One of the headlines about solar energy or solar power is saving money and being a good investment. Here are some illustrations of why solar energy is a good investment and how by using as much as can yourself, it saves you money especially with what seems like a high upfront cost.
Let’s start with two scenarios for three typical UK homes (from Ofgem figures) to see the savings and Payback Period. The first scenario uses 50% of the solar power generated in the home, exporting the other 50% via SEG. Secondly exporting all the power via SEG only as many people imagine will happen.
The 25 year figure for total savings is used as that is the warranty period on most panels, however solar panels go on generating way beyond with some best solar panels being given a 40 year warranty now.
Small Home (1 – 2 Bedrooms) – 1,800 kWh annual electricity usage.
A 2.1 KWp solar panel system or 6 x 350W solar panels. In the UK a 350W panel will produce per year on average 265 kWh each = 1,590 kWh in total. Average installation Cost for 3.5 kWp Solar Panel System – £4,700.
This gives an equivalent lifetime electricity price of £0.118 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
50% House, 50% Export | £230 | £119 | £349 | 13.5 Years | £4,025 |
All SEG Export | £0 | £238 | £238 | 19.8 Years | £1,250 |
Medium Home (3 Bedrooms) – 2,900 kWh annual electricity usage.
A 3.5 KWp solar panel system or 10 x 350W solar panels. In the UK a 350W panel will produce per year on average 265 kWh each = 2,650 kWh in total. Average installation Cost for 3.5 kWp Solar Panel System – £7,860.
This gives an equivalent lifetime electricity price of £0.118 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
50% House, 50% Export | £384 | £198 | £582 | 13.5 Years | £6,690 |
All SEG Export | £0 | £397 | £397 | 19.8 Years | £2,065 |
Large Home (4 Bedrooms) – 4,300 kWh annual electricity usage.
A 4.9 KWp solar panel system or 14 x 350W solar panels. In the UK a 350W panel will produce per year on average 265 kWh each or 3,710 kWh in total. Average installation Cost for 4.9 kWp Solar Panel System – £11,000.
This gives an equivalent lifetime electricity price of £0.118 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
50% House, 50% Export | £537 | £278 | £815 | 13.5 Years | £9,375 |
All SEG Export | £0 | £556 | £556 | 19.8 Years | £2,900 |
The type of home electricity consumption figures come from Ofgem’s published values. Solar panel values from MCS, Energy Savings Trust. Savings calculated using Ofgem price cap rates and Octopus Energy Export tariffs July to September 2023.
It is important to note that unless your are at home during the day when their is maximum solar production, 50% use is generous and in reality for average family out during the day is more likely to be 30-35%, roughly half between the two savings figures.
Looking at the figures above and you can see that the real benefit comes when you can use all the solar power you generate. Unless you have an EV you can charge during the day, it is very unlikely you will use all your solar energy in the home when it is being produced. The answer is to time shift your solar energy from when it is produced to when energy consumption is the highest, evenings and mornings using a solar battery.
There are other advantages to having a battery too. With a battery system designed to take advantage of lower prices at night, in the low solar generation months of winter, you can charge the battery using low cost electricity and then use it when prices are higher, saving the difference and paying off your solar system even faster.
Another advantage is protection against power outages, keep the lights on when the power goes out.
Although solar batteries add to the initial cost they can help you save more overall as you use more of your own generated energy. The below shows what happens to payback period and savings adding an appropriately sized solar battery to use all the solar energy in your home.
Solar Power Use | Money Saved | Payback Period | 25 Year Savings | Savings vs 50%/50% | Savings vs SEG Only |
|---|---|---|---|---|---|
Small House | £461 | 15.6 Years | £4,325 | £300 | £3,075 |
Medium House | £768 | 15.4 Years | £7,340 | £650 | £5,275 |
Large House | £1,075 | 15.4 Years | £10,375 | £1,000 | £7,475 |
So although batteries do add to the initial cost, they are VAT free if added with a solar panel system, and can give you larger savings than without a battery over the lifetime of the system.
Simply click the button and complete the form. We will then be in touch to understand your needs, providing more information on how a solar energy system can save you money on your energy bills.
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