How much do solar panels cost?

In the UK, the average cost of solar panels is around £5,000. The price will vary depending on a number of factors, including how many panels you get installed. For example, in the UK, our average costs for solar panels (without a battery) are:

• £3,800 for 5 panels
• £4,800 for 10 panels
• £6,600 for 15 panels

We can also break that down into the cost for every Watts Peak (Wp) installed. Wp refers to the power generation capacity of a solar module and on average in the UK:

• A small system (1.9 kWp) will cost you £2 for every Wp installed
• A medium system (3.9 kWp) will cost you £1.23 per Wp installed
• A large system (5.8 kWp) will cost £1.3 per Wp installed

The price per Wp is calculated by dividing the cost of the system by the size of the system. If you add a battery to your system, it will increase the price:

• £9,200 for 10 panels and a battery or £2.35 per Wp installed for a medium system (3.9 kWp)
• £10,700 for 15 panels and a battery or £1.8 per Wp installed for a large system (5.8 kWp)

What impacts the cost of solar panels

As mentioned above, the cost of solar panels does vary based on certain factors – including the size of system you want or can have installed at your home. To give you a greater idea of why your quote may be higher or lower than the UK averages, we discuss what impacts the costs:

How many panels you have

The more panels you get installed, the more expensive installation will be. But, of course, more energy can be generated with extra panels. When discussing solar panels, kilowatts peak (kWp) is the measurement which lets you know the peak power of a system or panel – it’s the rate at which they will generate energy at peak performance. This is likely to be in the afternoon on a sunny day, but it’s worth noting that solar panels will work even on cloudy days.

Larger systems are capable of a greater peak, since there are more panels to capture the sun’s radiance. For example, using the same average UK set-up (without a battery) as above:

• The 5 panel installation costing £3,800 has a 1.9 kilowatts peak
• The 10 panel installation costing £4,800 has a 3.9 kWp
• And the 15 panel system costing £6,600 boasts 5.8 kWp

We can also look at this based on kilowatt-hours – the measurement of electrical energy produced as solar panels convert the sun’s radiance:

• 5 panels offer an annual production of 1800 kWh
• 10 panels offer 3600 kWh
• 15 panels offer 5500 kWh

How many solar panels you have installed may be determined by personal choice or factors such as the size of your roof. At Otovo, we will advise you on the optimal solar panel set up for your location.

Whether you include a battery in your installation

Having a battery included in your installation will make the overall price more expensive. It’s an additional cost and needs to be installed correctly. However, there are benefits to including one as part of your solar system:

• You can store energy to use at other times. Adding a battery to your installation is ideal for homeowners looking for greater energy independence. It provides access to reliable stored energy which can be used at times when there’s no sunlight. As a result, the amount of money homeowners can save also increases. Taking a 10 panel system installed in Kent as an example:
• Without a battery, this would cost £5,600 on average to be installed. Households would save £828 every year.
• With a battery, the installation would cost £10,600 on average, but households would save £1,219 annually.
• You can store energy to sell back to the grid. The most impressive cost savings of solar panels comes from using them as your own energy source, but there is the potential to sell energy too. Using the same example as above, the annual PV production (kWh) jumps from 3900 kWh to 4271 kWh with the addition of a battery. What this means is as follows:
• On average, annual self-consumption of kilowatt-hours (kWh) would be 3,416.8 and annual consumption from the grid would be 233.2.
• This means 854.2 kWh can be sold as surplus to the grid every year.

Location

We work with accredited solar panel installers across the UK, but there are some regional variations in what providers will charge. For example, 5 panels cost:

• £3,978, on average, in Cornwall
• £3,511, on average, in Norwich
• £4,131, on average, in Bedfordshire

Location also determines how much energy you’re getting from your solar panels because of the different sunlight hours across the UK. For example, we can compare the energy outputs expected in Kent and Manchester during some of the sunniest months of the year:

Getting a return on your investment

Breaking even after seven years

As well as the environmental benefits, one of the most appealing factors of solar panels is the amount of money you can save on your energy bills. Using Kent as an example again, here are the details of a solar panel installation:

• 10 panels
• 3.9 kWp
• 3900 kWh annually
• £5,616 installation cost (without a battery)

Using our calculations, it would take just seven years to see a return on your investment. To work out how long it takes to obtain this ROI, we look at the following characteristics:

• Installation costs and kWp installed
• Annual kWh production
• Average energy consumed from the grid before solar power
• 80% solar performance
• 50% self-consumption of the energy produced from new solar panels
• 50% of production sold to the grid
• A price of £0.21 per kWh when bought from the grid
• A price of £0.09 per kWh when sold to the grid

Your annual average savings with solar panels could also be greater (and the return at which you see a ROI could be quicker) if:

• Your energy consumption is higher – for example, if you work from home. You’ll recoup the installation costs sooner if you use more energy. That’s because you’ll see more savings from greater energy independence, especially since you're using more electricity while your panels are generating energy during daylight hours.
  
• Energy prices overall increase. The less reliant you are on the grid, the less you’ll be hit by changes in the energy market. Prices can be impacted by political instability and other external factors, so there’s peace of mind to be gained by relying on your own source of power by generating electricity with solar panels.

Furthermore, if you wish to install solar panels with no initial investment, you can opt for the solar panel subscription option.

Earning money from the Smart Export Guarantee

When thinking about the cost of a solar installation, it’s worth remembering solar panels can earn you money too. Homeowners across the UK have a great opportunity to take advantage of the Smart Export Guarantee (SEG), which allows you to receive payments on the excess electricity your solar panels generate. With the SEG scheme, you’re able to get a payment for every kilowatt hour you export back into the National Grid. It can be a great way to offset some of the cost of your bills.

SEG is a government-backed initiative and launched in January 2020. Since then, electricity suppliers which are SEG Licensees are required to offer SEG tariff rates. While it must be above zero, the suppliers set the rates so it’s best to shop around for a tariff that’s best for you. SEG payments will be calculated by using export meter readings.

FAQs

Do you pay VAT on solar panels?

If you’re installing solar panels on your home, you should be eligible for a reduced VAT rate of 5%. To quality, the panels must be used to generate electricity for domestic use and must be installed by a VAT-registered business. The reduced rate doesn’t apply to solar panels installed on a business property.

How many solar panels do I need?

The number of solar panels needed varies between households. It’ll depend on things such as your average energy consumption, the sunlight hours in your location and the size and suitability of your roof. A solar panel installer can assess your specific energy needs and provide an estimate of the number of solar panels needed to meet those needs, as well as advising you on what’s possible with your home.

Can you install solar panels yourself?

In order to install solar panels yourself, you would need to be comfortable with electrical work and have the skills and experience to work with electrical wiring and connections. You would also need to have the necessary tools and equipment, such as a voltage tester, a multimeter and protective gear. On top of that, you’d need to be familiar with local building codes and regulations.

It is recommended to hire a professional solar panel installer with the training and experience, along with the relevant industry certifications. This ensures your installation is done safely, correctly and inline with any necessary building regulations.