Solar Panels: A Simple Cost Guide

With most households in the UK feeling the pinch from rising electricity costs, many are considering solar panels for more independent, low-cost, long-term energy. . 

The idea of harnessing free, renewable energy from the sun sounds very appealing, but the costs of installing solar panels can still be confusing for some. We hear about the wholesale costs of solar PV coming down, so why has the cost for homeowners gone up in some circumstances? 

This guide aims to clear up the financial aspects of solar panel installation. We’ll break down the average costs, explore the factors that influence pricing, financing options, as well as look at the all important energy bill savings to be made. 

Average cost of solar panels in the UK

Let’s start with the big question: how much do solar panels cost? 

According to the Energy Saving Trust, the average cost for a 3.5kW roof mounted solar panel system is around £7,000.

Of course, the true answer depends on a number of factors, which we’ll touch on shortly. In terms of the range, you can expect to pay anywhere between £5,000 and £9,000 for a fully installed solar panel system of 2-4kW that’s suitable for most households in the UK. 

Average cost of solar panels in the UK

The price of a solar panel system largely depends on its size and the capacity installed, which is measured in kilowatts (kW). Here’s a rough breakdown:

  • 2-3kW system (suitable for 1-2 bedroom homes): £5,000 – £6,000
  • 3-4kW system (suitable for 3 bedroom homes): £6,000 – £9,000
  • 5-7kW system (suitable for 4+ bedroom homes): £9,000 – £11,000
Property sizeAnnual electricity usage (kWh)Solar capacityEstimated cost
1-2 bedrooms1,8002-3kW£5,000 – £6,000
3 bedrooms3,5003-4kW£6,000 – £9,000
4 bedrooms4,1005-7kWp£9,000 – £11,000

These costs can be broken down in various ways to give you more of an idea for your specific circumstances. 

For example, some like to split this up with a more accurate cost per kilowatt. As a rule of thumb, you can expect to pay around £1,800 per kW of solar capacity. This figure includes not just the panels, but also the inverter, mounting equipment and installation costs.

Another way to gauge costs is to look at the price per panel. Currently, you’re looking at around £700+ per panel for a complete system. These prices include the 0% VAT charge on solar panels, which in effect, is a 20% discount.

Over the past decade, wholesale costs of solar panels have dropped by an astonishing 90%. However, the cost of installing panels on your home hasn’t. 

In fact, since 2020 solar panel costs have actually increased. Even more, since the energy crisis hit in 2022, prices have been pushed further, meaning that on a per kW basis, solar panel systems now cost more than they did a decade ago!

So, why do we have this big disparity between wholesale and residential costs?

This is largely due to rising labour and scaffolding costs, which now make up a significant portion of the total price. In some cases, these costs can match the cost of your solar panel array.

Factors affecting solar panel costs

There are a number of factors that influence the final price of your solar panel installation. Understanding these can help you make informed decisions and potentially find ways to cut costs where necessary. Whilst it might be tempting to cut costs wherever possible, investing in quality components and professional installation can pay off in the long run through improved efficiency and system longevity. Let’s take a look.

  • Installation complexity – The difficulty of the installation process can significantly impact your overall costs. For example, if your roof is hard to reach, you may require more or specialised scaffolding or equipment, substantially increasing your installation costs. In some cases, this can add thousands of pounds to the total price.
  • Labour costs – Solar PV installation usually requires two installers working for 2-3 days. With labour costs ranging from £300 to £500 per person per day, you can expect to spend between £600 and £3,000 on labour alone.
  • System size –  Your household’s energy consumption will help determine the ideal system size. Over-sizing your system may lead to unnecessary expenses, whilst under-sizing could leave you relying too heavily on grid electricity. Although larger systems cost more overall, they often offer better value for money thanks to the economies of scale at play. This is because fixed costs like inverters and electrical work can be spread over more panels.
  • Panel quality and type – The type of solar panels you choose can significantly affect your costs. You have three main choices:
  • Monocrystalline panels – These are the most efficient and expensive, costing around £1,000 – £1,800 per kW.
  • Polycrystalline panels – Less efficient but more affordable, these cost around £900 per kW.
  • Thin-film panels – The least efficient but cheapest option, costing between £400 and £800 per kW.

Additional costs to consider

Whilst the basic solar panel system costs cover most of what you need, there are a few additional expenses you might encounter along the way. 

  • Planning permission – In most cases, solar panels fall under ‘permitted development’ and don’t require planning permission. However, if you live in a listed building or a conservation area, you may need to seek approval, which could involve additional fees.
  • Roof structure – Most roofs are capable of supporting solar panels without issue. However, if your roof is old or in poor condition, it may need reinforcement before installation. Your installer will advise here. If a new roof is needed, or you have plans to upgrade this anyway, this will add several thousands pounds to your costs. Your roof angle and direction can also come into play too. South-facing roofs at a 30-40 degree angle are ideal. Other orientations may require more panels or specialised mounting systems to achieve the same output.
  • Battery storage – Although not essential, adding a battery storage system can significantly increase your energy efficiency and the effectiveness of the electricity generated by your panels. Prices for domestic battery storage systems typically range from £2,500 to £10,000, depending on capacity and quality. 
  • Maintenance and cleaning – Solar panels are low-maintenance systems, but occasional cleaning if your panels are dirty can help maintain their efficiency. It’s possible to do this yourself or you can get in professional cleaning services, which typically cost around £100-£200 per clean. 

If you have the means, paying for your solar panel system outright can be the most cost-effective option in the long run. You’ll avoid interest charges and start benefiting from energy savings immediately.

However, for the average UK household, investing up to £10,000 on solar panels is not a small amount. This can be off-putting for some homeowners, but there are financing options available to help ease a large initial outlay. 

Many banks and building societies now offer specialised ‘green’ loans or mortgages for home improvements that increase energy efficiency. Here you have two main options:

  • Green loans – These are typically unsecured personal loans with competitive interest rates for eco-friendly home improvements.
  • Green mortgages – Some lenders offer better mortgage rates or increased borrowing capacity for energy-efficient homes or for financing energy-saving improvements. Check out Go2 Green Finance for options on Green Mortgages.

Forward-thinking energy companies and solar installers are offering their own financing plans for homeowners. Companies like E.ON, Scottish Power and SolarStyle offer schemes where you pay for your solar system in monthly instalments, often with low or no interest rates.

In terms of government grants, there aren’t any direct grants, unlike those available for air source heat pumps through the Boiler Upgrade Scheme. However, there are some government schemes available for specific groups of people:

  • ECO4 scheme – This provides solar panels to low-income households with electrically heated homes and a vulnerable resident receiving qualifying benefits.
  • Home Upgrade Grant – Available in some areas of England for low-income, energy-inefficient households not on the gas grid.
  • Home Energy Scotland Grant & Loan – Offers up to £6,000 (including a £1,250 grant and £4,750 optional zero-interest loan) for solar panel purchases in Scotland.

So, if you haven’t got the cash sitting there in your bank to buy and install solar panels, there are a number of avenues to go down.

When considering financing options, be sure to compare the total cost over the life of the loan or lease against the expected energy savings. In many cases, the monthly savings on your energy bills can offset a significant portion of your finance payments, making solar panels an affordable option even without a large upfront investment.

You’ve heard about the upfront costs of solar panels, but what about the plus side? It’s important to remember that solar panels will pay off in the future, giving you long-term savings and even a return on your investment further down the line. 

The amount you can save on your electricity bills varies depending on your energy usage and system size, but a typical saving range is from £200 to £1,000 per year. With electricity costs dropping to around 22p per kWh in July 2024, an average 3-bedroom household could save around £450 annually, or just over 70% off their yearly energy bill. 

If your solar system cost £6,000 for example, that’s a payback period of 13 years. On average, you can expect your solar panel system to pay for itself in 8-14 years. The good news is that solar panels last for 25+ years, meaning you have a significant period of ‘free’ energy to make the most of. 

There are ways to speed up this payback period. One of them is to earn money by selling excess electricity back to the grid. This comes under the Smart Energy Guarantee. The rates paid to you per kilowatt hour of exported energy vary by energy, but the highest rates seen at Octopus Energy, can be as high as 27p per kWh. Over the course of the year, this can mount up to several hundred pounds. 

The other option is to pair your solar panels with battery storage. A domestic battery energy storage system saves up excess solar energy that can’t be used immediately by your home. This stored energy can then be used later rather than purchasing electricity during peak times. If your solar panels do generate access energy at any point, your battery storage systems are filled up first before being exported to the grid under SEG.

As we reported here, the combination of solar and battery can save significant amounts in costs over the year. In our case, it was around £1,000 per year, which greatly reduces the payback period.

The system is also future proof. If grid electricity costs continue to rise, your savings will increase proportionally. It’s also worth remembering that solar panels also offer environmental returns, such as reduced carbon emissions which are much-needed for the planet. 

To make sure you’re getting the most value for your money when investing in solar panels, here are a few tips for you to keep in mind.

  • Get multiple quotes – Aim to get at least three quotes from different installers. This will give you a better understanding of the market rates and help you identify any outliers. When you receive a quote make sure it includes everything – the panels, inverter, mounting equipment and installation costs.
  • Research installers – All solar panel installers must be MCS (Microgeneration Certification Scheme) accredited. Check their reviews on third party websites.
  • Timing – Whilst solar panels can be installed year-round, some installers offer discounts during their off-peak seasons, typically in winter.
  • Solar and battery for savings – If you’re considering both solar panels and battery storage, buying them together can often be more cost-effective than purchasing them separately.
  • Understand warranties – Pay attention to the warranties offered. Most panels come with a 25-year performance warranty, but inverter warranties are typically shorter. The longer the warranty, the better. 
  • Explore financing options – Compare different financing methods to find the one that best suits your financial situation.

Wrap up on solar panel costs

Investing in solar panels is a significant decision, both financially and environmentally. Whilst the upfront costs can seem hefty, the long-term benefits for costs and savings make solar a worthwhile option for UK homeowners.

As we’ve seen, the cost of solar panels can vary widely based on factors like system size, panel type and installation complexity. Do your research, weigh up different quotes and go for the solution that suits you best.

About the author 

Ben Hardman

Ben is a professional writer and the creator of sustainable living website TinyEco.com.
It's here where he helps people to reduce their environmental impact through simple, everyday choices. Away from the laptop, Ben loves spending time in the natural environment with his young family and Murphy the cocker spaniel.

Experience:
First Class BSc Biology degree (environmental and climate change focus)
Six years of working and writing in the environmental sector, including two years working at an international sustainability consultancy
Written for Ethical Consumer magazine, My Mother Tree, Unsustainable Magazine, Happy Eco News, Emission Index, PeakDistrict.org
Commented in The Independent, The Guardian, GreenMatch. Also featured on Radio 1's environmental special 'Minute of Me'

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