What is the Cost of Solar Panels?

What is the cost of solar panels? Are there additional costs? Can I affect the price with my own choices? Be patient (or use the table of content), we’ll give you all the answers.

Government grants, subsidies, and incentive schemes have given solar panels a massive boost over the last nine years. As a result of these measures, in 2018, solar panel operators generated enough electricity countrywide, to cover some 4% of the electricity consumption of the UK. This number is expected to increase significantly in 2020 and 2021.

The bad news is that some of these subsidies and power buyback schemes are now over. With them out of the picture, the feasibility equation of solar panel ownership and operation has changed. Other such schemes may soon jump in to fill the void though.

For now, would-be solar panel buyers will foot all the bills themselves. That includes the actual cost of the panels, installation, maintenance and service costs. However, energy prices are also set to double in 2020, so that will, in turn, increase the profitability of the systems.

Also, solar panels are becoming more efficient, yielding more electricity over time. As solar panel efficiency goes up, costs drop, and this trend is expected to continue in the future. You should also consider the positive environmental impact of a PV system, showcased below.  

Typically, you recover your investment in under 10 years and after that, you actually make a profit on your solar panels.

So, What Is the Cost for Solar Panels?

The cost of solar panels varies from GBP 1,500 up to GBP 9,000 and even higher depending on the size of the system, where 1 kWP typically costs GBP 2,000 and 6 kWP typically costs GBP 8,500. These costs cover the panels, the inverters as well as the actual installation. Everything else, such as solar batteries, maintenance, extra inverters, roof work, tree trimming etc, is extra, entailing additional costs.

The table below gives us the estimates on how much it will cost one to install solar panels of a given size. We shall also take a look at how size impacts ROI (Return on Investment) over time.

System Power/Size (kWp – kilowatt peak)	Estimated Cost	Roof Surface Needed	Return Generated Over 1st Year	Profit at the End of 20 Years (System Warranty Period)	Number of People in Household
1 kWp	GBP 1,500-3,000	8 sq m	GBP 185	GBP 640	1
2 kWp	GBP 3,000- 4,000	14 sq m	GBP 369	GBP 3,800	2
3 kWp	GBP 4,000- 6,000	21 sq m	GBP 534	GBP 5,630	3
4 kWp	GBP 6,000- 8,000	28 sq m	GBP 700	GBP 6,750	4+
5 kWp	GBP 7,000- 9,000	34 sq m	GBP 865	GBP 8,340	4+
6 kWp	GBP 8,000- 9,000 and upward	40 sq m	GBP 1,030	GBP 9,930	4+

Why is the cost range so wide within the same size category?

Quality factors explain that. While the cost of a 1 kWp system may look attractive, an average home will almost certainly need a 4 kWp solution, see below.

System Power/Size (kWp – kilowatt peak)	Number of Panels Needed	Electricity Generated per Year	Number of People in Household	Annual CO2 Saved (t)
1 kWp	4	850 kWh	1	0.26t
2 kWp	8	1,700 kWh	2	0.51t
3 kWp	12	2,550 kWh	3	0.77t
4 kWp	16	3,800 kWh	4+	1.14t
5 kWp	20	4,750 kWh	4+	1.35t
6 kWp	24	5,400 kWh	4+	1.62t

The reason why it takes four panels to reach a peak power of 1kWp is that one panel is usually 250 Wp. For every additional 1kWp, homeowners need to add four more panels. The cost of one such panel is in the GBP 200 – 500 range. Please remember that the cost of the actual panels is just part of the overall cost of a PV system.

There are of course higher and lower capacity panels too, such as 75 Wp and 400 Wp ones. For such panels, the surface calculus changes.

Actual panel costs have been declining quickly. What’s more: the trend is likely to continue.

A quick glance across the multitude of solar panel offers online will reveal that:

– You can get a 325 Wp Panasonic HIT PV panel for just GBP 292.23. This price only covers the cost of a single panel and nothing more. Given that this panel is of normal dimensions (1,053mm x 1,590mm) its superior output can save roof space.

– A 250 Wp Panasonic HIT PV panel only costs GBP 246.71. Again: this is solely the cost of the panel, tax excluded.

– Digging a little deeper in your pocket will land you a 400 Wp LG Bifacial Solar PV panel, featuring front- and back solar irradiance absorption. The panel costs GBP 343.62 and the price only covers the panel itself and its connectors, tax excluded.

– Interestingly, lower capacity does not always equal lower costs. The 36 Wp Activesol Ultra Flexi PV panel costs GBP 256.30.

– A 330 Wp Canadian Solar HiDM Mono PV panel on the other hand will only set you back GBP 186.49.

Choosing a solar panel manufacturer

When choosing a solar panel manufacturer, you should stick to the “name” brands, such as:

– LG. LG panels offer the best product warranty at 25 years. As well as the highest efficiency available on the market: 21.4 percent. The power warranty on LG products is 25 years, which is not half bad either.

– Panasonic (formerly Sanyo) is a good choice as well. The warranty is 25 years on these panels, coupled with a 25 years power warranty. Efficiency-wise, at a maximum of 19.7 percent, they fall behind LG. These maximum efficiency ratings are only valid for mono panels.

– Efficiency-wise, Canadian Solar products are slightly better than Panasonic. At 19.89 percent, they are a top choice in this regard. The warranty on the products is just 10 years, however. The 25-30 year power warranty somewhat compensates for this shortcoming.

– When it comes to efficiency, Sharp panels are only second to LG, with a rating of 20 percent. The product warranty on Sharp panels is 10 years, with a 20-year power warranty.

– Yingli Solar delivers in the efficiency department as well. At 19.1 percent, it is the 5th most efficient solar panel available in the UK. These panels come with a 10 years product- and 25 years power warranty.

– A few other brands to consider are SolarWorld, Solarcentury & IKEA, Viridian and Trina.

The actual price of solar panels reflects a massive number of variables. This makes it quite impossible to provide exact price quotes for your individual needs in this article. The best we can do in this regard are approximations. – IF YOU FIND SOLAR PANELS FOR 200 GBP you can expect the quality to be lower than the 500 GBP ones.

What about full PV kits, the costs of which cover all the essentials, from roof mounting systems to other components?

The actual prices for full PV kits mostly fit into the above estimates.

LG Mono Neon2 panels are a great option pricewise, whether taken individually, or as parts of a complete kit.

Name	Size	Nr. of Panels	Price	Deliver Cost
1 kW LG Mono Neon2 kit	1,686 x 1,016	3 panels – 340w each	GBP 1,816.32	GBP 99 – UK delivery
2 kW LG Mono Neon2 kit	1,686 x 1,016	6 panels – 340w each	GBP 3,072.12	GBP 99 – UK delivery
3 kW LG Mono Neon2 kit	1,686 x 1,016	9 panels – 340w each	GBP 4,358	GBP 99 – UK delivery
3.68 kW LG Mono Neon2 kit	1,686 x 1,016	10 panels – 340w each	GBP 4,767	GBP 99 – UK delivery

These prices may look cheaper than some estimates, but they do not cover installation, and there do not seem to be inverters included in the kits. Furthermore, the 3.68kW system is really a 3.40kW one.

On the cheaper end of the spectrum, JA Solar dangles more attractive prices.  

Name	Size	Nr. of Panels	Price	Deliver Cost
1 kW JA Solar Mono kit	1,689 x 996	3 panels – 340w each	GBP 1,295.30	GBP 99 – UK delivery
2 kW JA Solar Mono kit	1,689 x 996	6 panels – 340w each	GBP 2,071.73	GBP 99 – UK delivery
3 kW JA Solar Mono kit	1,689 x 996	9 panels – 340w each	GBP 2,897.46	GBP 99 – UK delivery
3.68 kW JA Solar Mono kit	1,689 x 996	10 panels – 340w each	GBP 3,153.74	GBP 99 – UK delivery

While these kits include a metering device, they do not seem to include inverters. Installation costs are not included either.

Solar Panel Costs for a Small Household

A household consisting of up to two people would require up to 1,700 kWh of solar electricity per year. This calls for up to eight panels and some 14 square meters of roof space. A bare-bones system (without extras, such as a battery, but with installation), would cost GBP 3,000 – 4,000.

Given an estimated yearly return of GBP 369, it would take this household 9.5 years to break even on the investment or even shorter with rising energy prices in the coming few years. The remaining 10.5 years of the system warranty period would provide some GBP 3,800 of profit. Of this, about GBP 100/year would go to maintenance costs, leaving about GBP 2,800 clean profit.

The panels could well hold up for 5 more years on top of the warranted 20 years, or even more.

Solar Panel Costs for a Large Household

A family of four or more requires more energy. The 3,800-kWh generated by a 4 kWp, consist of 16-panels, requiring some 28 square meters of roof space will just about meet these needs. In the South of the UK, such a system can produce as much as 4,200 kWh per year. In Scotland, a yield of 3,400 kWh per year is more reasonable – according to theecoexperts.co.uk.

Having to invest around GBP 7,000 in the beginning, such a household might recoup this investment in about 10 years. The remaining 10 years may thus produce a profit, minus the expenses incurred with maintenance.

The cost of solar panels has dropped significantly since 2010. Nowadays, they are more affordable than ever. On top of that, energy bills are set to double in a little over a year. That may significantly improve the ROI numbers discussed above.

What determines the price of solar panels?

Quality and size are the two main factors when it comes to price.

Size is a straightforward variable: the larger the panel, the more it will set one back. There is no getting around it either. To reach a certain capacity (required to fulfill the given needs), one needs to cover a set area with solar panels.

Quality, on the other hand, impacts a whole set of variables. The first of these is the lifespan of the panel.

The average lifespan of a solar panel is around 25 years. What this means from the perspective of the owner, is a 20-year warranty on modules. The warranty means that the individual modules will deliver at least 90% of their rated power, after 20 years.

This calculus uses a 0.5 percent/year degradation in rated power. An analysis of various studies performed by the National Renewable Energy Laboratory has shown that solar panels made before 2000 degraded at a yearly rate of less than 0.5 percent. According to the same study, as the technology matured, this rate got even better. Thus, panels made after 2000 have been found to degrade at a rate lower than 0.4 percent per year.

Weather/climate conditions greatly impact solar module degradation. Modules exposed to bitter cold, high winds and heavy snow loads degrade quicker.

The same is true for modules that get a lot of direct sunshine in desert climates. UV radiation damages the modules, leading to yearly degradation of around 1 percent. On the other hand, the kWh generated is much higher because of more sun in deserts, however this is not relevant for the UK.

The quality of materials used in the construction of the panels makes a great deal of difference. This difference does not just manifest in the lifespan of the modules. It also limits degradation, leading to better functioning solar arrays over time and higher electricity yields.

Most of the sites that offer price quotes on solar panel arrays use 1 percent yearly degradation when calculating yield/overall costs. Using this worst-case scenario is not detrimental from an engineering perspective. It does, however, skew the numbers a bit.

Cost of Installation

The actual cost of installation is included in the above estimates. Various taxes and the cost of auxiliary equipment (inverters) are also included. The panels themselves account for a smaller part of the above-estimated costs.

In some cases, panel installers may find that the roof needs strengthening before installation. The same contractor may undertake the job for an additional charge, or the owner may have to look for a different contractor. The actual costs depend on the extent of the job required.

Tree trimming may also be necessary. This is yet another separate job, which entails additional expenses.

Some installers offer cleaning and maintenance services. In some cases, it is worthwhile to contract such services. This means further additional costs.

What Else Do You Need to Consider in Regards to Price?

The variables involved in the solar panel feasibility equation are many. Without specific information on the actual needs, they are quite impossible to thoroughly address. Some of these variables are technical, while others are policy dependent.

Battery

Do you need a battery to go with your PV array? You probably do. Why is that the case?

Whether it is sunny or not, PV panels work during the day. Most people are away from home during the day however, thus they are unable to use up the generated free electricity. At night, when people need light and when they are more likely to turn on the TV and other appliances, there is no free solar electricity on hand.

The solution to this conundrum is a battery. And a battery will set you back further still.

– A 3-4 kWh battery will cost upwards of GBP 3,410.

– One with a capacity of 4-7 kWh costs more than GBP 4,288.

– A 7-9 kWh battery will set you back GBP 5,185.

– The cost of a 9-13.5 kWh battery starts at GBP 5,920.

As far as battery construction is concerned, you should go for the lithium-ion variant. Such batteries may cost more. But they beat the lead-acid technology in every regard. They offer much better depth of discharge, more lifetime cycles and better cost/kWh/cycle rates.

With a battery, solar panel owners can consume 30% more of the electricity their panels generate. This can lead to substantial additional savings down the line.

Power Storage System Solutions

A battery added to an existing PV system requires a separate inverter. Full energy storage systems include such an inverter.

– An optimal choice in this regard would be the Tesla Powerwall 2.0 with Backup Gateway 2. Such a system may set you back some GBP 7,900 though. Having it hooked up to your existing system may cost you an additional GBP 500-2,000, depending on the complexity of the operation.

– PureDrive’s Energy Storage System is also a good choice. Such a system costs around GBP 3,500.

– At GBP 1,700, Enphase represents a budget choice.

Battery-only solutions cost less. If you need to replace a battery in your existing system, going for the GBP 2,650 LG Chem Resu makes good sense.

– Sonnen Batterie ECO costs some GBP 4,500, while the budget solution is the BYD B-BOX, at GBP 1,700+. 

Solar Panel VAT Increase

This factor is a policy-linked variable. Apparently, not only has the government rescinded all subsidies and ended all feed-in schemes, it is set to raise the VAT on solar panels from 5% to 20%.

Such a measure will lead to significant price increases.

Energy prices are also set to double in 2020, so that will, in turn, increase the profitability of the systems.

Maintenance and Service Costs

Solar panels generally require very little maintenance. What little cleaning needs to be done, can be done by the owner, with a garden hose.

That said, the owner is solely responsible for all the costs associated with maintenance and service – meager as they may be.

– Cleaning costs some GBP 100 per year. Panels need to be cleaned at least once per year, to maintain efficiency.

– Solar panels do not have moving parts. They are therefore very reliable and durable. They can usually withstand large hailstones too. It will likely take some sort of an accident to significantly damage a module. In case it does happen, repairs will likely cost from GBP 80 to GBP 1,500, depending on the extent of the damage.

Solar Power Inverters

Solar panel inverters and the cables connecting the panels to them are also essential components of the system. A budget inverter costs around GBP 800, while a premium one may cost as much as GBP 1,500.

The inverter is the solar component most likely to necessitate repairs over time.

How do Solar Panels Make Money?

On the one hand, they provide households with free electricity. The benefits of that are obvious. On the other, panel owners have the opportunity to sell surplus electricity back into the grid, through the Feed-in Tariff Scheme. That latter opportunity no longer exists for those now pondering the installation of a new system. In its stead, a new scheme, the SEG, is set to launch in January 2020.

Grants and Subsidies for Solar Power in the UK

Homeowners currently considering solar panels will not appreciate the fact that the mentioned Feed-in Tariffs scheme has been closed to new applications on 31 March 2019.

What this means is that those who already applied for the FIT scheme successfully, are not affected in any way. They will continue receiving payments. The current export tariff of electricity is 4.77p/kWh. This means that scheme participants may earn around GBP 100 per year, depending of course on the capacity of their PV array. 50% of this capacity is assumed to be exported back to the grid.

Under the scheme, solar panel owners also receive payment for each kWh they produce for export. This generation tariff is significantly higher than the export one, at 6-13.88p/kWh.

Homeowners who have not applied for FIT yet but have received an MCS certificate on or before 31 March 2019, can still apply.

No other new participants can enter the FIT scheme.

For a while, a free solar panel scheme ran as well. Through it, companies would provide panels, installation and service/maintenance for free. In exchange, homeowners would hand over their FIT earnings to them.

The FIT might be replaced by a much stricter Smart Export Guarantee program. Under this initiative, power suppliers with more than 150,000 customers would be compelled to offer their clients an export tariff.

Electricity exports would be metered and only actually provided electricity would be paid.

SEG is slated to go live in January 2020.

SEG’s scope will likely exceed that of FIT. On the one hand, it will reward the generation of renewable energy. On the other, it might aim to reward storage and export during times of peak demand.

The SEG does not feature a minimum tariff rate. Those currently enrolled in FIT will not be allowed into SEG.

In the future, the SEG may make it possible for entrepreneurs to earn a living through energy storage alone.

Impact on Real Estate Value

One would assume that the existence of a PV array on the roof is a net positive for any house, value-wise. Some may consider such systems unsightly and cumbersome, however.

Therefore, in some cases, solar panels may indeed add to the value of the property, while in other cases, they may detract from it.

A solution to this problem would be to use solar roof tiles (they do indeed exist). Such systems are however much more expensive than regular solar panels.

Is the UK sunny enough for solar panels?

The short answer to that would be “yes”. Of course, solar panels do not require direct sunlight to work. They work in cloudy weather as long as there is daylight.

That said, they produce energy at a much higher rate in direct sunlight. In the UK, the capacity factor of solar panels is around the 10% mark. This calculus accounts for all the grey, gloomy weather the country gets. By comparison, in sunny Phoenix, AZ, solar panels deliver a capacity factor of 25%. This is where they more or less max out, due to the existence of the day/night cycle and many other, more subtle, inefficiencies.

The 10% capacity factor has been averaged for the whole of the UK. In Scotland however, getting 10% is likely a pipe dream.

There are two types of solar panels:

– PV (photovoltaic) panels, which mostly use monocrystalline silicon technology to convert solar energy into electricity.

– Solar thermal panels, which use the energy freely dispensed by the sun to heat water.

There are some significant differences between the two options. A solar thermal system costs around GBP 4,000-5,000 and it consists of one (or more) 3.6 sq. meter devices.

Unlike PV systems, solar heating systems qualify for the Domestic Renewable Heating Incentive. Payments through this scheme may account for as much as GBP 190 per year, for a 4-person household.

In addition to that, solar heating systems may shave some GBP 50-95 off fuel bills per year, depending on the legacy system they augment.

The Bottom Line

Yes, solar panels can save you money and in the long run, they will pay for themselves. They can shave off as much as 50% of your electricity bill.

With energy costs set to continue rising, they will likely make even more financial sense in the future than they do right now.

In addition to that, as technology improves, solar panel prices continue plummeting. Newer panels do not just cost less. They are more efficient, and they degrade at a slower rate, lasting more.

Extra components, such as batteries, may inflate expenses, but in the long-run, they too recover their costs and generate profits.

Considering the current solar technology and energy price trends, it is safe to assume that the above estimates regarding ROI are very conservative. Solar panels are already highly profitable, and they may just become indispensable in the future.