Solar Panels - payback period during a time of rising energy costs

This is going to be a very unemotional, numbers-based blog post. I've rounded the figures to make it more readable. And I've put some pictures in to make it slightly more interesting.

We have 5kWp of solar panels on our roof.

Roof of our house.

The panels generate about 4,200kWh per year. Mostly in summer, but a decent amount in winter.

A generation meter showing 4,165kWh.

Over a year, we export about 2,800kWh. That is what we sell back to the grid.

Graph showing how much money our solar panels have earned from exporting.

We get paid an average of about £0.22 for every kWh we export. That's about £600 per year in tax free income.

We use about 1,400 kWh directly from our panels. When the sun is shining, we don't buy electricity. Assuming electricity prices of £0.30 per kWh, that's a saving of £400.

We earn £600 and save £400. That's a total yearly "income" of £1,000.

The average installation of domestic solar panels is - very roughly - £5,000 to £8,000. You might find a group-buy scheme which does it for less, or you may have a really awkward roof and find it costs much more.

So, at the current prices solar panels will pay for themselves in ~5-8 years.

If electricity prices rise, and export prices also rise, that timescale will drop.

If electricity prices fall, it will take longer to pay back.

If the price of solar installation continues to drop, it becomes a no-brainer to get solar installed.

Given another 20 years of generation, that could turn a healthy return on investment.

There are no on-going maintenance costs with solar panels. The panels are usually guaranteed for 25 years. It is possible that the inverter needs replacing (usually guaranteed for 10 years. Cost of a few hundred). And, like any electrical installation, things can break.

I should note that we have 2kWh of batteries. That will affect the ratio of how much electricity we use and export. It also adds to the cost of installation.

We use Octopus Energy for Solar Export (join and we both get £50). Their "Agile Export" pays a variable amount depending on electricity demand. It is worth shopping around to see if anyone offers a higher payment for export, or a lower price for import.

Solar has high upfront capital costs. Not everyone has £6,000 laying around. But if you can afford panels, they can dramatically reduce the amount of money you pay for electricity.

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22 thoughts on “Solar Panels - payback period during a time of rising energy costs”

  1. That's cool. I know nothing about Solar panels, but I'm guessing there must be a difference between all the different brands out there. Would appreciate anyone reading here's thoughts on if there is anything you gotta have/ nice to have/ avoid? Is it worth spending more to save more?

    1. @edent says:

      There's a few differences. The three main ones are capacity per square metre, predicted degradation curve, and weight. That all feeds in to the cost. Oh, and some of them have silver edges whereas others have black edges. So that might feed into your aesthetic.

      Generally speaking, a solar installer will offer you a choice - but it will be limited by whoever they have picked as a supplier.

      I'd recommend spending more to get a higher capacity. And if you have a weak roof, getting lighter panels is essential.

      But they're pretty much a commodity now.

  2. rudigarude says:

    Is that the whole array in the photograph? It looks quite small to be 5kWp. Could you share any information about the number of panels, make/model, spec. Info about the battery and invertors? Was the 2kwh battery included in the £6k or did you get that afterwards? How long have you had the system?

    Sorry for the barrage of questions. I've become quite obsessed with these kinds of details before taking the leap. I only purchased our first home in the summer of 2020 (a 1930s semi-detached house) and have a SW facing garden with a hipped roof which can probably fit 4-5 panels on each part, along with a single story extension that could also probably fit maybe 4 more panels.

    I've focused so far on insulation. I currently use about 3000kWh per year electricity and 10000kWh gas, but I am hoping to get this down as much as possible. I'm expecting gas to reduce this winter due to insulation I've done this year. The main thing I'm trying to do is have a holistic approach to reducing my carbon emissions and reliance on the grid (and therefore reduce cost) whilst also fixing a house that hasn't been modified in 30 years in a piecemeal way because I can't afford to do it all in one go.

    Again, sorry for the barrage of questions. Posts like this with actual details are fantastic, thanks for posting it. A really interesting YouTube video I watched recently (with like only 200 views) has a lot of detail about the modifications made in both CO2 and cost.

  3. Thanks, I think that it's not unrealistic to include them as an add-on when selling a house as well. You could offer to keep them there, for say another £3k.

  4. DinoNerd says:

    What happens when you need to repair or replace the roof? Standard roofs around here need a second layer of shingles after 10 or so years (don't quote me on the numbers), and both layers removed and replaced with a new single layer after another 10 - so approx. twice within the lifespan of the panels.

    I'd expect some increased costs from the roofers, and a chance they'd botch the reinstallation of the solar panels etc.

    1. @edent says:

      In the UK, it is really rare to replace a roof. They tend to last the lifetime of the building. The panels are installed either as replacements to the tiles or on top of them. I guess if you needed to replace tiles, the panels could be lifted off. They're pretty light and relatively strong.

  5. says:

    This site has a lot of interesting information (albeit specifically for the US). Interesting to see that in Arizona, you're almost generating 2x more electricity from solar. Guess it makes sense with England being famous for its rainy weather.

    A thing to consider, especially when talking at these timescales, is that as more people adopt solar, the less you'll get from selling energy back to the grid. You could probably model it by looking at the rate of adoption over the past decade.

    1. @edent says:

      At the moment, the generation tariff is tied to the wholesale price of electricity. In many markets (I don't know about the US) any generator can sell electricity at a price dictated by demand.

      If everyone has solar, prices at midday might go negative. But, hopefully, people will have batteries to store their own.

  6. DinoNerd says:

    The situation in my corner of the US makes it uneconomic to sell back to the grid. Pricing is also tiered in a way that means that only high-consuming households are likely to get a decent ROI; I pay less per watt, from my modest house with beautiful solar exposure, than someone whose larger household consumes twice as much electricity. Energy sold back gives me even less than I would save by using my own; home generators are paid much much less than even lower price tier consumers are charged.

    There are additional details that make things even worse - e.g. you should avoid installing solar in anticipation of a major increase in your consumption - you need at least two years in your new, higher-priced tier first for better financial results. I envy you living in a political jurisdiction with somewhat saner incentives.

    Note however that all this is from memory. I investigated some years ago, when installation was still subsidized - and even with the subsidy, it didn't seem financially worthwhile. So I chose not to purchase either an electric vehicle or the solar panels that would have kept it in "free" power. sigh

    1. @edent says:

      I suggest complaining to your elected officials, or moving somewhere more enlightened.

      1. DinoNerd says:

        This is a classic example of complexity leading to unintended results.

        The pricing tiers were set up to encourage conservation. But it's a blunt instrument; my small house with 2 adults faces the same pricing structure as my coworker's larger house with 2 adults and four teenagers. He installed solar, and was very happy with the payback period.

        Meanwhile, the system wasn't rethought when home electricity generation became both practical and desirable.

        With luck, the obvious absurdities will eventually be fixed.

        p.s. the comment at the top of this sub-thread was supposed to be a response to your earlier comment with "I don't know about the US", but got mis-threaded, making it look like I was playing Eeyore, and less like I was trying to add a wee bit of US data.

  7. Matt says:

    You've had solar panels installed at several places. Thank you so much for the informative posts you made over the years. You've persuaded me to get some installed for my home and have a bunch of questions. Do you have any guides for how to pick an installation company? And which compan(y|ies) did you use? What are some of the problems you've encountered - both when trying to find a company and during the installation process itself?

    1. @edent says:

      I'd recommend speaking to neighbours who have installed them recently. Get a few quotes and go with whoever seems competent.

      The main problem at the moment is that they're very busy. But you also need to check that they have public liability insurance and will take away all rubbish and packaging.

      Good luck!

  8. Summer Surfer says:

    Very late to this. Great blog. Would you mind sharing what was your total spend on the install and how much is your average annual consumption pre-install?

    1. @edent says:

      Thanks! Total spend is going to heavily depend on where you live, how many panels you want, if you get a battery, and how complicated your install is.

      We hadn't lived at the property very long before getting panels - less than a year. So it's rather hard to say.


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