It’s no secret that buying solar panels and having them fitted to your roof can require quite a large initial outlay, but most solar panel manufacturers insist that the panels will, over their lifetime, pay for themselves. We decided to do some digging and find out just how true that is – and just how long it will take to get a return on your solar investment.
Generate Your Own Electricity
The first theory of saving money on solar power is quite simple: by using solar panels to generate your own electricity, you decrease your reliance on electricity from the national grid. For every joule the Sun gives you, a few pennies can be knocked off your electricity bill, and over the course of a few years those pennies will add up to significant savings on your electricity bills.
Whilst this is most certainly true in theory, the reality is not quite so convincing – photovoltaic panels do generate electricity and will save money from your bill – but even saving £200-300 on your annual energy costs won’t be enough to pay down the initial fitting costs – which are likely to run to several thousand pounds – for several decades.
It’s worth remembering that rising energy costs and improvements in photovoltaic technologies will undoubtedly lead to better returns in the future, but in the near-term it’s hard to see how they could pay for themselves solely in lower bills, even across the whole lifetime of the panels.
The story, however, doesn’t end there – to counter this underwhelming return on investment, governments and solar panel manufacturers have been finding other ways to make renewable solar-generated energy a financially attractive proposition, the most significant of which is the ‘Feed-in’ Tariff.
A Feed-in tariff is a scheme which allows you to export any surplus electricity you generate into the national grid. For doing this, you get a credit whilst lowering your overall power import. If you’re completely self-sufficient with power to spare, then you effectively ‘sell’ that surplus back to the energy companies.
Feed-in tariffs operate over a fixed period of years, so the sooner you get in at the start, the more money you’ll save. There’s a big anticipation of a major uptake of solar power in the first few months of the 2010 as the April start time approaches.
Increase Your Home’s Value.
There are further benefits, too – homes with solar installations will tend to be valued higher than homes without, and so some of your initial outlay can be recovered from increased sale value. In America, the Appraisal Institute estimated that for every $1000 (approx. £600) that solar electricity knocks from annual energy bills, house value could increase by up to $20,000 (approx. £12,500).
You may not be planning on selling your house right now, but Solar Panels have a rated lifetime of over 25 years, so chances are you’ll have a chance to benefit directly from the increased value a solar panel brings when it’s time to sell.
Getting A Grant
Here’s another simple way to reduce the time it takes to make back your investment: spend a bit less in the first place! Under the Low Carbon Buildings Programme, government grants are available to help homeowners fund the purchase and installation of solar panels and other ‘micro-generation’ technologies.
In some cases you may be eligible for a grant of up to £2,500 towards the installation of micro-generation systems including photovoltaic solar power. This means a significant proportion of the original cost can be avoided altogether, making it far easier to get a return on your investment.
Adding It All Together
Back to the original question, though – when you add it all together, do Solar Panels pay for themselves?
The answer really depends on factors such as where you live – solar panels fitted on a rooftop in the Orkneys are unlikely to end up paying for themselves, to be honest, whereas the same panels in Newquay stand a very good chance of doing exactly that. Perhaps more surprisingly, though, in most cases you’re more than likely to come good across the life of the panels, after factoring in all of the above savings and grants.
What’s more, photovoltaic solar panel technology is always getting better – panels are growing more efficient, batteries more effective and systems cheaper to produce. So even if a solar panel right now isn’t likely to pay for itself in your area, it’s probable that within a decade or two we’ll have the technology at hand to let sunshine win the day.
Get your online solar panel installation quote for either Hot Water or electricity generating solar panel systems from Solar Panel Quoter – a free service to homeowners.