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Ad. This is a guest post by Tracy Walter – the ‘mum next door’ who is passionate about personal finance. Although she blogs about personal finance for work, she recently branched out to writing just for mums so follow her on her Medium account.
My son came home from school one day with a list of ideas to literally make the world a better place!
His list of eco-friendly lifestyle improvements included:
- Building an owl house and get rid of all rat poison.
- Taking showers instead of baths.
- Installing solar panels-
WHAT? Solar panels? England isn’t exactly the Sahara. We don’t have enough sunshine!
My son duly informed me that I was wrong. Solar Panels need daylight – not sunlight – to operate. In fact, there was a day in May 2017 that solar energy produced a quarter of the UK’s electricity.
Then he pitched his idea to his personal finance blogger mum: “You can save a lot of money by installing solar panels. The government also gives you money. You can even write about it!”
Okay, he had my attention.
What you will learn:
- How much do Solar panels cost?
- How much can I save when I switch to solar energy?
- Things to know before you Export surplus energy with SEG (Smart Export Guarantee)
- How to get a solar panel for free or cheap
- Is it worth it? My final decision
- More Things to know before buying a solar panel in 2019
Is Solar Energy worth the investment?
How much do Solar Panels cost in the UK 2019
Solar Panels are not as expensive as they used to be. The Feed-in-Tariff program which aimed to compensate people for investing in renewable energy while making the cost more competitive, successfully brought down the cost of solar panels. In the past 9 years, the price of solar panels has dropped by 70%! The total cost of your solar PV system will vary depending on your needs.
According to The Ecoexperts in March 2019, a family of my size (4 people) will need a 16 panel 4kWp system that could cost between £6,000 to £8,000. (Although the Energy Savings Trust estimates that one can buy a quality 4 kWp system for £5,500). A 4 kWp system generates around 3,800 kWp yearly – which would be more than enough for my family, considering that we are out for most of the day.
How much can I save when I switch to solar energy?
The amount of money I will save when I generate my own energy depends on what my current bills are. My bills vary not just according to my lifestyle but also varies whether I use it during peak times when National Grid peak prices apply. I also need to take into account the long term cost of my power as cost per kW goes up each year with inflation.
The amount I can save will also depend on how much electricity I generate. This will vary according to factors such as:
- Where in England I live. – I live in Southern England which gets more daylight than northern England
- How much my roof slopes – The more significant the slope, the better. Also having a slope over 15 degrees means that the rain will clean it for me – saving me about £100 a year.
- The direction my roof slopes – South sloping roofs are best; however South West or West slope will be okay.
- How much shade the area gets between 10am and 4pm
2019: The end of Feed-in-Tariffs
From 2010 until early 2019, people braved the initial investment by selling their extra energy back into the grid as part of the FiT program. The Feed-In-Tariff Programme (FiT) was a government scheme that brought in additional income to solar panel owners. Although the program ceased in 2019, one can still join if they installed solar panels with MCS certificate dated before the 31st of March 2019.
2020: Export surplus energy with SEG (Smart Export Guarantee)
I came just in time to find out about the FiT’s successor- SEG (Smart Export Guarantee). In June 2019, the government finalised a new bill to require medium-large energy to buy back electricity from small scale generators such as offices and small businesses.
Things to know before you export surplus energy with SEG
- The solar panel you purchased before 2020 can still be part of SEG: As long as its an MCS certified solar panel, one can join a program affiliated with SEG even if it is before the January 2020 rollout date.
- One cannot benefit from both FiT and SEG: Although one can switch from FiT to an SEG program, it is recommended they stay with FiT. Unless they joined FiT at the end of the programme when the rates were the lowest, the FiT rates are usually higher than SEG Tariffs.
- Shop around as there is no minimum tariff: Although the amount paid to generators by SEG suppliers always needs to be over £0, there is no minimum tariff. Stay tuned as the Solar Energy Trust is working on introducing minimum tariff.
- You need a smart meter: SEG plans to live up to the Smart in its acronym by providing smart and dynamic tariffs. It is a requirement that unless discussed with their supplier, one will need a smart meter that can report on their exports every half hour. The smart meter will also need to be registered under the Balancing and Settlement code.
- There are SEGS compliant companies ready to buy your power in 2019: Some companies are not waiting for the January 2020 rollout deadline and are prepared to buy back electricity. The Solar Energy Trust plans on keeping an updated comparison of export tariffs on their website.
How to get a solar panel for free or cheap
Even if I get the most economical solar panel – it will still set me back at a few thousand pounds. I looked around for more affordable ways to get a solar panel, and this is what I found:
In the past, people rented out their roofs to companies. The company would install a free solar panel system on their roof in exchange for the money the owner earned by selling electricity back to the grid. This is an excellent option if you only care about the environment and paying less on electricity bills. However, it is uncertain how rent-a-roof programs will continue now with the end of the FiT program and the cheaper cost of solar panels. Furthermore, being enrolled in such a program may be a liability if I sell my home in the next 20 years.
Are Solar Panels worth the investment?
It depends on whether you have £6000 on hand to invest. Solar panels are a long term investment that will take decades to break even once you include your savings as well as the export tariffs. If you have the money to spend – then it will pay itself back over 20 years.
Why I decided not to install solar panels
- I am not home during daylight. Without paying extra for a battery, I can only use the electricity as it is generated. Thus at night, I can’t use solar energy and will have to resort to buying power from the national grid.
- I have too many appliances to stagger during the brief time I am home. If I run all my energy-heavy appliances at once, I will use more electricity than my solar panels would generate at the time and thus still need to buy energy from the grid.
- I don’t have the extra £ to investt. There I said it. I wish I can be eco-friendly for the world’s sake and the sake of my children, but from a financial point of view, the investment is too steep and returns too slow. It can take 20 years to earn enough money to break even.
- VAT increase in October 2019: The VAT on solar panels will increase from 5% to 20% in October 2019!
- Planning permission: It is not necessary to get planning permissions on solar panels unless you live in a conservation area or in a listed building. There are also specific rules about the placement of solar panels – so be sure to google them or ask your MCS certified installer.
- Microgeneration Certification Scheme: Hire an MCS accredited installer to install your solar panels. The installer will register your solar panels on the MCS database and provide an MCS certificate. You should file this MCS certificate for your solar panels in a safe place as it is the SEG programme.