Energy bills have been rising steadily and now cost an average of £1,137 a year. But what if you could generate your own solar power? We do the sums to see if it’s worth the initial outlay
There are currently 920,000 homes in the UK with solar panels installed, according to the Department for Business, Energy and Industrial Strategy (BEIS). It is also possible to store self-generated electricity in a home battery pack, reducing the need to buy it from the national grid even when the sun isn’t out.
Until 31 March this year, the ‘feed-in-tariff’, which was introduced in 2010, allowed homeowners to get paid a set rate for each kilowatt hour (kWh) of energy they created. They also received a set payment for electricity sold back to the grid. On top of this, they saved between £90 and £220 a year on their bills, according to the Energy Saving Trust.
These payments, which were guaranteed for a number of years, were a huge incentive for those looking to install solar panels and led to a big boost to the industry.
However, the feed-in tariff has been gradually falling. At the start of 2016, it fell from 12.47p to 4.85p per kWh, which led to a huge drop in demand, and now it has been axed for new installations.
The government is looking into replacing the feed-in tariff under its Smart Export Guarantee (SEG) although the consultation into this has only very recently ended, so the amounts are not yet known. Solar trade organisations are pushing for a minimum sum to be set, of at least 5p per kWh.
The move to replace the feed-in tariff has been slammed by the energy industry.
Toby Ferenczi, director of strategy at energy supplier Ovo, comments: “Successive, dramatic reductions in support for solar energy have destroyed a once thriving industry, and bizarrely leaves residential solar in the position where it receives less government support than traditional fossil-fuel generation or nuclear power.”
A spokesperson for BEIS says: “The feed-in-tariff scheme has overachieved on its original objectives, outstripping installation predictions by nearly 100,000 with over 830,000 solar installations producing enough power for two million homes.
“But it’s only right we protect consumers and adjust incentives as costs fall, with solar having fallen by 80%.
“Our Smart Export Guarantee will provide a viable framework for small-scale renewable energy generation, protecting consumers from unfair cost burdens and ensuring that generators are not obliged to export their electricity to the grid for free.”
Now, many homeowners will be asking themselves if solar is still worth the cost.
“Solar still makes sense for people who use a lot of power”
How much will it cost to install?
The big financial outlay with solar is installation. An average system of 4kWp [the kilowatt peak generated by solar panels] now costs £6,200, according to the Energy Saving Trust. This is around half of what it was in 2010, but still a significant sum.
Most people will need to pay this up front, though there are some financial incentives available. In Scotland, for example, Home Energy Scotland (HES) has offered interest-free loans of £11,000 for installations. The Scottish Government is considering plans for the HES loan for 2019-20, so it isn’t accepting applications, but you can register your interest by calling 0808 808 2282.
There are also collective purchase schemes available in which several households receive panels at once, which can cut the costs. In some areas of London, Essex and Suffolk, households have been able to have their homes fitted with panels for £3,200.
How much could you save?
Before buying solar power, you need to calculate how much you could save compared to the initial amount paid to see how long it will take to make your money back. Although the money made from selling excess energy back to the grid can be factored in, as it is still unclear how much this will be, it may be worth waiting until the government has confirmed this.
Calculating how much you can save will depend on how much energy you use and where you live. For example, a household in London with people at home during the day could save an average of £220 a year, while a household in Manchester with no one home until 6pm could save £85 a year, according to the Energy Saving Trust.
Over a lifespan of 25 years, this could equate to a saving of £5,500 and £2,125 respectively. While the London household has almost made back the initial cost, it would take the Manchester household 72 years to do this.
Leonie Greene, spokesperson for the Solar Trade Association, says: “Solar still makes financial sense for households who use a lot of their own power, such as retired people, small businesses who work from home or young families, and the greatest financial value comes from avoiding buying power from a provider.”
According to her estimates, the highest users who provide 80% of their own energy consumption could get returns in around 11 years. This includes the cost of replacing an inverter [an electronic circuit] after 10 years. If the rate of selling solar electricity is set at 5p per kWh, she says this could be cut to nine years.
What about storage?
A battery pack can keep around 80% of the electricity generated through solar panels. Without this, households need to use the electricity when it is generated or it will be fed back to the grid. Without a battery pack, households will only use around 60% of the electricity generated.
Battery packs have a lifespan of around 20 years and a small number of providers offer them, including Tesla and Solarcentury.
The savings generated by a battery pack will depend on the size of a house, the amount of energy it uses and the cost of the energy. However, as these packs are relatively new, there are significant upfront costs. For example, a Tesla battery costs £6,200, £1,700 for supporting hardware, plus installation costs of between £950 and £2,800.
When you buy a battery pack the only cost is the upfront fee. Tesla says customers don’t need to pay anything extra for upkeep of the packs during their lifetime, and the only thing they need to do is make sure it is kept free of debris. It says energy bills could be more than halved with one.
Are there other solutions?
There is a wide range of products available with more likely to be launched since Chancellor Philip Hammond announced in the Spring Statement that he wants to stop the installation of gas boilers for water and central heating in new homes from 2025 to reduce greenhouse gases and carbon emissions.
Examples include biomass boilers, which cost up to £15,000 for a household system and could save £225 a year on your energy bills, ground-source heat pumps, which cost up to £18,000 and could result in savings of £580 if replacing an old gas boiler, and air-source heat pumps, which cost up to £8,000 and could save £400 a year if replacing an old gas boiler. Costs could fall as these options become more popular.
“We power two electric cars and our house for free in the summer”
Three-and-a-half years ago Anthony Wootton, 48, an energy consultant from Basingstoke bought a hybrid car for his wife. Now, he doesn’t pay anything for electricity in the summer, and their energy consumption has been cut by two thirds, thanks to solar panels and two battery packs.
“Before we bought the hybrid car it was costing £100 a week in petrol. Now the energy we create pays for the car.
“We had 4kWp of solar panels installed at a cost of around £200 excluding installation and last summer we created all our own electricity, apart from what I needed for my car – although I’ve also saved £7,000 a year on petrol costs.
“We then installed a Tesla powerwall battery and we now rely even less on the grid. After buying a second battery pack, at a cost of around £5,000 each, we now use an average of 22kWh of electricity a day in the summer and generate the same amount.
“My monthly energy bill from British Gas was £214.40 a month before we made these change and I’m now paying less than £100.
“Switching to solar power has been a huge saving for us. You need to have the money to pay upfront but also look at the long-term benefits.”
“Our energy use is down 50%”
In 2011 Jill and Jonathan Barker, both 52, bought Middlewick Holiday Cottages near Glastonbury and upgraded their old energy system. They installed a biomass heater and solar panels and now use 50% less energy.
“When we first moved the electricity alone was costing around £20,000 a year, with a combination of wood burners, heating oil and LPG, as well as storage heaters.
“We first installed an industrial-size biomass boiler, then had 30kWp of solar panels installed, costing £195,000 for both, and our energy usage has now gone down 50%.
“In the summer, we use hardly any energy from the grid and that’s with all our guests staying”
“When we had our solar panels the feed-in tariff was already low. It’s gone down again but the cost of installing the panels has also fallen – we were first quoted £70,000 for the panels but actually paid around half of this.
“In the summer we use hardly any energy from the grid and that’s with all of our guests staying, some with electric ovens, hobs and showers. It’s great to be able to see how much electricity we’re producing when the sun is shining and we’ve created our own standalone power station.”