How much do solar panels cost? (2023 guide)

You cannot have missed the news that household bills are rising, and in order to save money, many homeowners are investing in home improvements. But just how much do solar panels cost, and how much can you save?

In this article, we will break down what can be a complex subject into manageable sections and answer the questions you frequently ask:

• The benefits and why you would want to invest in solar panels 
• The upfront cost of solar panels and installation costs
• How solar panels pay back over time

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Solar panels cost and payback time—the basics

If you are after a quick answer, then this table will give you the topline figures. Read on to understand the various factors that contribute to the overall cost of solar panels and subsequent return on investment.

Solar panel system	Panels	Estimated installation cost	TOTAL	Potential annual energy bill savings	Payback period
3 kW	£5,000	£700	£5,700	£900	Six years
4 kW	£6,000	£800	£6,800	£1,000	Seven years
5 kW	£8,000	£1,000	£9,000	£1,100	Eight years
6 kW	£9,000	£1,200	£10,200	£1,200	Nine years

What are solar panels?

Solar panels are thin panels, usually black in colour, that are attached to your roof or the roof of an outbuilding, to harness the sun’s energy, converting it to electricity.  They can also be ground mounted if no roof space is available. Along with wind, water and biomass, they fall under the category of renewable energy sources, and can help to decrease the globe’s reliance on rapidly depleting fossil fuels.

How do solar panels work?

Solar panels work by harnessing the free energy from the sun and converting it to electricity to power your home. Each panel comprises silicon cells that, even on cloudy days, capture heat from sunlight, sending it through an inverter that turns the sun’s energy from direct current (DC) to usable alternating current (AC). 

The most commonly used type of panel in the UK is termed photovoltaic (PV). These panels are made up of tiny cells composed of silicon—a semi-conductive material—and are highly efficient at generating the electrical field necessary to produce solar power.

Why invest in solar panels?

Many households are investing in solar panels to save money on their energy bills, and the average UK family can expect savings of up to £1,000 per year. Any excess electricity that is not needed can be sold back to the National Grid through the Smart Export Guarantee (SEG) scheme, further boosting your return on investment.

Solar panels also reduce the carbon footprint of your home. Fossil fuels are rapidly being depleted, and the UK Government is looking to increase the use of renewable technology to power the country—and there are various grants available to help with the cost. Solar energy is a future-proof solution that UK homeowners can benefit from.

We have broken down the cost of a solar panel system into its components, including system size, property type, and installation costs. We have also calculated the amount you can save on your energy bills by installing solar panels.

What factors affect the solar panel cost?

How much solar panels cost depends on several factors, including:

• The size of the system required
• Solar panel type and brand
• Property type 
• Installation and labour costs
• Additional system components, including solar storage batteries and PV diverters 

The larger your household energy requirements, the more power your solar panels will need to generate, which increases the total cost of your system. Your property type can also influence the installation and labour costs. For example, if the roof access is problematic or extra mounting rails are needed to achieve the optimum panel angle, then this can increase the installation cost. 

You may also want to consider adding a solar storage battery to your system, allowing you to store any unused energy to use at night or on overcast days. You can also add a PV diverter, which gives you the option of diverting excess energy to a specific electrical appliance, typically an immersion heater—meaning your household can benefit from free hot water—or an electric vehicle charger. However, extra components will add to the overall solar panel cost.

How much do solar panels cost per kW system?

Solar panel systems are measured in kilowatts (kWs), which equates to 1,000 watts of electricity, and most panels are designed to produce between 250 and 400 watts each per hour (kWh).

A 4-kW system, the most popular size, uses 16 panels and can generate around 2,850 kWh of electricity annually. This is generally enough for a family of between three and four people, depending on their energy usage.

Here’s a breakdown of the average cost of several different sizes of solar panel system.

Solar panel system	Number of panels	Family size	Total cost inc installation
3 kW	12	2–3 people	£5,700–£6,700
4 kW	16	3–4 people	£6,800–£8,800
5 kW	20	4–5 people	£9,000–£10,000
6 kW	24	Over 5 people	£10,200–£11,200

How does the type of solar panel affect the cost?

There are two main types of solar panels—monocrystalline and polycrystalline. Polycrystalline panels tend to be cheaper but are generally considered less efficient, while monocrystalline panels have the highest efficiency and come in at a higher cost. Typically, homeowners choose poly panels to fulfil their energy needs at a more affordable price, but if you have a smaller roof area and therefore less space for the panels, it is worth considering mono panels for their higher energy output.

How does property type affect the cost?

The type of property you own can affect the overall cost of solar panels. The installers will require access to your roof, whilst the panel angle may need to be adjusted to achieve the maximum conversion of sunlight to electricity. These factors and more will impact the cost of your solar system. 

Here are some important things to consider about your roof when deciding if solar panels are right for you.

Roof access

Access to your roof space is a requirement for fitting solar panels. This usually involves the installers setting up scaffolding and a platform to allow them to work safely. If access is difficult and this process takes time, then this will increase costs.  

Roof space

The majority of solar panels are rectangular in shape and measure around 2 m x 1 m, with a thickness of between 2 cm and 3 cm. Manufacturers, however, have recognised the need for more compact panels, and many are producing smaller, more efficient panels that are ideal if you have less roof space available. These tend to be slightly more expensive than the standard-sized panels.

Solar panel system	Number of panels	Approximate roof space required
3 kW	12	22 ㎡
4 kW	16	29 ㎡
5 kW	20	32 ㎡
6 kW	24	43 ㎡

Roof angle

In the UK, to generate the maximum amount of electricity, the solar panels should be installed at the optimum angle of between 35 and 40 degrees if possible. Allowing your panels to be exposed to more sunlight leads to greater efficiency and larger savings. To achieve the best angle, you may need to have extra mounting rails installed, which could increase your costs. 

Roof condition

If your roof needs some attention, it makes sense to attend to this before the solar panels are installed. Once the system is attached to your roof, any repairs will entail having the fitter return to remove panels before the work is started. 

Listed properties

While most properties are suitable for having solar panels installed, listed properties are a little more complex. Depending on the listed status awarded, you may need to obtain listed building consent (LBC) from your local council before beginning the installation. Although there is no fee for this, it can take time for your application to be approved.

How much do solar panels cost to install?

The installation labour costs are typically included in your solar panels quote. Generally, the larger the system, the more it will cost to install, with a 6 kW system typically requiring two people working over a two-day period. However, the actual cost depends on your installers, and their prices can vary. We recommend that you get at least three quotes to find the most suitable system at the best price.

Solar panel system	Number of people needed for work	Typical installation time	Cost
3 kW	One	One day	£700
4 kW	One	One to two days	£800
5 kW	One to two	Two days	£1,000
6 kW	Two	Two days	£1,200

How do solar batteries affect the solar panel cost?

Solar storage batteries allow you to store any excess energy generated by your solar panels for use later—at night, for example. Storing this energy reduces your reliance on the electricity taken from the National Grid, cutting more from your electricity bills. At the current electrical prices, this can be around £220 a year.

Solar batteries typically last for between 10 and 15 years, meaning that over the 25-year lifespan of your panels, you may have to purchase two batteries, which can cost in excess of £2,000 each.  

A solar battery may not be the right choice for your household if you already use a large proportion of your generated electricity—for instance, if you work from home or are usually at home during the day.

Can I get any help with the cost of solar panels?

The UK Government, as part of its drive towards renewable energy, has several schemes available for eligible households who would benefit from installing solar panels. This includes offering 0% or 5% VAT, depending on where you live, on renewable energy home improvements until 2027. 

Green Deal

A Green Deal loan can reduce the initial cost of solar panels. If you are eligible, the loan is repaid through a charge added to your electricity bill or your prepayment meter for as long as you live in the house. The amount you will pay each month will be based on how much money you are expected to save by generating your own electricity. If you move before the loan is repaid, you are no longer responsible for the payments, as you will no longer benefit from the solar panels. The payments are taken over by the new owner of the property, or the person who pays the energy bill. Green Deal loans are available in England, Scotland, and Wales, and the funding comes through companies registered to be Green Deal installers. 

ECO4

If you receive certain eligible benefits, the Energy Company Obligation—the most recent iteration of which is called ECO4—could help fund your solar panel installation. Energy suppliers sign up with the scheme and will advise, supply, install, and fund energy efficient home improvements, including solar panels. 

LA Flex 

LA Flex is an extension of the ECO scheme. If you do not fulfil the eligibility criteria required for ECO4, local authorities can help those on lower incomes who would benefit from improved energy efficiency measures. Contact your local council to find out how to apply.

Energy provider financing

Many of the larger energy providers, such as E.ON, offer 0% finance to help with the cost of solar panel installation, so it is worth contacting your own supplier to see what help is available. Local councils often have schemes designed to help residents install home upgrades that harness renewable energy.

How much will you save with solar panels?

The savings to be made by installing solar panels depends on several factors:

• The current price of electricity
• The location of your property
• The direction your roof faces
• How your household uses electricity
• The size of your solar panel system
• The amount paid to you for any excess energy sold to the National Grid

Here is a general idea of how much money you can save and how long it will take to recoup your investment.

Solar panel system	Potential annual savings
3 kW	£900
4 kW	£1,000
5 kW	£1,100
6 kW	£1,200

The current grid electricity price per kWh

From October 2022 to April 2023, those paying by direct debit will see an average unit price of 34.0p/kWh. This price varies depending on your location in the country.

Region	Standing charge per day	Electricity per kWh
N. Scotland	51.07p	33.07p
N.W. England	43.26p	33.48p
N.E. England	49.93p	32.24p
Midlands	49.15p	33.73p
N. Wales	48.6p	35.98p
S. Wales	49.17p	33.97p
S.W. England	52.64p	33.86p
London	33.16p	35.80p
S.E England	42.68p	35.31p

Roof direction

Even if your roof faces due north, your solar panels will receive around 55% of the sun’s power. More than half of the UK’s light energy is reflected off clouds, the ground and buildings, making solar panels less reliant on direct sunlight. Still, the more sunlight your panels receive, the greater their output and the more you will save on your electricity bill.

Roof direction	% of solar energy captured
South	100%
Southwest	95%
West	80%
Northwest	62%
North	55%
Northeast	62%
East	80%
Southeast	95%

How your household uses electricity

The money you can save by installing solar panels depends on how you and your family use the electricity produced. 

Solar panels generate electricity during daylight hours, and although the output is less, they continue to produce power even on cloudy days. Any electricity that is not used goes back to the National Grid, for which you receive payment. At night, unless you have chosen to add a solar storage battery to your system, the energy your household requires will be drawn from the grid and charged at your normal rate.

The savings available to your household can be maximised by using your appliances wisely. People who are at home all day will make the most savings, as they can use the power as it is generated. However, even those who are only at home for a few hours can still save by using energy-greedy appliances, such as washing machines and dishwashers, during peak flow periods. For houses that are empty during the day, consider setting timers on your appliances. These should be set to switch each appliance on in turn, reducing the drain on the solar system. 

By adding a PV diverter to your solar panel system, the energy generated can also be diverted to heat your hot water during the day, or charge your electric vehicle, allowing you to save even more money. 

The size of your solar system

The larger your system, the more electricity you produce. This should be balanced, though, against the increased cost of an oversized system, and how much you can save by selling the surplus electricity back to the grid. Your solar panel installer will calculate the size of solar system your household requires and how much extra energy you can generate by adding more panels.

Solar panel system	Number of panels	Family size
3 kW	12	2–3 people
4 kW	16	3–4 people
5 kW	20	4–5 people
6 kW	24	Over 5 people

How much can you earn from selling your electricity?

Under the Smart Export Guarantee (SEG) any electricity produced by your panels that is not being used by your household can be sold back to the National Grid. The amount of money you can save through SEG is dependent on the electricity supplier (known as the SEG licencee) you choose to sell to, which does not have to be your own provider. However, your electricity supplier may offer slightly more payback if they supply your grid electricity or installed your solar panel system, so check with them when seeking your initial quotes. 

In order to sell electricity under SEG, certain criteria have to be met:

• Your solar panel system must be installed by a Microgeneration Certification Scheme (MCS)-accredited installer.
• An export meter must be installed.
• There must be an export meter point administration number.

Once these conditions are fulfilled, contact the company you wish to sell through and apply for your SEG export tariff.

Here is a list of some of the current SEG rates on offer by energy suppliers.

Supplier	SEG tariff	Rate per kWh	Variable or fixed
Octopus	Agile Outgoing	34p	Variable
Octopus	Outgoing Fixed	15p (4.1p if not a customer)	Fixed
EDF	Export Variable Value	5.6p (3p if not a customer)	Variable
E.on	Next Export	5.5p if E.on installed the system (3p if not)	Fixed for 12 months
Scottish Power	Smart Export Variable Tariff	5.5p	Variable
Ovo	Ovo SEG Tariff	4p	Fixed for 12 months
Shell	SEG V1.1 Tariff	3.5p	Variable
SSE	Smart Export Tariff	3.5p	Variable
British Gas	Export and Earn Flex	3.2p	Variable
Utility Warehouse	UW Smart Export Guarantee	2p	Variable

When do solar panels pay back?

The time solar panels take to pay for themselves has been dropping as electricity prices soar. Some reports suggest it could be as little as four to five years for you to make your money back through savings made on your electricity bills, but a more realistic timeline could have you seeing a return on your investment in five to six years, taking all considerations into account.

Solar panel system	Potential annual savings	Payback period
3 kW	£900	Six years
4 kW	£1,000	Seven years
5 kW	£1,100	Eight years
6 kW	£1,200	Nine years

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