Are Solar Panels Worth It?

If you own a home or run a business, you may have been considering solar panels for some time. You’ve probably also heard about the high initial costs, leaving you wondering – “Are they worth it?”.

The short answer to this question is: yes, they’re worth it. But why is this the case?

In this comprehensive guide, you will learn exactly why solar panel installation is worth it for both homeowners and businesses.

We’ll cover the initial costs, return on investments, payback periods, and everything else you need to make an informed decision.

Are Solar Panels Worth It For Homeowners?

If you’re considering installing a solar panel system in your home, you probably have many questions. How much will it cost? What’s the return on investment? How long do they last? Are they easy to maintain, and do you have to pay VAT on them?

This section is going to answer all of these questions for you.

How much do solar panels cost?

The cost of a solar panel system includes the panels, mounting hardware, inverter, and labour. The full cost will vary depending on the size of your house and other factors, but, generally, a 3.5 kW to 4 kW system costs between £5,000 and £13,000.

A 4 kW solar system for a home with 2 to 3 bedrooms usually costs between £9,000 and £10,000, but the cost can rise significantly for larger homes that require more solar panels. This is because larger homes have greater electricity requirements than smaller ones.

Single solar panel costs can range from around £100 to £500 based on efficiency and solar power output. The labour costs of installing solar panels are usually around £300 to £500 per person, per day.

If you’re looking at an off-grid solar setup, you might wonder about the costs involved. For a detailed breakdown, check out our guide on the costs of an off-grid solar system.

Return on investment (ROI)

The ROI on solar panels for homeowners can vary due to factors like the energy savings they make, the initial costs of installing the panels, and any government incentives the homeowner may be entitled to.

Based on the current energy price cap rates in the UK, it takes around 15 to 20 years for a typical 3.5 kW to 4 kW solar system to reach the end of its “payback” period. This refers to how long it takes for the savings you make on your energy bills to reach the amount you initially paid for the solar panel system.

For example, if the initial cost to install the panels in your home was £10,000 and you saved £1,000 per year on your energy bills, the payback period for your solar panels would be 10 years.

As well as saving money on electricity bills, you can also sell excess solar energy back to the UK grid to generate extra income from the Smart Export Guarantee (SEG) scheme.

The scheme allows homeowners to sell their surplus solar energy to energy suppliers in the UK, which can greatly increase the ROI you get from your panels.

The amount of money you can generate from the scheme varies but you could make between £80 and £165 per year. While this isn’t a huge amount, it can help to decrease the payback period of your solar panel system.

To be eligible for the scheme, your system’s capacity can’t exceed 5 MW and you must have a smart meter or export meter fitted to send readings to the SEG supplier.

Additionally, UK residents benefit from a 0% VAT rate on solar panels for residential properties. This VAT relief was introduced on April 1, 2022, for England, Scotland, and Wales, and on May 1, 2023, for Northern Ireland. The zero rate was announced by then-Chancellor Rishi Sunak in the 2022 Spring Statement and will remain in effect until March 31, 2027.

Maintenance and lifespan

When considering installing solar panels, you’ll probably be wondering if they’re a worthwhile long-term investment.

On average, the lifespan of a solar panel system is between 25 and 30 years. However, this can be affected by factors such as climate, geographical location, and the quality of the panels. For a more in-depth guide, check out our article on how long do solar panels last.

Although solar panels are generally very low maintenance, some maintenance practices can help increase their durability, including:

• Cleaning: You should clean your solar panels to remove dirt, dust, pollen, bird droppings, and any other debris that accumulates on their surfaces. When the surfaces are blocked, it prevents sunlight from reaching them, which significantly decreases power output. Cleaning should be carried out at least every six months.
• Professional maintenance: Whenever there’s a need for repairs or replacements, rely on professionals to do the work for you. If you try to do it yourself, you could decrease the longevity of your panels.
• Prevent shading: Although this doesn’t directly maintain the panels themselves, it’s important for their overall efficiency. You should regularly check that no trees or other structures are shading your solar panels, and remove any existing shading if possible.

The durability of solar panels, and the lack of maintenance they require, is another reason why they’re usually worth it for homeowners. The maintenance they do require can be carried out at little cost using household items like a garden hose or a soft cloth.

Are Solar Panels Worth It For Businesses?

So, we certainly think installing solar panels is worth it for homeowners, but how about businesses? Well, we think it’s definitely worth it for business owners too. We’ll show you why.

How much do solar panels cost for businesses?

As with residential solar systems, the initial cost of solar panels for a business varies based on the size of the property and its energy requirements.

On average, a commercial solar system in the UK costs between £16,000 and £70,000. A system that costs this much will usually be suitable for a small to medium-sized business. Of course, for larger systems, the costs will increase.

The systems most commonly used for businesses are commercial solar photovoltaic (PV) systems. A commercial solar PV system is much larger in scale than a residential system and is designed to satisfy the energy requirements of businesses, industrial facilities, and other commercial entities.

Although the initial costs of these systems are high, the payback period is usually much shorter than it is for residential systems, at around 4 to 6 years on average.

Financial incentives

There are several financial incentives for businesses that install solar panels, such as:

• SEG scheme: As with homeowners, businesses can take advantage of the SEG scheme and sell excess energy they generate back to the national grid. This is an excellent way for a business to increase its ROI on its solar PV system.

Schemes and incentives like these are aimed at encouraging businesses in the UK to adopt solar panel systems and transition towards renewable sources of energy.

Your business can take advantage of them to reduce energy bills, earn money from excess energy generation, and shrink your business’s carbon footprint.

Integration with corporate sustainability goals

Installing solar panels can also help your company to achieve its corporate sustainability goals. These goals are important for many reasons, such as:

• Environmental responsibility: By actively reducing your business’s carbon footprint, you demonstrate your environmental commitments to your employees, stakeholders, and potential customers.
• Employee engagement: Green initiatives, like the use of solar panels, have been shown to increase employee loyalty and morale. This is because employees tend to engage more with companies that prioritise social and environmental responsibility.
• Investor relations: Increasingly, investors look for companies that are committed to social responsibility and sustainability. By transitioning to solar power, your business can improve the relationships you have with existing investors and attract new, socially responsible investors.
• Brand reputation: Investing in solar panels is also a good way to improve the reputation of your brand. It’s been demonstrated that customers are more likely than ever to base their purchasing decisions on the perceived sustainability of a company’s operations. By using solar power, you show customers that you’re just as committed as they are to a greener future.

How Many Solar Panels Do You Need?

So, you should now be convinced that solar panels are worth it for both homeowners and businesses. Yet, you might still have some more practical questions floating around your mind, like “How many solar panels do I need?“.

For businesses, this can vary greatly depending on roof size, energy consumption, panel efficiency, and local sunlight conditions. There is no real guide we can give you for this as the needs and sizes of businesses differ so drastically.

Generally, you should arrange for a detailed professional assessment of your business to determine the number of solar panels you’ll need.

As mentioned earlier, the number of solar panels you need for a home depends on its size and energy requirements as well. The number of sun hours in the area also needs to be considered.

While a solar panel installer is the best person to tell you exactly how many solar panels you’ll need, there are some rough estimates we can give you.

A 1 to 2-bedroom house typically needs between 4 and 8 solar panels to generate electricity for the whole home. A house with 3 bedrooms might require 8 to 13 solar panels to meet the home’s energy requirements.

The Benefits Of Solar Panels

Some of the key benefits that make solar panels worth it include:

Reduced electricity bills

Solar panels reduce your home or business’s reliance on the national grid as you’re able to generate electricity yourself. Of course, when you use less electricity from the grid, there’s less electricity to pay for, which leads to a significant reduction in your energy bills.

This is most noticeable during the spring and summer months when there are more daylight hours. As mentioned, the money generated from selling energy back to the grid also helps to offset the initial solar panel costs and can be used to further reduce your electricity bills.

Environmental benefits

As a renewable energy source, solar panels have many environmental benefits, including:

• Water conservation: Traditional electricity production processes require large volumes of water for equipment cooling. Solar energy generation doesn’t require any water for cooling which contributes to the conservation of water resources.
• Reduced greenhouse gas emissions: Solar energy generates electricity without producing harmful emissions like carbon dioxide which contribute to air pollution and climate change.
• Sustainability: Sunlight is an infinite resource, which makes solar energy renewable and sustainable, unlike other electricity production methods that rely on finite fossil fuels.
• Prevention of oil spills: Solar panels reduce the need for oil in the energy production process, minimising the likelihood of oil spills which can be devastating for marine ecosystems and coastal communities.
• Protection of land and wildlife: By incorporating solar panels into existing residential or commercial structures, no new land is needed for solar installations. This prevents the need for clearing new land which leads to the destruction of wildlife habitats.

Incentives and support

We’ve covered some of the incentives and support that are available to homeowners and businesses in the UK. However, there are others, including:

• Energy Company Obligation 4 (ECO4) Scheme: This scheme was launched in April 2022 and will run until March 2026. It offers partial or full funding to install solar panels for low-income households and homes with poor energy performance ratings. It’s available to homeowners in England, Scotland, and Wales.
• Lloyds Bank Eco Home Reward: If you have a mortgage with Lloyds Bank or are planning to borrow money from them for home improvements, you can get up to £500 cashback towards the installation of solar panels.
• Home Energy Scotland Grant and Loan Scheme: Homeowners in Scotland can access this scheme to gain financial support for solar panel installations.
• Solar Together: This allows renters and homeowners in participating council areas to engage in group-buying schemes for solar panels.
• Local Authority grants: A number of local councils in the UK provide grants to homeowners for solar panels.

Challenges And Limitations Of Solar Panels

As well as the benefits, there are also some challenges and limitations to adopting solar panels for both homeowners and businesses.

Weather dependence

Solar panels are highly dependent on optimal weather conditions and require plenty of sunlight to generate electricity. Therefore, their functioning is greatly affected by weather changes such as cloud cover and seasonal variations.

In the UK, where the climate is particularly unpredictable, this can lead to energy storage uncertainties and electricity generation that often doesn’t align with peak demand.

Space requirements

For large businesses, utility-grade solar plants may be required to generate enough electricity for their operational needs. Finding space for these plants can be very challenging, particularly in urban centres where space is at a premium.

The good news for large businesses is that technological advancements like solar glass and solar roofing are starting to address this issue.

Upfront costs and financing

The upfront costs of solar panels can be a big hurdle for both homeowners and businesses. However, there are several ways to mitigate these costs, including taking advantage of grants and schemes, as well as investing in second-hand solar panels.

Environmental costs of production

Although solar panels provide renewable energy, there are still some environmental concerns around their production. For example, their production requires the use of rare or precious metals and high-temperature processes that release carbon emissions. Plus, there is currently a lack of sufficient recycling locations for solar panels in the UK.

Storage and overgeneration

Solar panels generate the most energy during the spring and summer months when there is plenty of sunlight. Unfortunately, this doesn’t align with the period when energy demand is at its highest, which is during the winter.

This means that solar panels overgenerate electricity during the summer and spring. As energy storage facilities for this excess energy are currently lacking in the UK, this electricity is wasted.

This issue will need to be addressed to even out the mismatch between supply and demand.

The Future Of Solar Panels

As the UK continues its shift towards renewable energy systems, there will be significant technological advancements in solar panels and their use will greatly expand. Let’s take a look at some of the ways solar panels will evolve in the future.

Technological innovations

The efficiency of solar panels will be enhanced by ongoing research and development. On average, the current efficiency levels of solar panels are between 15% and 20%.

Innovations like the development of tandem solar cells can improve the performance of solar panels by offering higher energy density. Plus, new materials like perovskite promise greater efficiency in the future.

Cost reduction

As manufacturing processes and economies of scale continue to advance, the cost of solar panels will steadily decrease. This means that solar panels will become more and more competitive with traditional energy sources, accelerating their widescale adoption.

Diversification of applications

Solar panels can now be integrated into different surfaces and aren’t as reliant on roof installation as they used to be. For instance, they can now be effectively integrated into building facades and windows. This helps to overcome space limitations and maximise their energy generation potential.

Market expansion

The global market for solar power is only going to increase in the coming years. In both developed and developing countries, the number of installations is soaring. This is a direct result of increasing consumer demand for clean energy, declining hardware costs, and favourable government policies.

Environmental considerations

The challenge of recycling old solar panels is currently being addressed in various sectors, and there are many efforts underway to help minimise resource consumption and waste.

Some technologies have now reached recycling efficiency levels of 96%, and novel techniques like solvent-based recycling are helping to increase efficiency further.

In the UK, it’s estimated that 30,000 tonnes of solar panel waste will be generated in the next 10 years. To meet this challenge, the panel recycling sector is currently expanding its capabilities.

Some of the companies already providing panel recycling services are ILM Highland, H&H Pro, and Recycle Solar Technologies.

Tips For Monitoring And Optimising Your Solar System

For solar panels to truly be worth it, you need to monitor them closely and make sure they’re working optimally. Here are some tips for how to do that:

Choose the best location and orientation

When your panels are being installed, ensure they’re in an area that isn’t shaded or obstructed by foliage or existing structures. This helps your panels get the amount of sunlight they need to generate electricity for your home.

You should also ensure the panels are aligned with the direction and angle of the sun in your location. This is done to maximise their exposure to sunlight during daylight hours.

Monitor your system’s data and performance

You should use a solar monitoring device or solar monitoring software to track key metrics that indicate your system’s performance levels. This includes things like energy consumption, energy production, and the amount of money you’ve saved on your electricity bills.

You can then compare this data with the expected output and efficiency of your panels based on their particular specifications. If they’re underperforming, you can take steps to address the issues that are causing this.

Integration with other energy tools

You should integrate your panel system with other energy tools such as inverters, smart meters, and controllers. These tools connect your system with your home appliances and the grid. They also help you identify issues that are causing your system to malfunction or underperform.

Consider storage solutions

Consider storing the excess electricity your system generates during peak hours so that it can be used when the sun isn’t shining. Some of the best storage solutions for residential solar panels include solar battery systems, which allow you to store excess electricity as a backup.

Upgrade and expand

As mentioned, the technology involved in solar panels is rapidly improving and, with it, the efficiency of solar panels is increasing greatly. So, if you have older panels then it may be worth replacing them with newer ones.

Upgrading to new panels means your system will be more efficient. This reduces the amount of energy that’s wasted and increases your self-sufficiency, leading to even lower electricity bills.

You may also have noticed that your current system is failing to meet your energy demands, meaning that you still need to buy a lot of energy from the grid. If this is the case, consider expanding the number of panels you have in your system.

Of course, it can be costly to do this, so you’ll need to weigh up the pros and cons of doing so to see if it makes financial sense.

FAQs

How expensive is it to repair, maintain, and replace solar panels?

The costs of repairing and replacing solar panels and the overall system can vary widely based on factors like the type of damage, the service provider, and the type of panels you buy (if you’re replacing old ones).

However, on average, an annual service usually costs around £100 to £200. Repairing solar panels ranges from around £77 for minor damage to £2,150 for major damage to the entire system.

It costs around £150 to £500 to replace a solar panel, depending on how efficient you want your system to be. Plus, the inverter will need to be replaced every 10 to 15 years which costs between £800 and £1,000.

Can solar panels increase the value of my home?

There’s no guarantee that solar panels will increase the value of your home, as plenty of other factors come into play, such as the location and age of the property. Still, some experts estimate that adding solar panels to your home could increase its value by up to 2%.

Some research has even suggested it could boost the value of a property by up to 25%.

One of the best ways to demonstrate the value of your solar panels to potential buyers is to show them copies of your energy bills before and after you had them installed. This might convince them that they’ll save money each month on their bills, and might lead to a better offer.

Are solar panels worth it if I don’t have a south-facing roof?

Yes, solar panels are definitely still worth it even if your residential or commercial property doesn’t have a south-facing roof.

If you have an east-facing roof, your panels will still be able to generate about 94% of the electricity that south-facing panels would. If you have a west-facing roof, they should be able to generate around 80% of the electricity south-facing panels would. For panels on a north-facing roof, it’s around 80% to 94%.

For businesses, it might be best to consider a ground installation if you have enough space. Or, you could consider installing your panels on a building facade that is south-facing.

You should always arrange for an accredited installer to carry out a site assessment of your home or business to determine the best location for your panels.

Final Thoughts

As you can see, solar panels are worth it for both homeowners and businesses. While there are many common myths about solar panel systems, the reality is that installing them will reduce your energy costs and make your home or business more environmentally friendly.

Although the initial costs of installing them are high, this is offset by long-term savings and there are numerous grants and schemes you can access to help with the upfront cost.

The future of solar energy is exciting, with plenty of innovations and advancements on the horizon. You should consider installing panels on your home or business as soon as possible so that you can join the solar energy revolution, and start contributing towards a greener future. If you’re curious about harnessing the sun’s power, contact Eco Happy for more information.