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Solar panels can lower your energy bills and generate extra income through the Smart Export Guarantee. Here’s how it works and what affects how much you can earn
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Solar panels can do more than cut your electricity bills. If your system generates more power than you use, you can sell the excess back to the grid through the Smart Export Guarantee (SEG), creating an extra return on your investment.
Whether solar panels are worth it for your property – and how much you can earn – depends on your roof, your household’s energy use and the export tariff you choose. Homes with a south-facing roof, little shade and a competitive SEG rate will usually see the strongest returns, while lower-paying tariffs and less ideal conditions will reduce your earnings.
This guide explains how making money from solar panels works, what affects your export income and whether installing the best solar panels for your home is likely to pay off.
Use our comparison tool to get a range of free solar panel quotes from leading solar panel installers across the UK.
The quick answer is that if you have space to install them, use electricity during the day, own your home, plan on staying there for the long term, and are willing to do a little homework, then the answer is probably yes.
Industry estimates vary, but it can take up to 13 years to get a return on your solar panels.
Household size
System size in kW
Array cost
Electricity cost per year before solar
Savings (energy used and sold from panels)
Price after solar generation
Pays for itself after
3-bed
3.6kw
£4,990
2,900 kWh @25.73 pence = £746
£540
£206
9 years
4-bed
5.4kw
£5,470
2,900 kWh @25.73 pence = £746
£780
-£34 (profit)
7 years
5-bed+
9.9kw
£7,390
2,900 kWh @25.73 pence = £746
£1,370
-£624 (profit)
5 years
However, if you have a south-facing roof, live further south, use your savings to buy them rather than borrowing and paying interest, and use power during the day, this number can be reduced. They can also last for 30 years, meaning that even the 13-year timeframe means you will be getting free electricity from them for 17 years.
However, there are some maintenance costs to consider. For instance, the inverter required to step up the voltage to 230v will need replacing every 10-15 years, but otherwise that power will be free.
The amount of energy you generate will depend on how many panels you can install.
How much money you earn from your solar panels will depend on two further criteria: how much energy you use yourself and the rate at which you can sell the excess back to the grid.
Using the power yourself first is your best bet because top tariffs often offer around 15 pence per kilowatt-hour energy unit, whereas you will pay 25.73 pence per kWh for electricity from the grid. So use it before you sell it.
The above chart shows three scenarios for three sizes of homes. As you can see, with a bigger system, you can make instant savings, with a 5.4kW system covering your electricity bill and offering £34 surplus each year.
This is because a big chunk of the costs is for installation, which doesn’t get much bigger even as you look at larger and larger solar setups.
Each type of home shown in our chart will need scaffolding, solar panel installers to fit the panels, testing of the electrics, and an inverter. These costs are baked in, no matter what size home you have. The extra cost comes from more panels and a little extra time to fit them.
This is why a 9.9kW array, which is almost three times bigger than a 3.6kW installation, only costs about 50 per cent more.
These sums are based on data from the Energy Savings Trust and average usage of 2,900 kWh for the year. If you use more power, you will make less profit. We use 15 pence per kWh as a selling price.
Not necessarily. Your earnings will vary depending on how much electricity your system produces, how much you use yourself, and the export rate your tariff pays. Solar output naturally fluctuates year to year due to weather conditions, and export tariffs can also change, so the amount you make won’t be identical annually.
You earn money through a Smart Export Guarantee (SEG) tariff. After registering with an SEG provider, your smart meter records how much excess electricity you send back to the grid. Your supplier then pays you for each kilowatt-hour exported, usually monthly or quarterly, depending on the tariff.
Savings depend on your system size, your home’s electricity use and how much solar power you can use during the day. A typical 4kW system can cut bills by several hundred pounds a year, often £400–£700, by reducing the amount of electricity you need to buy from the grid. Homes with high daytime usage or battery storage tend to save even more.
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