We are continually told that solar panels save us money on our energy bills and that they can earn us money too. Solar Panels are a popular option for those who want to cut costs while producing eco-friendly energy. But it is important to understand if the calculations really make it worth your while. The blog will try and provide all the information that you need to know.
Table of contents
- Maximizing Solar Savings: Understanding the Smart Export Guarantee (SEG) Scheme
- Savings Potential: Using Solar Power to Reduce Energy Bills
- Understanding the Smart Export Guarantee (SEG) Scheme and Earning Potential
- Does the break-even point make solar panels worth it?
- Maximise your energy usage to make solar worth it.
- Other factors affecting whether solar is worth the investment
- Long term plans
- If you decide solar panels are worth the investment
Maximizing Solar Savings: Understanding the Smart Export Guarantee (SEG) Scheme
With the soaring energy prices, harnessing solar power for personal use can lead to significant savings. Furthermore, under the Smart Export Guarantee (SEG) scheme introduced in January 2020, households in Great Britain receive payments. These are for the solar energy they “export” to the national energy grid. Excess electricity is the energy they generate but don’t use themselves.
The previous Feed-in Tariff (FIT) scheme, which closed to new applications in March 2019, was more generous. It offered higher rates and compensated solar owners for all the energy generated.
However, it is beneficial to do your own to calculations to ensure solar panels are worth it. Moreover, the SEG scheme can be financially advantageous for some individuals (detailed analysis below).
Savings Potential: Using Solar Power to Reduce Energy Bills
Primarily, you have the advantage of using the electricity generated by your solar panels. This leads to a reduction in your energy bills. The amount of savings depends on various factors. The size of your system, your electricity consumption, and whether you are home during the day all affect savings.
The Energy Saving Trust estimates, a standard household with a 3.5-kilowatt-peak system can potentially save between £175 and £420 annually based on the current Energy Price Cap rates.
If you haven’t seen the Channel 5 investigative programme on Solar you can watch it here: Channel 5 Investigate If They Are Worth It Here
Understanding the Smart Export Guarantee (SEG) Scheme and Earning Potential
Also, keep in mind that many tariffs are variable, so it’s essential to monitor the rate you’re receiving. In order to sell back energy to the grid, engage with an MCS Accredited installer like SolarGain. According to estimates from the Energy Saving Trust, a typical household could make between £100 and £145 per year with a rate of 5.5p per kWh.
If you had solar panels installed before 31st March 2019, you might already be on a feed-in tariff (FIT) that pays more. However, if you’re currently on a variable SEG tariff, you have the freedom to switch.
For detail on the tariffs see our website.
|20p or 18p*
|16.5p or 3p*
|Fixed for 12 months
|15p or 4.1p*
|Fixed for 12 months
|Outgoing Fixed Lite
|15p or 6.4p*
|Fixed for 12 months
|Export & Earn Flex
|5.6p or 3p*
|Export Variable Value
|5.6p or 3p*
|5.6p or 2p*
|So Export Flex
|20p or 7.5p*
|Ovo SEG Tariff
|20p or 4p*
|Fixed for 12 months
|SEG V1.1 Tariff
|Smart Export Tariff
|Smart Export Guarantee
Does the break-even point make solar panels worth it?
The break-even period hinges on various factors. These include location, electricity consumption patterns, timing of energy usage, the inclusion of batteries in your solar system, and the payments you receive through the SEG scheme. If you opt not to include solar batteries in your system, the initial cost of the setup will be lower. However, the return on investment will be slower. You won’t be using as much of the generated energy as you would with solar batteries. Additionally, it’s important to consider the long-term benefits of battery storage in terms of energy utilisation and potential savings.
Maximise your energy usage to make solar worth it.
Currently, on a standard tariff under the July Price Cap, households pay about 30p per kilowatt-hour for electricity. However, the payment you receive for exporting the surplus energy back to the grid is significantly lower. To make the most of solar, households should align electricity consumption with electricity generation. This means programming white goods to run during the daylight hours, etc. This is particularly important for households without solar batteries. They are unable to store excess energy for later use.
While this approach may lead to exporting less energy and receiving lower payments, the overall financial gain is substantial. This is because you reduce your expenses on buying energy from the grid. Moreover, this strategy ensures efficient use of the energy you generate and can result in considerable long-term savings.
Other factors affecting whether solar is worth the investment
When considering the worthiness of a solar investment for a particular home, several factors come into play. These home-specific factors include:
- Roof Suitability: The size, shape, and orientation of the roof play a crucial role in determining how many solar panels can be installed and their efficiency in capturing sunlight.
- Shading and Obstructions: The presence of nearby trees, buildings, or other obstructions that cast shadows on the roof can reduce the solar panel’s effectiveness.
- Roof Condition: The condition of the roof should be assessed to ensure it can support the weight of the solar panels and that there are no potential leaks or structural issues.
- Available Roof Space: The amount of available roof space will determine the maximum capacity for solar panel installation and, consequently, the potential energy generation.
- Planning Permission: Most homes will not need planning permission for solar panels although there are some exceptions: if your home is in a conservation area, if your home has listed status and also if you have a flat roof. In these cases we recommend speaking to Building Control at your local Authority.
Long term plans
Before deciding to invest in solar panels, it is essential to take your long-term plans into account. The return on investment for solar installations is not immediate. Therefore, so if you are contemplating moving to a new home shortly, solar panels may not be the most suitable choice for you. However, it’s worth considering that solar panels can increase the value of your home. According to a report published by the trade body Solar Energy UK, homeowners have experienced an increase in the value of their property. They were able to recoup some of the installation costs through higher sale prices. Nonetheless, while this is a valuable consideration, it should not be the sole reason for choosing solar panels for your household. Other factors like potential energy savings, environmental benefits, and long-term sustainability should also be taken into account.
If you decide solar panels are worth the investment
If you’ve made the decision to invest in solar panels and firmly believe in their worth, it’s crucial to carefully select your installer. To start with, ensure that they hold MCS accreditation, which guarantees that the installation adheres to scheme standards. Importantly, it also allows you to sell surplus energy back to the grid. Opting for a non-MCS accredited installer will still enable energy export, but you won’t receive any compensation for it. Once the installation is finished, obtaining the MCS certificate is essential for registering it to receive the aforementioned SEG payments. Additionally, it’s also important to confirm that the installer is a member of either HIES or RECC.
If you would like to find out more or have any questions, don’t hesitate to contact us . We cover England and Wales and are MCS accredited and an HIES member. Call us at 0800 001 6258 or complete our form for a Free, no-obligation Survey.