Potential Savings with Solar Panels: How Much Can You Really Save?

With energy prices rising and the demand for sustainable solutions increasing, solar panels have become a smart investment for UK homeowners. Solar energy can significantly reduce your electricity bills, protect you from future price hikes, and even earn you money through government incentives.

Power your home with Upvolt’s smart solar solutions.

But how much can you really save with solar panels? In this guide, we’ll break down the financial benefits of solar energy, including potential savings, how government schemes like the Smart Export Guarantee (SEG) can put money back in your pocket, and the role solar battery storage can play in maximising your savings.

Solar Power Savings: Here’s the Low Down

• Solar panels can help lower energy bills by reducing reliance on the grid.
• The Smart Export Guarantee (SEG) enables homeowners to earn money by selling excess solar energy back to the grid.
• Solar battery storage allows for greater energy independence by maximising self-consumption and reducing grid reliance.
• Over time, solar panels can offer a strong return on investment, delivering long-term financial and environmental benefits.

Do Solar Panels Actually Save You Money?

Solar panels not only reduce your carbon footprint but can also help you save money on your energy bills. By generating your own electricity, selling excess power back to the grid, and protecting against rising energy prices, solar panels offer a smart financial investment for homeowners. Let’s explore how they can save you money in the long run.

Generating Your Own Electricity and Reducing Bills

One of the primary ways solar panels help you save money is by allowing you to generate your own electricity. A typical 3.5 kW solar panel system in the UK generates around 3,000 to 3,500 kWh of electricity annually. 

If your home uses most of the power you generate, you could reduce your energy bills by significantly lowering the amount of electricity you need to purchase from your energy supplier, leading to long-term savings on your household expenses.

Selling Excess Energy Back to the Grid

In addition to reducing your electricity bills, solar panels give you the opportunity to sell any excess energy back to the grid through the Smart Export Guarantee (SEG). This government scheme allows homeowners to earn money by exporting surplus electricity, which can further offset the cost of the system and increase your savings.

Protecting Against Rising Energy Prices

Solar panels provide long-term protection against rising energy prices, which have been a growing concern for UK households. By generating your own electricity, you’re shielded from the volatility of market prices.

According to a UK Parliament Report, typical household energy bills increased by 54% in April 2022 and 27% in October 2022, with many suppliers increasing their prices in response to the ongoing energy crisis. Solar panels help mitigate these price hikes by allowing you to generate affordable electricity. They also offer a way to future-proof your home against future energy price inflation.

How Much Can the Average UK Home Save with Solar Panels?

The savings a typical UK household can achieve by installing solar panels depend on several factors, including the size of the system, household energy consumption, geographical location, and how much sunlight your area receives. However, on average, solar panels can significantly reduce energy bills over time.

Average Annual Savings

For a typical three-bedroom home in the UK, you could reduce your energy bills by £140 and £340 a year with solar panels alone. These savings come from generating your own electricity and using less power from the grid.

However, without a solar battery, any excess energy produced during the day that you don’t immediately use will be sent back to the grid, meaning you’re not fully capitalising on your system’s potential. Keep reading to learn how a solar battery can significantly increase your savings.

Solar Panel System Size and Savings

The savings also vary depending on the size of the solar panel system installed. Here are potential annual savings based on different system sizes, according to the Federation of Master Builders:

• 3kW system: Saves around £200 annually, ideal for smaller homes with lower energy use.
• 4kW system: The most common system size in the UK, saving approximately £250 per year for average-sized homes.
• 5kW system: Best for larger homes, providing savings of ~£300 annually.

These figures reflect potential savings without considering Smart Export Guarantee (SEG) payments, which could increase your earnings.

Smart Export Guarantee (SEG)

Homeowners can earn money by exporting surplus solar energy back to the grid through the SEG scheme. The SEG allows homeowners to be paid by energy suppliers for the excess electricity their solar panels generate.

The amount you can earn depends on the SEG tariff rates offered by energy providers, which can range from 3p to over 20p per kWh of exported electricity. For example, E.ON’s Next Export Exclusive tariff offers 16.5p per kWh, while British Gas provides 15.1p per kWh. 

For a typical 3.5 kW system, generating between 3,000 to 3,500 kWh annually, you may export around 1,000 to 1,500 kWh back to the grid, earning £150 to £225 per year, depending on the tariff. This is an added benefit that can increase your overall return on investment.

Return on Investment (ROI)

The return on investment for a solar panel system depends on several factors, including the cost of installation, household energy consumption, sunlight exposure, and system size. According to Energy Savings Trust, solar panel systems typically have a payback period of up to 12 years, meaning homeowners will start to see a return on their investment within that time frame. After the payback period, the energy savings and SEG payments become pure profit. 

Where you live in the UK can affect your savings and ROI, as sunlight availability and electricity rates vary across the country. Homes in areas such as Cornwall and Sussex, which receive more sunshine, can see their solar panels perform better than homes in the north. 

For instance, a home in London could see a payback period of approximately 11 years, which is about two years faster than the same home in Scotland.

Can I Increase My Solar Savings?

To get the most out of your solar panels, it’s important to plan strategically and manage your energy efficiently. By adopting a few key strategies, you can significantly enhance your energy savings and reduce costs.

Solar Battery Storage

One of the most effective ways to maximise your solar savings is by incorporating solar battery storage. This technology stores excess solar energy produced during sunny periods for use at night or during low sunlight hours. Not only does this increase your energy efficiency, but it also reduces your reliance on the grid and shields you from rising electricity prices.

Benefits of Solar Battery Storage

• Maximising Energy Efficiency: Energy storage allows you to use more of the energy your solar panels generate. According to National Energy Action, energy storage can increase the self-consumption rate from around 20–30% to over 70% with a 6kWh battery.
• Reducing Electricity Bills: By relying less on the grid, you can lower your electricity bills. Homeowners could save up to £796 per year with solar battery storage.
• Energy Independence & Resilience: Solar battery storage ensures you have a reliable backup power supply during power outages or emergencies, offering enhanced resilience and peace of mind.

Smart Energy Efficiency Tips

To maximise your solar savings, it’s important to optimise how you use energy in your home. One simple way to do this is by running energy-hungry appliances, such as washing machines and dishwashers, when the sun is shining. This way, you can take full advantage of the electricity your solar panels are generating, rather than pulling from the grid.

In addition, using smart home devices can significantly boost your energy efficiency. Smart thermostats, lights, and appliances allow you to control energy use more precisely, ensuring you’re not wasting power when it’s not needed. 

Monitoring your energy use through apps is another effective way to stay on top of consumption and identify areas where you can save further. For example, Upvolt’s Skygate® is an innovative software platform designed to optimise your energy system. 

By intelligently connecting and managing the components of your solar and battery setup, Skygate® increases your solar energy self-consumption by up to 10%. Its smart algorithms and controls ensure that devices are powered when electricity prices are low, helping you make the most of your renewable energy and reduce reliance on the grid.

Choosing the Right SEG Tariffs

When selecting a Smart Export Guarantee (SEG) tariff, it’s important to compare different energy providers to find the best rates for exporting excess solar power back to the grid. 

SEG payments vary depending on the provider and tariff plan. Some providers may also offer fixed rates, while others offer variable rates based on market conditions. Careful consideration and choosing the right tariff can significantly boost your earnings. 

Unlock the Full Potential of Solar Savings

Solar panels are a valuable investment for homeowners looking to reduce their energy bills, protect against rising energy costs, and contribute to a more sustainable future. By generating your own electricity, selling excess energy back to the grid through the Smart Export Guarantee, and incorporating solar battery storage, you can maximise your savings and return on investment. 

With proper planning and the right tools, such as smart energy management and battery storage, you can make the most of your solar power system, ensuring long-term financial benefits and energy independence.

About Upolt

Upvolt specialises in delivering bespoke solar energy solutions for homes across the UK. From expert design to professional installation and ongoing support, we ensure a seamless transition to renewable energy.

Our team is dedicated to optimising solar systems for your unique needs, navigating local requirements, and ensuring maximum efficiency through our advanced equipment and innovative Skygate® platform.

Request a free quote today and take the first step toward a sustainable and energy-efficient home.

FAQ

How much money can I save each year with solar panels?

The savings depend on factors like system size, energy consumption, and sunlight exposure. On average, a typical UK home can save between £140 and £340 annually without a battery. With solar battery storage, savings can increase significantly, up to £796 per year in some cases.

How long does it take for solar panels to pay for themselves?

The payback period for solar panels in the UK typically ranges from 8 to 12 years, depending on the system size, installation cost, energy consumption, and location. After this period, the energy savings and Smart Export Guarantee (SEG) payments become pure profit.

Does battery storage increase savings?

Yes, solar battery storage can significantly increase savings. By storing excess energy generated during the day, homeowners can use it at night or during low-sunlight periods, reducing reliance on grid electricity. 

Can I get paid for exporting solar energy to the grid?

Yes, through the Smart Export Guarantee (SEG) scheme, homeowners can get paid for the excess solar energy they export to the grid. Payments depend on the SEG tariff rate, which can vary between energy suppliers, and you can earn money for the electricity you don’t use, typically ranging from 3p to 20p per kWh.

Are solar panels worth it in the UK’s climate?

The UK’s climate is ideal for solar energy production, as moderate temperatures help solar panels operate at their best, maximising efficiency and ensuring consistent energy generation throughout the year.

Alex Lomax

CEO & Co-Founder

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