Solar panels for most homeowners are a large investment. The solar market has changed drastically since the shock to energy prices in 2022 and an increasing number of companies are offering free solar panel installation. This is often a marketing ploy to entice you to sign up and give them your precious data; but of course without a grain of truth they would not be allowed to advertise such offers. With marketing tactics among solar panel installers heating up as the market gets tougher and brokers being increasingly aggressive, here is a rundown on what to bear in mind when enticed by such an offer.
Solar Panel Leasing
With the schemes offered by such companies seemingly too good to be true, they do in fact lock you in to only marginally cheaper energy rates. In one example, a customer was quoted £80 a month for ten years with no increases. However this still translates to significantly less gains over the ten years then if you paid up front.
For a standard 4kW installation, you can expect to save around £700 per annum on your energy bills each year with a combination of exporting excess electricity and reducing imported electricity. You can see a more detailed worked example over on this blog. Over ten years, this translates to around £7,000 which is easily enough to cover the cost of the installation where generally you will have paid off the cost of the install after 7 to 8 years. More importantly though, the amount a standard household with a 4kWp installation would end up paying for electricity (net of export payments and saving of imported electricity) is a mere £20, so with an upfront investment, you start out saving 75% more from day one.
If we do the maths on this, you are significantly better off after ten years if you buy the panels up front. An additional £60 a month on your energy bills for 120 months comparing the £80 you pay with a leasing scheme with the annual average of £20 you would pay for electricity translates to £7,200, generally more than the cost of installation, so you end up paying more in the long term.
While you own the panels after the lease has elapsed, you are out of pocket for the period of the lease, and you have little say in the quality of the panels. Such schemes are incentivised to cut costs and we have heard of such schemes using lower quality or even second hand panels, as they are not interested in maintaining performance after 10 years and choosing panel models that minimise degradation. Although rarer these days, some solar panel leasing schemes extend to 20 or 25 years, and these schemes mean the leaser is making much more money out of your roof than you are once the installation costs have been recouped.
Additionally, such schemes come with other pitfalls, if you end up looking to move home, you can end up with all sorts of conveyancing issues if you are burdened with panels on your roof you do not own.
Solar panel leasing has a poor reputation in the industry, and some firms that offered it have previously been investigated by Ofgem. While not all firms who offer such schemes are this disreputable, it is highly recommended you check any contract carefully, preferably with professional legal advice, as some of the terms and conditions may trip you up - especially with things like insurance, and who are liable for any repairs.
What about Government Funding for Solar Panels?
If you've been researching solar panel installation for any length of time, you've probably seen something similar to the following pop up on your Facebook feed:-
"Postcodes in You Neighbourhood Qualify for Government Grants - Sign Up to Find Out More!"
Such pronouncements are often naked attempts to harvest your data - often from companies with domains like "solar panel funding", to increase their authenticity. Government grants and low interest loans for solar do exist, predominantly under the Eco4 scheme and the Green Deal. However, these are quite limited in scope, and primarily for household on low income (generally getting some form of universal credit) and in a property with a poor EPC rating. While technically solar is one of the improvements that the schemes offer to fund, generally the adviser, if you go direct, is more likely to steer you in the direction of insulation, double glazing or heat pumps to increase your EPC rating as these are significantly less expensive.
Companies that imply they are working on behalf of agencies or governmental organisations, in our experience are generally brokers, trying to entice you to part with your contact details so they can sell your details on to 3rd party installers, and care little if you actually qualify for such schemes. Always check very carefully the credentials of any organisation asking for your personal data and check their terms and conditions and privacy policy. If something seems too good to be true - it generally is!
Conclusion
With installation prices falling, if you have the liquid capital, it is far better to invest upfront in your property and enjoy the value of your roof for your own benefit. At Spirit we have been installing since 2010 and the experience we have built up over that time gives us insight into the nature of the industry and what works for our clients. We will design a system owned by you and built for you, and in addition have recently launched the solar consultancy arm of the business to give impartial advice on all aspects of solar for domestic clients. You can learn more about this domestic consultancy here.
You can also access in depth information on the finances and costs of solar panels over at our knowledge bank.
