Do Solar Panels Pay For Themselves?

Whether you are interested in solar panels for a residential property or as a commercial installation, it is inevitable to think about the profitability of the system and ask whether your panels will pay for themselves.

There’s no denying that solar panels are a long-term investment, but given the potential for both saving money on energy bills and earning from the energy you put back into the system, solar panels can actually pay for themselves over a period of time.

However, there are many factors to consider.

Location is important!

You might think that there is a simple binary answer as to whether solar panels will pay for themselves, but it is actually affected by a huge range of factors. For example, you might not be aware that the amount of energy that you can gather (and therefore, how fast your solar panels will pay for themselves) depends very much on where you are located.

For example, you might be surprised to learn that if a home in London was earning and saving a combined £365 per year, the equivalent system in Scotland would achieve just £305 per year. This isn’t to say that you can’t have profitable panels in the north of the country, but it just shows the relative potential is affected by the location.

Positioning your panels

Do Solar Panels Pay For Themselves?

Aside from the location in the country, another factor that influences you panels profitability is where they are positioned. Firstly, the way that they are facing has a big impact on their ability to capture energy.

The ideal direction for solar panels is south-facing, this is due to the fact that as the UK is in the northern hemisphere, south-facing solar panels will get the sun all day. West and east-facing panels are also acceptable although they will not generate as much energy, while north-facing panels are typically not cost effective.

The direction is important but there are other factors to consider. If you don’t have a south-facing roof, for example, you may wish to use free-standing panels at ground level. The issue that you would need to be concerned with here is whether or not there is any shade which could potentially block out the sun from reaching your panels.

Are grants still available?

Up until April 2010 it was possible to get a basic grant from the government to cover part of the cost of having solar panels installed. However, with the introduction of the tariff scheme this form of funding was taken away and does not appear to be returning.

That being said, there are a number of other options you can look into for solar panel grants. There are grants available from the Community and Sustainable Energy Partnership (CSEP) which covers not-for-profit and public sector organisations. Some utility companies offer grants at certain times – it is worth looking into what is available and who is eligible.

What affects your investment?

There are a number of factors with solar panels that will influence how profitable the investment is for you. A good example of this is future energy prices. If energy prices continue to rise, then the amount you save (and the amount that you are paid) will increase. The higher energy prices are pushed, the more money you will save.

It is also true that inflation will have an effect on your investment. Generation and export tariffs will be increased with inflation, so this can help you to determine what kind of return that you can see from future tariffs.

What about house value?

It is also worth pointing out that if you are a homeowner who is thinking of having solar panels installed, this can affect the value of the property. Clearly this has a bearing on the overall profitability of your solar panels.

There are a number of different issues you need to consider with the panels. For example, how old will they be when you sell the house? Very old panels could end up making no difference to the house price, or even contributing a negative. Brand new panels with a long lifespan should be a positive.

It can also be a case of how the panels affect the property aesthetically. Obvious panels are less sought-after than those hidden away behind the house.

The following two tabs change content below.
Master of the budgets. Provider of the tips. Author and owner of Dumbfunded.co.uk.