Is it worth investing in a solar pv system?

The world is becoming more eco-conscious, with many of us turning to reasonable solutions, such as, reusable bags, vegetarian alternatives, cloth nappies, water saving shower heads, using public transport, and filling up the kettle only as much as you need to. However, renewable energy has always seemed to be a more expensive solution for being eco-friendly.

Ten years ago, in 2010, solar panels were steadily rising to popularity with the total UK solar capacity at 95MW, the cost to install was steep but the Feed-in-Tariff (FiT) was providing many homeowners with an extremely profitable, additional income from their solar investment.

Now, the FiT has ended and the Smart Export Guarantee (SEG) has been introduced in its place. As such, the demand for solar panels and the cost to install them have fallen dramatically as the incentives are now limited with the SEG Scheme. Yet, the solar installation numbers are rapidly creeping up, with the UK solar capacity reported to be 13,616MW in 2019, across nearly 980,000 installations. So it begs the question, is now the time to install solar panels?

COVID-19 impact

In a post-pandemic world, UK employers are expecting the proportion of those working from home will double once the crisis is over, rising from 18% to 37%. With more people working from home, that has led many homeowners to start making improvements to their house as they spend an increased time within it. Whether that be creating dedicated working environments, expanding living areas, renovating gardens or, in some cases, it has meant installing solar panels to become more self-sufficient.

It was reported that not long after the 23rd March 2020, when the first COVID-19 lockdown began in England, that the solar sector received a dip in sales. But it didn’t take long for the industry to recover and jump by 37% for domestic installs in May compared to April, and then a further 185% in June, showing a significant increase and positive sign for the future of solar panel installations.

You can get the most out of solar panels when you are there during the day to use the free electricity generated there and then. You can of course sell back any unused energy to the grid for a profit, but without installing a solar battery to store all of your energy generated, the more time you spend at home during the day, when the sun is shining and generating energy for you to use, the more you can maximise on that electricity generated. In the evenings, when most are home from work and using electricity, is when solar panels are not generating as much energy as the sunlight is minimal, if at all.

How much do solar panels cost?

When you think about solar panels and renewable energy in general, the immediate reaction is that it will be expensive. That may have been the case 10 years ago, but the cost of solar panel installation has in fact decreased over the last couple of years. As the Feed in Tariff (FiT) has been removed from new installs, the overall cost to buy solar panels has dropped as well.

The cost of your installation will obviously vary depending on the kW you select for your home, as a larger home will use more electricity and therefore need a larger system to cope with their needs.

For example, a typical 4kW solar panel system would be suited for a 3 bedroom house and will require up to 13 panels, and a system this size will cost in the region of £4,000-£6,000. It’s been estimated that it will take between 4 to 20 years to regain the cost of the solar panels, depending obviously on the size of panel system and where you live (Southern areas will receive more sunshine than those in the North).

SEG Scheme/FiT

If you were registered for the FiT before the funding was cut, then it was incredibly profitable to have solar panels installed, with the subsidy around 43p per kWh. However, now homeowners only have the option of the Smart Export Guarantee (SEG) as the FiT is no more, with incentives depending on your energy provider.

The SEG is a government initiative which aims to give homeowners some incentive for selling any unused energy generated from their solar PV system back to the Grid, with their energy companies paying a set tariff. The SEG doesn’t offer the same compensation that the FiT did, however, it is a case of something is better than nothing. It means that the electricity generated isn’t wasted if you aren’t there to use it, and you will be making a small profit from it.

How much will you earn from SEG? Well, it won’t be to the same magnitude that those on the FiT will receive, as the amount you receive will be dependent on the energy company and the tariff they independently set. Which? has reported that in November 2020, energy companies were paying between 1p per kWh and 5.5p per kWh, with some as high as 11p per kWh. So it is important to shop around for the best tariff.

If you do join onto the SEG Scheme, you will need to install a smart meter too as this will be required to send accurate readings to your energy provider, to ensure the energy you are generating and exporting back to the grid is correctly recorded and you are being paid fairly.

Is it worth installing a solar PV system?

If you are home most of the day, then yes, you will find the benefits will outweigh the negatives. The benefit of having solar panels will start when you are there to use the electricity generated. The more time you spend at home. the more solar electricity you are using when it is actively being generated and therefore, reaping the benefits long term. You are predicted to reap the benefits of the solar panels more if you are there to utilise the energy generated from the sun there and then, rather than in the evening, when energy produced may be less.

If you install solar panels today, there will be no FiT offering a high fee for your exported energy, but you will be paying more than half for your solar panels while still receiving a small cost incentive.

If you want to become more green, save some money on your bills going forward and you are finding yourself at home more during the day, then yes, solar power could be the best investment for you. But it could take you anywhere up to 20 years to earn back the cost of them, depending on the size of your panel installation.

Before investing, make sure you calculate your annual energy usage and the size of installation needed to make it a viable option. Most homes in the UK will use 3,700kWh on average every year and to produce this much energy every year, your installation would need to be at least 4kW. So make sure you are comparing your energy usage.

You should also look at if your roof is suitable for solar panels, as the direction of your roof will also make a huge difference to your energy production. Those with south facing roofs are more likely to generate more energy as you have more hours of sunshine, compared to that of a North facing roof that will receive less hours of sunshine. Energy is still generated in daylight, but not to its maximum potential.

Are there any large trees shadowing your roof? Shadows can cause you to not produce as much electricity as the shadows block the rays. Make sure your panels are positioned in full sunshine.

Does your energy provider contribute through the SEG Scheme? Before jumping to install solar panels, check if your energy provider will pay you for the excess electricity you don’t use through the SEG. If you aren’t with one that will pay you, consider switching to a different energy provider, perhaps a larger one which supports the SEG scheme. If you switch energy providers regularly, which is recommended to make sure you get the best tariff deal, then remember to check with each provider when you do to ensure you won’t be left out in the cold this winter by them.

So if you’re considering getting solar panels installed, remember to ask yourself these questions first:

  • Do you spend enough time at home during the day to use the energy when it’s generated?
  • Would you consider battery storage for any unused energy generated? (if you aren’t home as much in the day)
  • Are there any trees creating shadows on your roof? (any trees you cannot control/chop down)
  • How much energy do you use?
  • What size solar PV system would you require to be able to meet your annual usage needs? Or even half your usage needs to allow for cheaper bills?
  • Is your roof large enough to take this size of solar PV system? And is it facing in a suitable direction to get the most energy.

These practical questions will help you narrow down your true options when it comes to solar panels and to find out if they are a viable solution for your home.

If you’re thinking that solar panels aren’t worth it for your home and energy needs, then maybe it is worth looking into alternative ways you can save money around the home or alternative ways to be more eco-friendly.

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