How Solar Panels Pay for Themselves: Savings, Income and Sustainability

Solar panels are becoming increasingly popular as homeowners look for ways to protect the planet, reduce their carbon footprint and secure a source of clean, renewable energy for the future. The best part? Over time, your investment in a solar PV (photovoltaic) system will pay for itself. Exactly how long that takes depends on factors like installation costs, energy generation, your household's energy consumption, and your energy tariff. But one thing is certain: solar is a smart long-term investment.

 

In this blog, we explore how your solar panels will pay for themselves.

 

 

Saving money by generating your own power

One of the most immediate benefits of installing a solar PV system is reducing how much energy you need to import from the National Grid via your energy supplier. Your solar panels will generate far more energy on sunny days, but the latest version of modern solar panels can even generate energy on cloudy days by using ambient light. This means your solar panels have the capacity to power your appliances during the day, helping you avoid using electricity from your energy supplier.

 

Here's an example - if your energy tariff charges 24 pence per kilowatt-hour (kWh) and your solar panels generate 2 kilowatts (kW), which is 2 KW that you won’t have to export from the grid, that’s an instant saving of 48 pence. In the UK, a 4 KW solar PV system can generate 15-28 kWh of electricity per day in the summer. So, as you can see, over time, these savings add up and help offset your installation costs.

 

 

Storing and selling excess energy

During the summer months, your solar panels are likely to generate more energy than your household can use. If your installation includes a battery system, you can store some or all of this excess energy (depending on the size of your battery) and use it later when the panels aren't generating power, such as during the night or on cloudy days. This reduces your reliance on the grid even further.

 

If your battery is full or you don’t have one, any excess energy can exported back to the grid. Through the government backed Smart Export Guarantee (SEG) scheme, you can be paid for every unit of energy you export, ensuring that no clean energy goes to waste.

 

You can read more about solar battery sizes in our blog Choosing the Right Solar Battery.

 

 

What is the Smart Export Guarantee?

The Smart Export Guarantee (SEG), introduced in January 2020, allows homeowners with small-scale renewable energy systems to sell their excess energy to licensed electricity suppliers. This includes solar power, wind power and other renewable energy sources.

 

 

Key points about the SEG:

 

• Your solar panels must have a maximum capacity of 5MW (megawatts).
• Your system must be installed by an MCS-certified engineer.
• You’ll need a smart meter or export meter to measure the energy you export.
• SEG rates vary depending on your energy supplier and their tariff, typically ranging from 12 pence to 16.5 pence per kWh. 
• Once you’re signed up, the process is seamless and payments or credits are applied directly by your supplier.

 

 

How solar energy export works

 

Exporting solar energy is simple and efficient. Once your system is connected to the grid:

 

• Any excess electricity is automatically fed back into the grid through your grid-tied inverter.
• A two-way meter tracks both the electricity you use from the grid and the energy you export.
• At the end of each billing period, your energy supplier calculates the net amount and applies credits or payments accordingly.

 

This way, your solar panels are always working for you, whether it’s powering your home or earning you money from surplus energy.

 

 

How long until solar pays for itself?

On average, a well-installed solar PV system pays for itself in six years. The payback period will vary depending on the system size, installation cost and how effectively you use the energy generated. Over the long term, solar panels can significantly reduce your energy bills and even generate additional income through the SEG scheme.

 

Aside from financial savings, solar panels also increase the eco-friendliness of your home. By generating your own power, you reduce your reliance on fossil fuels and contribute to lowering CO2 emissions, helping to combat climate change.

 

 

Next steps…

Choosing the right solar provider is essential to ensure your system is installed correctly and operates at maximum efficiency. At Plug Me In, we specialise in assessing whether your home is suitable for a solar PV system and designing bespoke solutions that maximise power generation while delivering the quickest payback period. Talk to us today, we’d love to help plug you in to a greener, more sustainable future! 

 

 

Suggested further reading..

 

Blog - Power Up Your Home: The Compelling Reasons to Switch to Solar in the UK
Blog - Do weather conditions affect the efficiency of solar panels?
Blog - Choosing the Right Solar Battery