How much do solar panels cost? UK home installation rules explained - how much can they save on energy bills

Not only can you save money on your bills, but with a Smart Export Guarantee you could earn money back on excess electricity generated by solar panels

It has been announced that energy prices for British households will rise by 80% by October after regulator Ofgem confirmed an increase in the energy price cap for around 24 million homes in England, Scotland and Wales - skyrocketing the average household’s yearly bill from £1,971 to £3,549.

As soaring energy bills and the ongoing cost of living crisis continues to affect families across the UK, some of you may be looking at alternative energy sources in a bid to reduce costs.

One option that some households may be considering is that of solar panels. This is everything you need to know about the renewable energy source, and how it could affect your bills.

What are the rules around installing solar panels?

Solar PV panels are considered “permitted developments”, meaning that they don’t often require planning permission - however, exceptions do apply and therefore it’s best to check with your local planning office for guidance before going ahead with any installations.

If you live in a listed building, conservation area or national park, you should be aware that additional restrictions may also apply.

Solar panels are seen on the houses in Mereside Grove in Worsley on May 16, 2019 in Salford, England (Photo by Anthony Devlin/Getty Images)

You can find out the specific planning permission rules of your local authority in England and Wales via the Government website, and in Scotland through the My Gov site.

If you’re planning on installing a solar PV system for your household, you’ll need to register it with your Distribution Network Operator (DNO). Installation contractors must examine the solar PV system and required connection to figure out whether the DNO needs to be informed before or after installation.

How much do they cost?

According to Energy Saving Trust, the average domestic solar PV system, which is 4.2kWp, costs around £6,500.

This price can vary depending on factors such as the size of the array, how difficult it is to access your roof, whether you choose panels or tiles and whether you want building integrated panels or panels that sit on top of your roof.

Panels on top of your roof are the cheapest option you can consider, while tiles are the most expensive.

Solar panels installed on roofs of houses in Loos-en-Gohelle, northern France, on November 25, 2016. (Photo by PHILIPPE HUGUEN/AFP via Getty Images)

You can also choose ground-mounted systems instead of ones on your roof, however these costs are much more difficult to predict as there are even more variables to consider, like the type of mounting frame used and how far away the system is from the house.

Costs can vary between different installers and products, and so Energy Saving Trust recommends that you get quotes from at least three different installers to ensure you get the best deal possible.

What’s the Smart Export Guarantee?

If you live in England, Scotland or Wales, you could potentially benefit from a Smart Export Guarantee (SEG) tariff. SEG tariffs are not available to residents in Northern Ireland.

There may be times that you generate more electricity than you use, and so with the SEG you can get paid for that excess renewable energy which gets exported out for others to use.

You have to sign up to a SEG tariff with a company, otherwise you won’t get paid for the electricity, but any excess will still be exported to the National Grid for free.

A person cleans dust off of solar panels on the roof of a home (Photo by SAUL LOEB/AFP via Getty Images)

How much you could earn with a SEG tariff depends on things like how much electricity you export to the grid, your export tariff rates, time of export (if your SEG has a time variable rate), how much electricity you use yourself, how much you pay for electricity and how much time you spend at home.

If you go ahead with installing solar panels you should be able to sign up to a SEG tariff, although there are a few specifications you need to fit to be eligible:

  • Your installation must be 5MW capacity or less (50kW for micro-CHP)
  • You’ll need a meter that can provide half-hourly readings for electricity export
  • Your installation must be MCS-certified 

Will they save me money on my energy bills?

Solar panels can help you save money on your energy bills, however the amount you could save annually can vary.

Energy Saving Trust says that most households will use around 15% to 20% of the energy that they generate, although this can change quite significantly depending on things like:

  • Whether you work from home
  • How many people are at home during the day
  • Whether you have an electric vehicle 
  • Whether you heat your home or hot water using a heat pump or other electrical heating
  • Whether your cooking is done using electricity 
Solar panels adorn the roofs of homes on September 27, 2021 in Runcorn, England (Photo by Christopher Furlong/Getty Images)

Here are some figures from Energy Saving Trust regarding annual savings with solar panels in various locations around the UK, based on households that have people home all day:

  • London, South East England £505 with SEG, £415 without
  • Aberystwyth, Wales, £485 with SEG, £405 without
  • Manchester, North England, £475 with SEG, £400 without
  • Stirling, Scotland, £450 with SEG, £385 without
  • Belfast, Northern Ireland, £530 with the Renewables Obligation Certificates, £440 without

You can also use the Energy Saving Trust solar energy calculator to help you figure out a bit more accurately how much you could save with solar energy.