Payback time for Solar Panels in the UK
With the increasing focus on electricity bills, renewable energy and sustainability, solar panels have become a great option for UK homeowners. But realistically, how long does it take to get back your initial investment?
2 mins read
What is Payback time?
This often means the time it takes for an investment in solar panels to be recovered through savings on electricity bills and/or grid operators paying customers back for the electricity sent to the grid. After the payback period is done, the homeowner effectively begins to earn money from the solar panels in the form of lower energy costs o. The payback period can be different depending on a variety of factors such as government incentives, energy consumption, the efficiency of soar production and total investment.Government incentives and installation costs
In the UK, there is a wide range of cost for PV systems. A typical home will have a cost between £4,000 and £7,000, depending on the size of the system and the quality of the electronics and solar panels. Larger systems would cost more but they would in general tend to recoup the investment faster. Some government such as (SEG) Smart Export Guarantee give PV owners the opportunity to sell the excess electricity to the grid. The amount of money received for this may vary but as rule of thumb, the amount sold is around half the price to buy the same kWh. In this case it is better to consume the energy produced by PV than to sell it to grid operators. However, there are times where homeowners are on holiday or not in their home, that means that PV systems don’t stop paying for themselves.As the government is switching to renewable enregy, there is another benefit as of 2023. Solar installations for homes are subject to 0% VAT rate, making the overall cost of solar panels more affordable for UK households. This helps drive down the overall payback period.
Energy savings
The main reason people install solar panels is to reduce electricity bills. A 4kW solar panel system in the UK can generate around 3,400kWh per year. Given that usually the average consumption of a UK household is roughly 3,600kWh solar panels can cover that need. Depending on energy consumption, homeowners can expect savings of £300 to £600 per year, which in many cases offsets their consumptions.As energy prices continue to rise and Grid operators begin to have difficulties in serving households putting pressure on future price increases, payback periods begin to shorten as time goes by. As more electric devices are being introduced to the system such as electric cars, bikes and scooters prices as demand for electricity will continue to go up. This will make the payback time for solar panels decrease over time.
Average Payback Time
On average, the payback period for solar panels has decreased over time and as of September 2024 it ranges between 9 to 10 years. This time frame depends on several factors, including the size of the PV system, your households energy consumption, how many days of sun your area receives a year and local government incentives. At sunmatch.co.uk we take a variety of factors in consideration and calculate these on the fly giving you a very good proximation of how long it takes to pay back your initial investment and make money in the long runRegions such as the South West tend to have shorter payback periods than other regions because there is less cloud coverage throughout the year. As the performance of solar panel systems is linked to amount of direct sunlight they receive, location, roof orientation and angle all play an important role in determining the financial return on investment.
A final thought
For UK homeowners, the payback time of solar panels is a key consideration when understanding the benefits of renewable energy. As installation costs range from £4,000 to £7,000 and savings from £300 to £600 per year, the average payback starts becoming shorter and shorter. At sunmatch, you only need to add your address and we automatically calculate all of these details for you, no strings attached.Factors like government incentives, local energy costs and solar irradiance play a crucial role in determining how fast you can get your money back. While solar panels might require an initial investment upfront, the benefits for the planet and your pocket will outweigh the initial cost. I would think it as you would purchase an “infinite” energy generator that would save the planet and help you become self-sustainable.
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