Richard Banes-Walker

Senior Associate Director, Estate Agency

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Richard

Installing solar panels can not only make your home greener but can also save you money in the long term. Here’s what you need to know.

Types of solar power

There are two main types of solar panels for residential properties: photovoltaic (PV) panels that convert daylight into electricity; and solar thermal, which heat water for your home. Here, we’ll be talking about solar PV.

What are the costs?

Before installing a solar PV system you need to be clear about your objectives. Are you doing this for the long-term financial return? Or is it simply to reduce your carbon footprint? If you’re doing it to save money, then you need to consider the cost.

When doing this, look at the bigger picture – how long are you planning on staying in the property? Even in the best locations with lots of sun, it’ll take years to pay back the cost of installing solar panels. If you’re only going to be in a home for a few years, it’s not worth installing panels as a money saving measure. It’s not yet been proven that panels actually add value to a home either, so don’t bet on that to pay off the installation costs.

These days, the average cost of solar panels and installation is between £6,000 and £9,000, though Ikea has started selling them from £5,700. And prices are dropping, with costs falling by around half every decade.

Some of this money can be recouped through a Feed-in Tariff (FIT). You get paid in two ways – firstly, through a ‘Generation tariff’. Here your energy supplier pays a set rate for each unit of electricity generated. These rates are guaranteed for up to 20 years. Secondly, there is the ‘Export tariff’, whereby any un-used electricity is sold back to the national grid.

These subsidies have been cut recently, though. Households now receive just 4.11p per kilowatt hour of renewable energy generated, down from 12p in January 2016. This means the time period to pay back the upfront installation cost has been extended.

You will achieve the biggest benefit by using as much of the electricity that you generate as possible. A typical domestic PV system will generate around 3,000kWh a year. That’s worth about £400 of electricity bill savings every year if you can use it when you would otherwise have been buying electricity from your supplier. This usually means operating appliances during the day rather than in the evening, using the electricity to heat water, or storing it in a battery to use in the evening – more of which later on.

You can trade the benefits of the FIT payments for free installation. You’ll benefit from lower energy bills and free maintenance, but the energy company will own the panels, and a 20 year lease on the space above your roof. And fewer companies are doing this now.

When it comes to maintenance costs, the Energy Saving Trust (EST) says a well installed and designed system should need little maintenance. The only major cost might be replacing a part called the ‘inverter’ within around 20 years. This will cost around £800.

Keeping FIT

There are a number of variables that can affect your FIT returns. Inflation will increase the generation and export tariffs each year, while electricity price increases will also impact your potential return on investment. The higher prices go, the more money you’re potentially saving by not paying for electricity.

Your FIT rate is also influenced by your home’s Energy Performance Certificate, with the amount paid for generating electricity depending on your home’s rating. If you've got a grade D or above you'll get the full payment. Below D and you'll only get a lower rate of 0.52p/kWh.

If your home is rated lower than D you might want to make some improvements to make it more energy efficient before installing solar panels.

Are they suitable for my home?

While most homes can have solar PV installed, some homes are more suited than others.

Further south is better due to the weather. A solar PV system will generate electricity even on a cloudy day but it will nearly always generate much more on a sunny day. The EST estimates you’d earn 10% less from FIT if you installed your panels on a home in Manchester than in London.

To achieve the maximum output the optimum orientation for solar panels is south. However, panels facing anywhere from east to west (through south) can be very effective especially if the roof pitch is low. A combination of east and west facing panels will produce an output more evenly spread out during the day.

Another factor to consider is your home’s energy usage in total. It’s worth installing energy monitoring equipment so you can better understand your home’s energy use profile. This can show if your usage matches the output of a solar PV system.

For larger properties, you might need to employ an independent renewable energy consultant to carry out a feasibility study that covers not only solar, but also other technologies and measures such as heat pumps, insulation, battery storage and electric vehicle charging etc. (e.g. Paul Noble at www.mesh-energy.com).

This practical and financial information means you can tailor your energy supply to your property, delivering the maximum benefit over your chosen timescale. For example, if you want to install a PV system but your daytime electricity use is low, you might consider an immersion heater power diverter or a battery storage system.

Any hurdles

While you don’t usually need planning permission, there are a few exceptions to be aware of. For example, if your property has a flat roof, is a listed building or is located in a conservation area.

But don’t be downhearted as there are moves to change the rules surrounding listed properties. The Local Government Group is publishing a paper on the benefits of energy-efficient homes for the country’s growing elderly population – many of whom live in period properties.

There are other ways to get around it, such as locating the solar on a non-listed out building like a garage block or pool house.

Solar panels could be viewed as a modification by mortgage lenders so it’s also best to inform them if you’re planning on installing.

Future changes

There have been a few major breakthroughs in solar technology recently. The two main ones are Concentrated Solar Power (CSP) and transparent cells.

CSP uses mirrors to concentrate solar onto a cell. While this works better on larger scale commercial properties, it could eventually make its way to the residential market. These systems can also include thermal energy storage – essentially rechargeable batteries.

Transparent cells offer a better solution for homes. The cells are made from near-transparent plastic. This could allow solar energy to be generated from windows allowing for greater coverage of panels with lower visual impact.