How solar panels save money
Panels on your roof turn daylight into electricity. An inverter changes it into the kind your home uses. Whatever your home needs at that moment comes from the panels first. Anything left over flows out to the grid.
The money comes from two places:
- The bill saving. Every unit (kWh) you use from the panels is a unit you do not buy. At the October to December 2026 price cap, that is worth 26.32p a unit.
- The export income. Units you send to the grid earn money under the Smart Export Guarantee (SEG). The rate depends on your tariff and is usually much lower than what you pay to buy electricity.
Because a unit used at home is worth about twice as much as a unit exported, the share you use yourself matters almost as much as the size of the system. The calculator lets you set that share.
System size: kWp and panels
Systems are sized in kilowatts peak (kWp): the output in ideal test conditions. A 4 kWp system made of 430-watt panels has 10 panels (4,000 ÷ 430, rounded up). Most new panels are rated about 400 to 450 watts.
Real output is always below the peak figure, because the sun is rarely at full strength. What matters is how many kWh the system makes over a year. In the UK, each kWp makes roughly 800 to 1,150 kWh a year, depending on where you live and the roof.
The size you can fit depends on the roof. A typical three-bedroom house has room for about 8 to 12 panels on one slope. If you only know how many panels fit, pick “Panels” in the calculator.
How much sun your region gets
We use the European Commission’s PVGIS tool, which models solar output from satellite weather data. For each region, it gives the yearly output of 1 kWp facing south at a 35° tilt, allowing 14% for losses in wiring, the inverter and dirt.
The sunniest south coast makes over 40% more than the Highlands. Even so, panels in Scotland can still pay back: they simply take a little longer.
Which way your roof faces
South-facing roofs make the most. Using the PVGIS figures for Birmingham, this is how other directions compare with a south roof at 35°:
| Roof faces | Share of output | 4 kWp, Midlands, a year |
|---|---|---|
| South | 100% | 3,872 kWh |
| South-east or south-west | 93% | 3,612 kWh |
| East or west | 78% | 3,024 kWh |
| Panels laid flat | 83% | 3,220 kWh |
| North-east or north-west | 61% | 2,376 kWh |
| North | 54% | 2,096 kWh |
East and west roofs lose about a fifth of the output, but they spread it across the morning and evening, when many homes use more power. That can raise the share you use yourself. Some homes put panels on both an east and a west slope for that reason.
Shade
Shade costs more than you might expect. Panels are wired in strings, and on older systems a shadow on one panel can pull down the whole string. Modern systems often use optimisers or microinverters to limit this.
The calculator takes off 10% for some shade (a chimney or a tree for part of the day) and 25% for heavy shade. With some shade, the 4 kWp example makes 3,485 kWh instead of 3,872, and payback moves from 9.2 to 10.3 years. With heavy shade it makes 2,904 kWh and takes 12.4 years. An installer should check shade properly during the survey.
Using the power at home
The share of output you use at home is the biggest unknown. It depends on who is in during the day, what runs then and whether you have a battery. Without a battery, about a third to a half is common. We start at 40%, and 70% with a battery.
For the 4 kWp example in the Midlands (2,500 kWh used a year, SEG at 12.9p):
| Used at home | Bill saving | Export income | Total | Payback |
|---|---|---|---|---|
| 20% | £204 | £400 | £603 | 10.8 years |
| 40% | £408 | £300 | £707 | 9.2 years |
| 60% | £611 | £200 | £811 | 8.0 years |
| 70% (all your use) | £658 | £177 | £835 | 7.7 years |
At 70% the panels would cover everything this home uses, so the calculator caps the saving at your own use: you cannot save more than you would have bought. Ways to use more yourself include running the washing machine and dishwasher in the day, heating water with a solar diverter, and charging an electric car at home. Our appliance running cost calculator shows what each appliance uses.
The Smart Export Guarantee
The Smart Export Guarantee requires larger suppliers to offer a tariff that pays for electricity you export. Suppliers set their own rates; the only rule is that the rate must be above zero. You do not have to use your own supplier.
Ofgem’s report for April 2024 to March 2025 shows £56.97 million paid for 443.1 GWh exported: about 12.9p a unit on average. Flat tariffs ranged from about 1p to 15p, with higher rates on some time-of-use deals.
- Export income
- £93
- First year
- £501
- Payback
- 13.1 years
- Export income
- £300
- First year
- £707
- Payback
- 9.2 years
- Export income
- £348
- First year
- £756
- Payback
- 8.6 years
Shopping around for the export tariff is one of the easiest ways to shorten payback.
A worked example
A 4 kWp system on a south-facing roof in Birmingham, no shade, no battery, in a home using 2,500 kWh a year.
- Yearly output4 kWp × 968 kWh3,872 kWh
- Used at home40% of output1,549 kWh
- Exportedthe rest2,323 kWh
- Bill saving1,549 × 26.32p£408
- Export income2,323 × 12.9p£300
- Cost4 kWp × £1,595 median£6,380
Over 25 years, allowing for 0.5% less output each year and today’s prices, the panels bring in about £16,662, or £10,282 more than they cost. They cover about 62% of the electricity this home uses.
Payback across the UK
The same 4 kWp system, cost and use, in each region:
| Region | Output a year | First year | Payback | 25-year return |
|---|---|---|---|---|
| South East England | 4,624 kWh | £845 | 7.7 years | £13,518 |
| South West England | 4,208 kWh | £769 | 8.5 years | £11,728 |
| South Wales | 4,168 kWh | £761 | 8.5 years | £11,556 |
| East of England | 4,120 kWh | £753 | 8.6 years | £11,349 |
| London | 4,076 kWh | £745 | 8.7 years | £11,160 |
| Midlands | 3,872 kWh | £707 | 9.2 years | £10,282 |
| Yorkshire and the Humber | 3,808 kWh | £696 | 9.4 years | £10,006 |
| North East England | 3,796 kWh | £693 | 9.4 years | £9,955 |
| Northern Ireland | 3,676 kWh | £672 | 9.7 years | £9,438 |
| Southern Scotland | 3,616 kWh | £661 | 9.9 years | £9,180 |
| North West England | 3,544 kWh | £647 | 10.1 years | £8,870 |
| Highlands | 3,244 kWh | £593 | 11.0 years | £7,579 |
Northern Ireland has its own electricity market and prices, and no price cap, so enter your own unit rate there. The SEG does not apply in Northern Ireland either: ask your supplier what it pays for exports.
What panels cost
The government publishes the cost of every system registered with MCS. For April 2025 to March 2026, the median cost was £1,595 per kW for systems up to 4 kW and £1,546 per kW for 4 to 10 kW. Costs fell again in real terms, and a record 264,742 installations were counted.
| System | About | Typical cost |
|---|---|---|
| 3 kWp | 7 panels | £4,785 |
| 4 kWp | 10 panels | £6,380 |
| 5 kWp | 12 panels | £7,729 |
| 6 kWp | 14 panels | £9,275 |
Real quotes vary with scaffolding, roof type, the inverter, bird protection and monitoring. Enter yours under More options for an exact payback.
0% VAT until March 2027
Installing solar panels and batteries in homes in Great Britain is zero-rated for VAT until 31 March 2027. From 1 April 2027, the rate is due to return to the reduced rate of 5%. On a £6,380 system that would add about £319.
Electricity VAT is 0% too, for now
Household electricity also carries no VAT from 1 October 2026 to 31 March 2027. That lowers the unit rate, which slightly lowers the value of each unit your panels save. If VAT returns, each saved unit is worth about 5% more.
Is a battery worth it?
A battery stores spare daytime output for the evening. In the example, raising the share used at home from 40% to 70% adds about £128 a year, because each stored unit is worth 26.32p used rather than 12.9p exported.
That means a battery costing more than about £1,280 would take over 10 years to repay itself on solar alone. Batteries become better value when you also charge them from the grid at a cheap overnight rate and use that power at peak times. Put the battery’s cost under More options to see the combined payback.
Smart tariffs and electric cars
Some suppliers offer higher export rates to customers who also buy from them, or rates that change with the time of day. Read the conditions: some need a smart meter, a battery or a particular import tariff.
An electric car charged at home in the day soaks up a lot of solar output. If yours is parked at home on sunny days, raise the share used at home. See what charging costs in our petrol vs electric car calculator.
Panel ageing and the 25-year view
Panels slowly lose output. Warranties often promise about 0.4% to 0.55% a year. We assume 0.5%, so the example system makes 3,872 kWh in year 1 and about 3,433 kWh in year 25.
- Year 1Installed
£6,380 spent; £707 back in the first year.
- Year 9Payback
Savings and income pass the cost after about 9.2 years.
- Year 10Ahead
About £536 ahead.
- Year 25End of the usual warranty
About £10,282 ahead, at today's prices.
Many panels keep working well beyond 25 years, so the real return can be higher.
If electricity prices change
Nobody knows what electricity will cost in 10 or 20 years. The calculator starts with today’s price cap and lets you add a yearly change. If prices and export rates both rose 3% a year, the example would pay back in 8.2 years instead of 9.2, and the 25-year return would be £17,734 instead of £10,282.
Ofgem announces the next cap, for January to March 2027, on 25 November 2026. Our energy bill calculator shows your whole bill at the cap.
Carbon savings
Each unit of grid electricity in 2026 comes with about 0.144 kg of CO2e, counting generation and losses in the wires (DESNZ conversion factors). The example system’s 3,872 kWh a year saves about 557 kg of CO2e a year. As the grid gets cleaner, the carbon saved per unit falls.
If you also want to cut gas, our heat pump vs gas boiler calculator compares the running costs and carbon of the two.
Planning permission and MCS
Most roof panels on houses are permitted development, so you do not need planning permission, as long as they do not stick out more than 0.2 metres and do not sit higher than the roof. Listed buildings, flats and homes in conservation areas or World Heritage Sites have extra rules: check with your council.
Use an installer certified by the Microgeneration Certification Scheme (MCS). You need the MCS certificate to get paid under the SEG, and it shows the system was designed and fitted to the standard. Your network operator must also be told about the connection; the installer usually does this.
Upkeep, inverters and insurance
Panels need little upkeep. Rain usually keeps them clean enough. The inverter is the part most likely to need replacing during the panels’ life, often once in 25 years. The calculator does not include that cost, so leave some room for it.
Tell your home insurer about the panels. Most add them at no or little extra cost.
Selling or moving home
Owned panels usually go with the house. Buyers will ask for the MCS certificate, the warranty and the SEG details. Panels on a lease or “rent-a-roof” deal are different: some lenders are wary of these, so read the lease before you agree.
If you are paying for panels from savings, compare the return with leaving the money in a savings account using our savings interest calculator. If you add the cost to your mortgage, our remortgage calculator shows the cost of borrowing more.
Getting good quotes
- Get at least three quotes from MCS-certified installers.
- Check the expected output in kWh a year. MCS installers must give a performance estimate.
- Compare like with like: panel and inverter make, warranties, scaffolding, bird protection and monitoring.
- Ask about shade and how the design deals with it.
- Pick an export tariff before the system goes live.
- Plan the timing: 0% VAT runs to 31 March 2027.