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Since energy prices have risen significantly, generating and using your own solar power has become a popular alternative to using conventional energy suppliers. It also opens the door to far bigger savings than it used to, which could be a lifeline during the energy crisis. While solar panels are a big investment to make, if you do the maths, you could end up saving hundreds on bills.
Saving on bills
The main reason that people invest in solar panel systems is due to the money that they save on energy bills. The amount you can save varies from household to household as different variables have to be taken into account. Savings are mainly dependent on the overall size of the system that is being installed, where you live in the country, and if anyone is in the house throughout the day or not. Using the EST (Energy Saving Trust) estimations, an average 2–3-person household, with a 3.5 kWp system can save from anywhere between £210 and £514, with the average being £330, a year on energy bills alone.
These figures are inclusive of any savings that you may make through the SEG tariff, and are estimated based on the October 1st price cap rises. In order to fully make the best savings, it’s recommended that you use your electrical appliances, like a dishwasher or washing machine, every day. This is because you are more likely to make savings from actually using the electricity you make relative to current energy prices, instead of exporting the excess for a fee.
Save with SEG
If you’ve looked into getting solar panels before, you have probably heard of the SEG tariff. This is a government backed scheme that allows consumers to sell the energy they make but don’t use, to energy suppliers. The SEG tariff replaced the Government’s Feed-in Tariff (FIT) which came to an end in 2019, but overall is pretty similar. One major difference is that the FIT paid a flat rate which was higher than when energy companies are supplying now. Furthermore, the FIT paid consumers for every bit of energy generated, whether they used it or not, which is a huge benefit that you miss out on with SEG.
Nevertheless, you could still make up to £110 in savings from the SEG tariff, but again this is dependent on different variables, with the main one being the energy supplier that is paying you for it. One good aspect of the SEG tariff is that consumers are free to shop around to choose the best deal for them, as price per kW differs greatly between different suppliers, from as low as 1p/kWh to 15p/kWh, and with most suppliers offering less than 5p/kWh. What’s even better is the fact that you don’t have to stick with your current energy supplier, so you can really make the most out of being able to choose who to go with.
An important thing to note about the SEG tariff is that you must qualify to be eligible. The criteria are:
- A solar panel system located in Great Britain that is 5 megawatts or less
- The panels have to be certified by the Microgeneration Certification Scheme
- You must have a smart meter to be able to record how much energy is being exported, and it must be able to automatically send these readings to your supplier every 30 minutes
This criterion applies to solar PV systems but not to thermal solar systems that can heat up your water.
Breaking even
Solar systems are far more affordable now than they were a few years ago, but many people still wonder if having a solar system installed is cost effective. You have to think of solar panels being a long-term investment, while there is a high upfront cost, in the long-run they are able to pay for themselves. It’s estimated that it would take an average household around 11-15 years to return the investment made initially. This takes into account the October 2022 price cap rise, SEG or no SEG, and how much energy is being used. It’s also important to note that the times that people are in their house can have an effect.
What we mean by this, is if you are home all day, you’ll be using up the energy that is being generated at a higher rate than if you left for work at 8 and didn’t get back till 6. This is more effective in terms of saving on bills overall, but if we look at the flip side, a person who is out of the house for most of the day could benefit more from cashing in on the SEG tariff, as the electricity that is being generated isn’t all being used.
The location of the house is an important factor too. Solar panels are able to generate energy through daylight, not sunlight, which is why solar panels can work pretty much anywhere. However, daylight hours change depending on whereabouts in the country you live. The 11–15-year estimate is based on being situated in the middle of the country, so you can expect savings to be about 4% in the south and 4% lower in the north/Scotland. This in turn, has an effect on the rate at which your investment is to be returned, and so could be longer or shorter depending on any possible future rises of the price cap.
In order to maximise the amount of savings you could make, it’s important to know if your house is suitable for solar panels. Some of the most essential aspects are:
- A south facing roof: While roofs that face east and west can get some benefit from solar panels, a south facing roof will bring the most benefits.
- There is enough space: there needs to be enough room on your roof to have solar panels in the first place, but also to hold as many as you need in order to make the most savings.
- Your roof isn’t in the shade: this might sound like an obvious point, but shade throughout the day is not going to make your solar panels effective as they should be.
Final thoughts
Looking overall, it’s clear that you can make some huge savings from using solar panels to power your home. While there is not set figure that you could be looking o save, due to the outlying factors presented, we can confidently say that installing solar panels on your property can save you hundreds, and in a country that is facing a huge energy crisis, every little bit of cash you can save on bills matters.