Energy Guides

How to install solar panels

Thursday 24 November, 2011

By Martin Fagan

The cost of solar panels has fallen and the government will even pay you for the electricity you generate and consume. So not only do you save on your electricity bills, you also get paid for the privilege. We look at the benefits - financial and environmental - of installing solar panels.

One of the consequences of the rising price of fossil fuel energy is that more people are looking at sustainable energy sources - as much for the good of their wallet as for the environment. This has led to a mini-outbreak of house roofs covered with twinkling solar panels..

Solar panels - or, to give them their proper name, photovoltaic (PV) panels - on the roof says the person living under it has made the decision (and the investment) to reduce energy bills by generating their own electricity.

This is because when you buy a solar PV system, what you effectively do is pre-buy decades of electricity at today's price, thus shielding yourself from future price rises. It does require a sizable upfront investment, but the cost of panels is falling. This is because PV panels are made from silicon and the price of silicon has plummeted as supplies of it have increased.

Also, there are a larger number of companies entering the market to produce the panels and related technology, which has introduced a greater degree of competition which, in turn, has placed downward pressure on prices.

But first, a point of clarification: we’re talking in this guide about solar PV panels which generate electricity, not the smaller type of panel that simply heats water.

How are solar PV panels installed?

One of the assumed negatives of solar panels is that we don’t get enough sunshine in the UK to make solar panels a viable investment. However, only daylight is needed to create energy - not sunshine - so PV panels can still generate electricity on a cloudy day.

Panels are generally installed on the roof. They work best on a south-facing roof, (the sun rises in the east, travels southwards and sets in the west) which would produce the best power output - but they can also be installed on south east and south west-facing roofs. A north-facing roof isn’t a complete no-no either; it’s just that it won’t generate as much power as a south-facing roof.

Another consideration is where in the UK you live. The south of England gets more daylight hours than the north of Scotland and this could influence the size of the system you need (and therefore the cost).

As well as the panels on the roof, in the loft space or attic will be the DC-AC converter (also known as an inverter) which converts the direct current (DC) from the panels into the alternating current (AC) used by domestic appliances. There’ll also be a meter of some form (to show how much power the system is generating and how much you’re using) and also a junction box that feeds the power to your home appliances and exports any surplus into the National Grid - for which you’ll be paid (more on this later).

Solar PV needs little maintenance - you'll just need to keep the panels reasonably clean and make sure any trees or garden vegetation doesn’t overshadow them. The Energy Saving Trust [www.energysavingtrust.org.uk] says panels should last 25 years or more.

But in response to the growing faith in the reliability of the technology, companies such as British Gas (0800 084 3952) are now offering a 25-year manufacturer’s performance warranty on solar installations.

Get free quotes for your solar panels here or call British Gas on 0800 084 3952 for a quote.

How do solar PV panels work?

PV panels are made from layers of semi-conducting material, usually silicon, known as “cells”. When light shines on these cells it creates an electric field across the layers. The stronger the sunshine, the more electricity is produced. Groups of cells are mounted together in panels that are attached to your roof.

The power of a PV cell is measured in kilowatts peak (kWp). That's the rate at which it generates energy at peak performance in full direct sunlight during the summer. In the UK, the average household consumes 3,300 kWh (kilowatts hours) of electricity a year. A 3kWp system can generate over 2,500 kilowatt hours of electricity a year - around three quarters of a typical household’s electricity needs.

So what’s the catch?

The biggest catch is the upfront cost - installing solar PV panels is not cheap. According to the Energy Saving Trust (EST), an average PV system costs between £8,000 and £14,000, depending on the size of your roof/property, the type of panel and how much electricity you’re planning to generate.

The EST says an average (medium) system is 3kWp and will cost around £10,000 (including VAT at 5%) to install. Most domestic PV systems cost around £3,000 to £3,500 per kWp installed and larger systems are usually more cost-effective than smaller systems because of economies of scale.

But prices for solar installation are falling as the competition increases. Not only does British Gas offer solar panel installation, but Tesco also does. Solar panels specialist Evo Energy says that the solar panels for an average installation will have paid for themselves within ten years, after which any income is pure profit. Another catch is something called the feed-in tariff, or FIT. The feed-in tariff pays solar panel owners for the electricity their panels generate, regardless of whether the energy is used by the household or fed into the National Grid. However, from 3 March 2012, the government reduced the feed-in tariff to 21p per kilowatt hour from the original 43.3p per kilowatt hour plus an additional 3.1p per kWh for energy exported to the National Grid. The feed-in tariff is now a flat 21p per kWh on energy generated by the solar panels and used by the house and for surplus energy fed onto the National Grid.

This price reduction has been opposed by the green lobby who say reducing the feed-in tariff by 55% actively discourages home owners from installing solar panels, as the time taken to recoup any investment in a solar PV system is effectively doubled.

But this doesn’t factor in the fact that prices for solar installation are falling as the competition increases.

If the cost of installing the system is falling significantly year upon year, this goes some way to offset the fact that the feed-in tariff has been reduced by 55%.

However, the Department of Energy & Climate Change (DECC) has also said that if the cost of solar panels falls further, the feed-in tariff may be revised downwards to suit. It will be revised again on 1 July 2012 and as the cost of solar panels continue to fall, it’s likely the feed-in tariff will fall accordingly.

For more on the feed-in tariff, read our guide.

How long will it take to recoup any investment?

According to the Energy Saving Trust’s solar energy calculator, a medium-sized system installed on a south west-facing roof in Hertfordshire, and taking into account the government’s new lower feed-in tariff (21p per kWh), would earn you £434 in the first year (£349 from FIT, £60 money saved on bill and £25 income from exporting surplus power into the National Grid). If the installation costs £7,200, then at £434 a year, the system would pay for itself in just over 16 years. And 19.8 tonnes of CO2 will be prevented from being pumped into the environment.

But remember - these figures don’t factor in any future rises in the price of electricity if bought from one of the major suppliers. As all bill-paying Brits know to their cost, the price of energy has risen rapidly over the last 10 years and shows every sign of rising further in the future. In 16 years time, it’s conceivable that electricity generated by burning fossil fuels could treble in price.

And to repeat what we said earlier: with a solar PV system, you effectively pre-buy decades of future electricity at today's price. Use the Energy Saving Trust’s solar energy calculator solar energy calculator to see how much you could save.

Get free quotes for your solar panels here.

And finally...

Consumer watchdog Which? recommends that the best way to find a reliable installation company is to ensure that your installer is a certified member of the Microgeneration Certification Scheme (MCS).

Fitting solar PV panels is likely to give you a heightened awareness of the amount of energy you consume - and also how much energy you waste. And regardless how much money you spend generating your own electricity with solar panels, if your home is not properly insulated, you’re effectively throwing money away.

This is why the government has brought in new energy efficiency requirements for householders installing solar PV.

Householders with an Energy Performance Certificate (EPC) of Band D or better (A being the best) will be eligible for the standard tariff of 21p/kWh for each unit they generate. For EPCs of E or lower (with G being the worst) then householders will receive the lower rate tariff of 9p/kWh.

So it’s financially worth your while to make sure your home is as energy efficient as you can. To make your home more energy efficient, read our Top Ten energy efficiency tips.