The long-term investment of purchasing solar panels will help you reduce your carbon footprint as well as your electricity bill. But will they be able to pay for themselves? Will they make you more money? What about the impact on your home’s value? Find out more.
Solar panels can be marketed as both a way for you to save money and make money. You can earn money for the electricity they generate, even if you don’t use it.
Continue reading to discover how long it takes to break even for solar panels and how much you might earn.
Additionally, our exclusive survey of estate agents shows the impact solar panels will make on the value and appearance of your home.
How long will it take for solar panel to pay off their costs?
How long it takes for your solar panel to pay for itself and how much you can make from them will depend on these factors:
Cost of solar PV systems
How much of the electricity produced can you use?
What and how much you are paid to export electricity.
You should balance a more expensive system with the money you can save from using renewable electricity (rather than buying power from an energy firm) and how much you could make by selling any excess.
Finding the lowest SEG rate tariff rate will reduce the time required for solar systems to pay off. You get paid more for the electricity you produce.
If your solar panels have been in use for some time, you will be eligible for Feed-In Tariff payment (FIT). You also get paid for the amount of electricity generated.
What determines the time it takes for solar panels to pay back?
These factors can have an impact on the amount of the SEG, FIT, or savings that you make from using renewable electricity generated by the system.
The electricity price changes can affect your ability to save money on your electricity bills. Higher electricity prices will result in greater savings.
Solar panel installation costs A smaller upfront cost can mean it’s easier to breakeven, but if the system is smaller it might produce less electricity.
SEG tariff rates These rates vary greatly between companies. Fixed tariffs ensure the same rates throughout the contract’s length, while variable rates change according to the cost of electricity (for instance, rates could be tied to wholesale prices).
Inflation This can affect feed-in tariff payments if you are signed up. They are adjusted to RPI each year.
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How to invest in solar panels
Some companies sell solar panels as a money-making investment. However, there are important differences between traditional options like savings and investments and purchasing and installing solar panels.
Feed-In tariff payments can be received if they have been paid. They are guaranteed for between 20-25 years, depending on the date that the panels were installed. The Retail Prices Index (RPI), which changes annually, determines the price per kilowatthour you are paid. Any money you make is not subject to tax.
You will not be able to get electricity through a SEG tariff. They have lower long-term security. Fixed tariffs are only valid for a set period of time, usually 12 months. After that you’ll have to find another one. Companies may choose to alter variable tariff rates.
You can boost your savings and earn more from solar PV.
How to pay for solar panels
It is best to pay upfront for solar PV panels.
A loan or remortgage may be an option if you don’t have the funds to pay upfront. There will be interest charges on any money borrowed, and loan repayments may exceed the return you get from the solar PV systems. So make sure you carefully calculate your options.
You can also sign up for a free solar panel and solar buyback scheme or rent-a roof, but be careful.
How will solar panels affect my home’s value?
Solar PV installations are not guaranteed to increase the property’s value. The majority of estate agents that we interviewed** believe that solar panels make no difference to the value and worthiness of your home.
Only 8% believed solar panels would increase the property’s value. 17% thought they would decrease it. However, 67% said that having solar panels does not impact the value of a property.
Property value and the impact of solar panels
8% – Increases property value
17% – Property value decreases
67% – Does not make any difference in property value
8% – I don’t know
Survey of 1,252 estate agents, conducted by NAEA Propertymark and Which? in June 2017.
These factors may also have an impact.
The age of the solar panel
If they are owned by a business rather than the homeowner
They have an impact on the appearance of the property.
Keep in mind that over the 25 year period, the system’s Inverter could need to be changed and that the efficiency of the panels will decrease. If you are looking to sell your home and invest in solar PV, these factors must be considered.
A surveyor is a good idea if you plan to buy a property that has solar panels.