If you’ve ever thought about getting solar panels, you may have been a little bamboozled by the array of information on costs. Some firms tout their panels as free, whilst others offer finance options and repayment schemes. Alternatively, you can buy your panels outright.
Unfortunately, many people don’t have £6,000 just sitting in their back pocket. If you want to get solar power and cut your electricity bills, then it’s worthwhile doing your homework because though you might be lured by cheap solar panels, the hidden costs and poor efficiency might make another option better.
The Three Solar Panel Options
In general, there are three main options that often crop up when you’re researching solar panels; free, finance and full purchase price.
- Free Solar Panels
Unfortunately, free solar panels are largely a thing of the past. Once offered by companies who could make money through the government’s FiT scheme, tariffs are now so low that many solar organisations don’t make enough revenue to warrant the cost of giving solar panels away.Though this might seem discouraging, it’s not as bad as you think. There’s a general misconception that you could grab a free solar panel and be rewarded with free power and an extra income. This is not the case. Whilst you would benefit from reduced electricity bills, most companies would keep the FiT revenue for themselves.
- Finance Options
As free solar panels become extinct, they’re being replaced with finance deals. Generally, these panels are still advertised as ‘free’. However, technically, you’re buying them via a finance scheme, with the solar panel company taking the loan out for you. You will benefit from reduced electricity bills, and you can also make some income from the FiT. However, you need to weigh up the costs of loan repayments and the amount of electricity saved. If, for example, your energy costs are already low, by the time you’ve paid loan costs, savings may be negligible.
- Full Purchase
If at all possible, the best option if you want to save on solar power costs in the long run is to buy the panel yourself. If you can purchase the panels outright, you then own them. It means you keep any power generated to reduce your electricity bill and can also take full advantage of FiT payments.You can also keep installation costs low by using a site like Quotatis to find, and negotiate with, local fitters. Though there’s a large up-front cost, this option offers the greatest return on your investment. It’s also important to note that it might be worth taking out a loan to pay for the panels. The interest rates can be cheaper than those offered from the finance deals provided by solar companies, giving you a better return in the long run.
Solar Panel Prices
Though once extremely expensive, solar panel technology has progressed over the years and, as a result is now a lot more affordable for the everyday homeowner. In fact, prices have dropped by a significant 70per cent and are set to continue falling. The average family home needs to generate around 3kW of electricity from their panels to see any notable benefit. This costs between £4,000 and £6,000. Of course, the cost per panel will be affected both by its size and quality. However, a more expensive panel might have a higher efficiency and could, therefore, be more financially rewarding long term.
There are several options to suit most budgets, but each will have various degrees of savings and efficiency.
- £2,500 – £3,000
For tight budgets, a 1kW system covering 8sqm could generate 850kWh during a year. In the first 12 months, around £130 will be saved. Over the system’s 20 year lifespan, you can expect a profit of just £100.
- £3,000 – £5,000
If you’re still working to a less-than-average budget, you could afford a 2KW system covering 14sqm. During a year, this should generate 1,700kWh, providing initial annual returns of £222 and a 20 year profit of £562.
- £5,000 – £6,000
At this level, expect to generate around 2,550kWh per year with a 3kW system covering 21sqm of roof space. You first year returns should be approximately £316, with a 20 year profit of £1,320.
- £6,000 – £8,000
To maximise your returns, this level of funding is required. By setting up a 4kW system covering 28sqm, you’ll generate 3,400kWh. First year returns will be £404, whilst you’ll make the most of the FiT scheme to gain a profit of £2,080 over 20 years.
Install Quickly for Better Returns
Though the cost of the physical solar panels is expected to continue falling in coming years, the FiT is expected to follow suit. This means that the government will be paying less and less for generated electricity. However, your FiT rate is locked in for the full 20 years when you register your panels, meaning that even if rates drop, you’ll be kept at the same level. It’s extremely important to act as quickly as possible if you want to get the best returns.
When it comes to solar panel prices you need to weigh up the balance between buying now and benefiting from larger returns, or waiting until prices come down even more. Either way, solar panels can be a great way of powering your home in an environmentally friendly and sustainable way.