machine, dishwasher, etc.) during the day, when the sun is out and your solar panels are active. Those small changes can result in big savings on the energy bill.
In addition, how efficient your solar panels are will also play a part in how much you can save. Monocrystalline panels are more efficient (but also more costly), while polycrystalline panels are less efficient (but cheaper). The more efficient your system is, the more electricity it can generate in a given time.
Reduce Solar Panel Costs with SEG Payments
In the UK, you can reduce your solar panel costs even more by making use of solar panel grants, like the Smart Export Guarantee (SEG). Through the SEG, you can earn money for exporting surplus solar power that your panels have generated back to the national grid.
There are currently 15 companies licensed to offer SEG tariff rates. Depending on how much you export back to the grid, these tariff rates can make a significant difference on how much you earn.
The tariffs for exported solar energy can vary from supplier to supplier, but a good rate is 4-6p/kWh. You are able to choose any supplier for your SEG tariff. It doesn’t have to be the supplier that provides you with electricity, however, sometimes you can get better rates if it is your electricity supplier.
SEG generators that are seeking further guidance, you can read this guide on Ofgem's website.
If you have a 3kW system installed, you can earn £75 per year through the SEG. With a 4kW system, you can expect annual earnings of £100, and with a 5kW system you can earn £120 per year.
For example, the average household in 2022 uses 2,900kWh of electricity each year and could export approximately 1,500kWh of electricity if they have a 4kWp solar system. Based on the lowest and highest tariff rates in 2022, the household could be earning between £15 and £112 annually.
Before the SEG came into play, the Feed in Tariff (FIT) was the main solar panel grant available. Those that are already registered under the FIT can continue to receive payments, but the FIT ended in 2019, and no new applications are being accepted.
Watch our video below to understand what funding options are currently available for homes looking to install solar panels:
How Long Do Solar Panels Take to Pay for Themselves?
Depending on the size of your solar panel system and the export tariff, your solar panels can be paid off after 15-25 years. A larger system is more expensive, but it can generate more electricity and, therefore, can bring you more savings in the long-run.
A 5kW solar panel system can break even after 15-20 years, while a 3kW system can take 21-25 years to break even.
To protect the lifespan of your panels, ensure you always adhere to solar panel maintenance and cleaning tips.
Do Solar Batteries Affect the Installation Costs?
Adding a solar battery storage system will inevitably increase the overall costs of your solar panel investment, but it can also mean that you get even more out of your solar panels by using stored electricity when the sun has gone down.
The average prices for batteries can range between £1,200 and £6,000, depending on the battery type, lifespan, and quality. So, if you want to include a storage solution be prepared to pay more up-front.
FAQ About Installation Cost of Solar Panels
Yes, there are solar panel grants available for UK homes to turn to renewable energy:
- Smart Export Guarantee: The scheme allows you to get paid for selling surplus energy back to the grid. The scheme started back in January 2020.
- ECO4 Scheme: The scheme is set to replace ECO3, and will run from April 2022 - 2026. This will enable more people to qualify for grants because of LA Flex eligibility.
- Zero VAT: Recently, the UK announced that there will be zero VAT on energy efficient measures such as solar panels, insulation, and heat pumps. This completely scraps the 5% VAT that was applicable on renewables earlier. The scheme will come into place from April 2022 up to 2027.
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