Solar Panel Cost Guide

Solar panels can reduce your household carbon footprint as well as your fuel bills. All you need to do is work out what’s right for your home and how much it’ll cost using this guide.

Why install solar panels?

As fuel bills rise, the recession bites and climate change accelerates, it’s becoming even more important for us all to clean up our energy use. Installing solar panels in your home is a great way to reduce your household carbon emissions as well as save money on your fuel bills. There are two types of solar panels to choose from:

1) Solar photovoltaic (PV) panels, which convert the sun’s energy into electricity.

2) Solar thermal panels, which utilise energy from the sun for heating household water.

The benefits of installing solar panels include:

• Reduced fuel bills – installing solar panels can save you as much as £180 a year off your fuel bills
• Lower household carbon emissions – save an average of one tonne of C02 per year when you install a PV system or up to 510kg with solar thermal panels
• Earn money through government schemes – you could make as much as £400 per year through the Renewable Heat Incentive (RHI) with solar thermal panels or up to £570 when you install PV through the Feed-in Tariff (FIT) scheme
• Low maintenance costs – solar panels are often referred to as a ‘fit and forget’ technology as they don’t require much maintenance, unlike traditional heating systems. The Energy Saving Trust (EST) recommend having your solar panel system checked out every three to five years

Solar panel prices

The cost of solar panels will vary depending on:

• Whether you are fitting PV or thermal panels
• The location of your property
• The size of your solar panel system
• Whether you choose to install solar tiles, slates or a standalone unit

According to the EST, solar panels are priced at:

• Between £5,500 and £22,500 for solar PV panels
• Between £1,000 and £8,000 for solar thermal panels

Get more information on solar panel prices.

PV solar panel costs

In a PV system, cells made up of layers of a silicone-like material are attached to exterior walls or the roof. Light from the sun is converted into electricity to be used in the home; find out more about how solar PV panels work. The EST put the average cost of a PV system at £10,000 – this price will vary depending on size and type. More specific prices from the Ideal Home Group are detailed below:

• A 3 kilowatt (kw) solar PV panel system costs between £5,500 and £6,500
• A 4kw solar PV panel system costs between £7,500 and £8,200

Get more solar PV panel prices.

Solar thermal panel costs

Solar thermal panels are the cheaper option – the Solar Trade Association (STA) say that there are over 100,000 solar systems in the UK already, making them a popular option. If you choose to install solar thermal panels you’ll need a water cylinder; most systems can be connected to your own boiler or immersion heater. Find out more about how solar thermal heating panels work. The EST put the average price of a solar thermal system at £4,800, but:

• Solar thermal panels can be found for as little as £1,000
• Larger systems can cost up to £8,000

Get more information on solar thermal panel prices.

Cheapest solar panel prices

The initial cost of installing solar panels can be daunting, however, cheaper prices are available if you limit the size of your system and shop around at the cheaper manufacturers/installers. Here are some of the cheapest solar panel prices:

• DIY solar panel kits are a cheaper alternative, typically costing between £180 and £600
• The cheapest solar thermal panel systems cost around £5,500

Get more information and compare the cheapest solar panel prices.

Solar panel installation costs

You should remember to factor in installation costs as well as the cost of the solar panels when budgeting. Installation costs will vary considerable depending on:

• The size of the solar panel system and therefore how long it will take to install
• Where you live – installation costs are typically more expensive in cities
• What kind of company you hire – a well established solar installer may be more expensive than an independent company
• Hiring an installer from the manufacturer may also save you money

On average it can cost between £3,000 and £3,500 for solar panel installation per kilowatt peak (kWp) installed. Get more information on the costs of installing solar panels.

The cost of solar panels for your home

Domestic solar panel installation will obviously cost less than commercial solar panel installation and there are additional benefits and incentives for homeowners such as £300 grants toward the cost of installing solar thermal panels. Find out more about grants for domestic solar panels. According to the STA, solar thermal panels could provide a family of four with between 40 and 65% of their hot water needs per year. An average solar PV system can generate around three quarters of a typical household’s annual electricity needs.

• The average cost of a typical home PV system is £10,000
• The average cost of a home solar thermal system is £4,800

Get more information on home solar panel costs.

Solar PV panel Feed-in Tariff earnings

The FIT scheme was launched by the government in April 2010 in an attempt to boost solar PV panel installations, therefore lowering total UK carbon emissions. The scheme works across two tariffs:

1) Generation tariff – provides fixed payments for every kilowatt hour (kWh) of electricity generated by your PV panels. The FIT tariff rate is currently set at 21p per kWh for installations up to 4kw in size – which can earn around £640 per year

2) Export tariff – you can sell any excess electricity your panels generate back to the national grid. The current export rate is set at 3p per kWh, so you can earn an average of £40 per year from this tariff

Both tariffs are inflation linked and payments last for 25 years. To be eligible for the FIT scheme you need to have a well-insulated home and panels should be installed by a member of the Microgeneration Certification Scheme (MCS). An electric meter will also need to be installed to measure how much electricity is generated and exported.

Get more information on solar PV FIT earnings.

Solar panel grants

To encourage people to heat their homes with renewable energy, the government have introduced the Renewable Heat Incentive (RHI), which is set out in two phases:

1) Industrial, business and public companies can now get cash back for every kWh of renewable heat produced over 20 years. Tariff levels are set to provide around a 12% return on investment, are inflation linked and will reduce over time. Phase one also includes the Renewable Heat Premium Payment Scheme, which provides grants of £300 towards the cost of installing solar thermal panels in domestic properties. To qualify your home will need to be well insulated, have been awarded the necessary planning permission and your panels need to be installed by an MCS registered engineer.

2) In October 2012 household solar thermal installations (carried out since July 2009) will move on to the RHI tariff and can earn up to £400 per year.

Get more information about solar thermal panel grants.

Solar panel fuel savings

Installing a solar PV system can save you between £90 and £180 per year on your electricity bills while installing solar thermal panels will save around £55 to £80 per year. Get more information on exactly how much money solar panels can save you.

Planning permission for solar panels

If you live in England and Wales you won’t generally need to apply for planning permission to install solar panels as long as you follow these guidelines:

Roof and wall mounted solar panels

• Should not project more than 200 millimetres from the surface of your roof or wall
• Must not be installed above the ridgeline of the roof
• If fitted to a garden building, solar panels should not be visible from a highway
• You must get listed building consent to install roof or wall mounted solar panels if you live in a listed building
• When installing wall mounted solar panels which are visible from a highway, you will need to get planning consent if you live in a conservation area or a world heritage site

 Standalone solar panels

• Must be no higher than four metres
• Should be placed at least five metres from the boundaries of your property
• Should not be installed in the boundary of a listed building
• Must be no more than nine square metres wide or three metres deep
• Should not be visible from a highway when installed in a conservation area or world heritage site
• You must not install more than one standalone solar panel in your property

If you live in a listed building or conservation area you should check with your local building authority before you install solar panels.

*Sources: Energy Saving Trust, Department of Energy and Climate Change, Directgov, IdealHomeGroup.com, Solar Trade Association, Microgeneration Certification Scheme, Planning Portal. All information is accurate as of January 2012