Unveiling the Real Costs and Savings of Home Solar Panel Installation

Innovative, eco-friendly and cost-effective—solar panels promise to revolutionise how properties generate energy. The big question is, have they lived up to that promise? 

Homes everywhere are taking advantage of solar panels and government initiatives that make installation more affordable. 

The market also continues to grow, with Mordor Intelligence estimating a CAGR (compound annual growth rate) of 23.53% between 2024 and 2029. 

It’s safe to say that solar panels will continue to be a go-to option for homes that want to reduce their carbon footprint—but are they the right choice for you? 

Most importantly, do the savings solar panels offer outweigh the initial costs? Find out here as we take a deep dive into solar power and unveil its true money-saving potential. 

Solar panel costs in 2024 

The cost of solar panels depends on the size of your property, how many panels you’re installing, and the size of the system. On average, households spend between £5,000 and £13,000, but opting for a higher kW size can increase your initial spend. 

Let’s take a look at the average cost of a solar panel system, depending on house size: 

House Size	Number of 350W Panels	Number of 450W Panels	System Size	Average Cost
Small (1-2 bedrooms)	8	6	3kW	£7,000 to £8,000
Small to Medium (2-3 bedrooms)	10	8`	4kW	£9,000 to £10,000
Medium (2-3 bedrooms)	13	10	5KW	£11,000 to £12,000
Large (4-5 bedrooms)	16	13	6kW	£12,000 to £13,000

Smaller systems often cost less to install, but they won’t produce as much electricity, so it’s really a balancing act between initial costs and long-term savings. 

Reducing installation costs with government initiatives 

Solar panel installation might seem like a hefty expense, but the government’s move towards sustainability means you can take advantage of initiatives that decrease your outright costs. 

Depending on your circumstances, you could be eligible for one of the following schemes: 

• EC04: The EC04 Scheme is available for households that are receiving benefits. It allows low-income, vulnerable individuals and fuel-poor households to receive a solar panel grant. 
• Smart Export Guarantee: The SEG is an active initiative that pays owners of low-carbon electricity alternatives for any energy exported back to the grid. 
• VAT Reductions: Homeowners can save around £1,000 on installation thanks to the 0% VAT scheme, which is available for investments into energy-saving solutions. 
• Monthly Plans: Companies are also offering affordable solar plans, which allow homeowners to pay a convenient monthly fee for installation, services, and repairs. 

Solar panels vs traditional electricity

To understand how much money you can save, we need to explore the cost differences between solar panels and electricity. We all know that electricity bills take a significant chunk out of our monthly incomes, with the cost of living crisis resulting in hefty increases. 

According to Confused, the average electricity bill in 2024 – depending on household size – is: 

• £58.93: Low energy usage in a 1-2 person small flat or house. 
• £80.40: Medium energy usage in a 2-3 bedroom house with three occupants. 
• £113.89: High energy usage in a 4+ bedroom house with up to five occupants. 

Using traditional electricity means your rates are subject to whether the provider decides to increase them each year. 

As we all learned from the pandemic’s aftereffects, price hikes can devastate bank balances. 2022 saw an increase of 54% in April (Commons Library). 

Once you pay for solar panels, any energy they generate is free, making them a safe investment for the future. 

How much can I save with solar panels?

The amount you’ll save with solar panel installation depends on the size of your system and how much electricity it generates. Households with smaller systems might still rely on their traditional power supply, but solar panels can still contribute to significant savings. 

So, let’s take a look at how much you could save over time. 

System Size	Average Consumption	Year 1 Savings	25 Year Savings
3kW	1,800kWh	£440	£11,000
4kW	2,700kWh	£660	£16,500
6kW	4,100kWh	£1,005	£27,500

These savings depend on how you utilise the solar panels and whether you maximise their energy. As they produce higher levels of energy throughout the daytime, using high-consumption devices and appliances during these hours can result in higher savings. 

Many households also invest in batteries with a higher storage capacity, allowing them to collect more excess energy and use it later in the evenings. 

Maximising savings with the SEG Scheme 

Households that sign up to the Smart Export Guarantee receive cash compensation for the excess energy they export to the grid. SEG payments can add up over time, giving you higher savings. 

Let’s take a look at how much you can expect to save: 

System Type	Average Energy Generated Yearly	SEG Income	Annual Savings (With the SEG Scheme)
3kW	2,550kWh	£41.25	£480
4kW	3,400kWh	£38.50	£700
5kW	4,250kWh	£85	£745
6kW	5,100kWh	£55	£1,060

Are solar panels a wise investment?

When it comes to solar panels, financial savings are obviously a massive factor in your decision, but we shouldn’t forget about the vast environmental benefits they offer. 

Our reliance on fossil fuels depletes available resources and causes significant harm to the environment. Solar power is clean and renewable, making it a giant leap forward in the battle to save our planet. 

In terms of the financial benefits, investing in a 3kW solar panel system that costs £7,000 to £8,000 could pay off in just 14 years – and that’s not even including the SEG Scheme. 

Larger systems have shorter break-even points, and the average electricity savings can significantly improve disposable income. So yes, they are a wise investment. 

Final thoughts 

Investing in solar panels today protects the planet – and your bank balance – in the future. If you’d like to save money on solar panel installation, Hometree offers a range of convenient payment plans, including free installation, services and repairs. 

Forget upfront costs and look forward to low monthly payments with our innovative Green Finance plans. Please feel free to get in touch if you have any questions.