Solar panel systems represent the only true 100% clean energy source. For many, this is reason enough to install them. But solar PV systems can also send energy back to the grid. This allows homeowners to get paid for the energy they generate but don’t use.
This raises the question, can a solar system pay for itself, and if so, how long will it take to get your money back? With that in mind let’s explore the complex subject of payback in more detail.
The factors that impact solar panel payback?
No two solar panel installations are alike so it would be impossible to give a definitive answer to the question. The exact payback period will depend on a combination of the following factors:
The amount of energy consumed
The amount of energy consumed is the first factor to consider. The more energy you use, the faster the payback period will be. However, this assumes you have enough space to install the number of panels required to cover your consumption.
You can find out how much energy you use by checking your electricity bill. This will contain a summary of how many kWh you were charged for during the period. We would recommend looking at bills over a 12 month cycle as we use more electricity in winter than the summer.
Read our How Many Solar Panels Do I Need? article for more information.
The amount of energy generated
The amount of energy your system generates is key to determining the payback period. The larger the system, the more energy it will generate in theory. But generating capacity is impacted by several factors including panel location, panel angle and shade.
Many payback calculations assume that 100% of your energy consumption will be generated by the solar system. But for many houses, particularly those with pitched roofs, this may not be possible.
So when calculating the payback period, don’t assume that all your energy will be produced by the solar panels. You need to know precisely how much energy your system will generate and how much (if any) will be left over to export back to the grid.
Read our Is My Roof Pitch A Good Fit For Solar? article for more information.
Total solar system cost
The total cost of your system will also need to be calculated. Generally speaking, the larger the system, the higher the initial installation cost will be. But the more energy it will produce, allowing more energy to be exported.
Total system costs include the cost of equipment, installation and maintenance. Solar panels need regular cleaning to maintain efficiency, so make sure you factor this into your calculations.
Maximising returns on your solar PV investment
Below we have listed some methods that will help you to get the best return from your solar PV system.
The Smart Export Guarantee
The Smart Export Guarantee (SEG) is a government-backed scheme that allows small scale energy producers to receive payment for any excess energy they export back to the grid – which will help solar adopters chip away at the initial investment.
The scheme is open to anyone who has installed a solar panel system of up to 5MW capacity. To qualify for payments the system must have been installed by an MCS accredited installer and a smart meter must be fitted.
Read our Smart Export Guarantee article for more information on SEG.
Estimated payback time with and without SEG
The table below gives simple examples (based on location) of expected payback times for a typical home using a 4.2kWp solar PV system that on average costs around £6,500. The payback times are split into two groups (with energy usage scenarios) – homes that export and receive payments via SEG and those that do not.
| Scenario | With SEG | Without SEG |
|---|---|---|
| Scenario: Home all day | With SEG: 11 years | Without SEG: 13 years |
| Scenario: Home in mornings | With SEG: 13 years | Without SEG: 16 years |
| Scenario: Home in afternoons | With SEG: 13 years | Without SEG: 18 years |
| Scenario: Out all day until 4pm | With SEG: 16 years | Without SEG: No payback |
| Scenario: Out all day until 6pm | With SEG: 18 years | Without SEG: No payback |
| Scenario | With SEG | Without SEG |
|---|---|---|
| Scenario: Home all day | With SEG: 11 years | Without SEG: 14 years |
| Scenario: Home in mornings | With SEG: 13 years | Without SEG: 17 years |
| Scenario: Home in afternoons | With SEG: 14 years | Without SEG: 19 years |
| Scenario: Out all day until 4pm | With SEG: 17 years | Without SEG: No payback |
| Scenario: Out all day until 6pm | With SEG: 19 years | Without SEG: No payback |
| Scenario | With SEG | Without SEG |
|---|---|---|
| Scenario: Home all day | With SEG: 12 years | Without SEG: 14 years |
| Scenario: Home in mornings | With SEG: 13 years | Without SEG: 17 years |
| Scenario: Home in afternoons | With SEG: 14 years | Without SEG: 19 years |
| Scenario: Out all day until 4pm | With SEG: 18 years | Without SEG: No payback |
| Scenario: Out all day until 6pm | With SEG: 20 years | Without SEG: No payback |
| Scenario | With SEG | Without SEG |
|---|---|---|
| Scenario: Home all day | With SEG: 12 years | Without SEG: 14 years |
| Scenario: Home in mornings | With SEG: 14 years | Without SEG: 18 years |
| Scenario: Home in afternoons | With SEG: 15 years | Without SEG: 19 years |
| Scenario: Out all day until 4pm | With SEG: 19 years | Without SEG: No payback |
| Scenario: Out all day until 6pm | With SEG: 21 years | Without SEG: No payback |
| Scenario | With SEG | Without SEG |
|---|---|---|
| Scenario: Home all day | With SEG: 24 years | Without SEG: No payback |
| Scenario: Home in mornings | With SEG: No payback | Without SEG: No payback |
| Scenario: Home in afternoons | With SEG: No payback | Without SEG: No payback |
| Scenario: Out all day until 4pm | With SEG: No payback | Without SEG: No payback |
| Scenario: Out all day until 6pm | With SEG: No payback | Without SEG: No payback |
Table data sourced from Energy Saving Trust. Correct as of October 2022.
Use the electric you generate during the day
This one may sound obvious but drawing electricity from the grid during peak periods means more money spent on energy, with daytime rates being the most expensive. If you are at home during the day then try to make use of the energy your solar PV system generates, especially for power hungry appliances e.g. washing machine, dishwater, tumble dryer etc…
If you are not at home during the day then you could look automating your appliances (should they be capable) by setting timers.
Use a PV diverter to control energy distribution
Most homes won’t use all the energy their solar PV system generates, resulting in surplus energy being sent back to the grid. As it stands the best price for exported energy is 10p per kWh (see our SEG/Export League Table for current rates) and import is currently around 16p per kWh.
What if we told you that with a PV diverter you could stop that surplus energy being sent back to the grid and alternatively use it to power an immersion heater to heat water for free.
Without a PV diverter a solar PV system will either
- Generate insufficient energy for your home – in this scenario you will end up importing energy from the grid to meet your home’s demand.
- Generate surplus energy which will be sent back to the grid.
A solar PV diverter works by using a sensor that constantly monitors your solar PV system’s output against how much energy your home actually needs.
If your home is not demanding energy and your solar batteries are full then rather than exporting the energy back to the grid the PV diverter will kick in, diverting energy to power an immersion heater.
According to Energy Saving Trust a PV diverter will typically add around £800 to installation costs.
Read our What is a solar PV diverter? article for more information.
Government announce Zero percent VAT on Solar PV
For those about to embark on solar PV projects then the government’s 2022 Spring Statement will provide a boost. The good news is that VAT has been slashed from 5% to 0% on solar PV, solar thermal, heat pumps and insulation – making solar PV more of an attractive proposition.
The 0% VAT rate started from April 2022 and is expected to run for five years.
Read our Solar Panel VAT Now 0% article for more information.
Conclusion
Solar PV payback time will ultimately depend on your own system’s set-up, but considering a solar PV system’s life expectancy is 25+ years, then when it is paid off you will be able to benefit from free-green energy.
In addition to free-green energy you will also earn yourself a pat on the back for actively reducing c02 emissions and helping to preserve our planet in the long run.
SEG/Export League Table
View the best SEG/Export tariffs available in 2026 with our SEG/Export League Table.
View League Table
