Can Solar Panels Help with the Cost of Living Crisis?

A financially strained household with two children, a dog and parents who are dual-income earners has to grapple with bills piling up on the kitchen table and the increasing cost of living. 

The UK inflation has risen above 10 per cent for the first time in 40 years. For the average family with young children, the budget for food and childcare has to increase as UK supermarket food prices have risen to the highest level since the 2009 financial crisis, and childcare fees have increased by an average of £1,500 in two years.  

As winter approaches, people must consider ways to keep their homes warm with rocketing energy bills set to triple this winter for typical UK households. 

The cost of living crisis is making people consider immediate ways to cut their energy bills, such as only boiling as much water in the kettle as you need to make tea and cooking two dishes simultaneously in the oven. However, solar energy is becoming a more attractive, longer-term solution. Over 3,000 solar installations are being carried out every week in the UK, up from 1,000 a week in July 2020. 

There are factors to consider when it comes to solar energy. Firstly, you need the right property type. Solar technology has developed, and less roof space is required to produce the same amount of energy as a decade ago. However, properties such as north-facing or heavily shaded houses do not get as much from solar energy. The roof of a building also needs to be examined to ensure it is structurally sound for the installation. The good thing is that solar panels currently do not require planning permission. Still, some listed buildings need consent to install solar panels and properties in a conservation area need to contact the local council before proceeding. 

Secondly, there is an upfront investment of thousands of pounds to get solar panels. A decade ago, a typical solar panel system cost around £20,000. Today, a standard solar panel system for a three-bedroom house costs £5,430.  

Solar energy can help cut energy bills in the long run. The time taken to recoup the cost of installing solar panels from savings on energy bills is forecasted to reduce from under 11 years in January 2022 to fewer than four years from January 2023. 

It is unlikely that household energy bills will reduce soon as the cap is expected to rise again to £3,616 a year. A household with a 4.2 kilowatt-peak system can take between £297 and £729 off energy bills at the upcoming October price cap rates.

Solar calculators, such as the Energy Savings Trust website, can help families assess whether a solar panel system is suitable for their household. It estimates the installation and maintenance costs and the financial and environmental benefits of getting solar panels.

In addition, there is support for the initial installation cost. Companies like EON offer interest-free finance options to install a typical six-panel (2.34 kWp) which costs about £5,995 and can be paid at £166.52 per month over 36 months. 

According to the Department for Business, Energy & Industrial Strategy (BEIS), the average household uses 3,731 kWh per year, and the unit price of electricity will be set at 34.0 p/kWh by October 2022. Based on this, 3,731 kWh of electricity produced is worth £1,268.  

In theory, you will get back the £5,995 spent on a six-panel solar panel system through interest-free finance in less than five years. In reality, the exact payback period will differ by household. It can take more than five years for families that do not use much of the electricity produced, and the price of energy and the cost of solar panels will change in the coming years. 

Finally, while installing batteries with solar panels can add £4,500 on average to the initial installation cost, the batteries help to store the solar energy produced – but not used – during the day and let us use it at night. It also helps to reduce the house's overall carbon footprint. 

A solar panel system does not address the immediate cost of living crisis. Still, it is an investment that provides a reliable source of renewable electricity; it cuts energy bills in the long run, requires little maintenance and lasts long.