Solar panel payback calculator
Find out how long it takes for solar panels to pay for themselves. Enter your installation cost, system size, estimated generation, how much electricity you use at home and the Smart Export Guarantee rate for any surplus you export — and see your payback period and lifetime saving.
The payback period for solar has come down dramatically in recent years as installation costs have fallen and electricity prices have risen. On current numbers a well-sited 4 kWp system in the south of England typically pays back in 7 to 10 years and then generates free electricity for another 15 to 20 years. The key variables are self-consumption rate and future electricity prices — both of which you can adjust in this calculator to see the sensitivity.
Smart Export Guarantee
The SEG replaced the Feed-in Tariff in January 2020. Suppliers with over 150,000 customers must offer an export tariff. Rates vary significantly between suppliers — shop around for the best SEG rate when choosing an energy supplier. Your installer must be MCS-certified to access the SEG.
Self-consumption matters most
The more solar generation you use directly at home, the better the return. Every unit you use yourself is worth your full electricity rate (currently ~24.5p/kWh). Every unit you export earns the SEG rate (~5 to 15p/kWh). Running appliances during daylight hours significantly improves your payback period.
Battery storage
Adding a battery means you can store surplus daytime generation and use it in the evening, increasing self-consumption from around 30–40% to 70–80%. Batteries typically add £3,000 to £6,000 to the installation cost but extend the effective value of each kWh generated.
Generation degrades slowly
Solar panels lose approximately 0.5% of output per year due to degradation. After 25 years a good quality panel will still generate around 87 to 90% of its original rated output. This model uses a fixed annual generation figure — your real returns in later years will be marginally lower.
Please note: All calculations are illustrative estimates based on the inputs provided. Actual solar generation depends on roof orientation (south-facing is ideal), pitch, shading, panel quality and local weather patterns. Installation costs vary by installer and location. SEG rates change over time. This calculator assumes constant generation each year and does not model panel degradation. Always obtain quotes from multiple MCS-certified installers. This is not financial advice.
What does the solar panel payback calculator do?
The solar panel payback calculator estimates how many years it will take for energy savings and export income to recover the installation cost of a solar PV system. It accounts for the energy you generate and use directly (saving on your energy bill) and the energy you export to the grid (earning an export tariff).
How to use this calculator
System size (kWp): The peak kilowatt capacity of the system. A typical domestic installation is 3 to 4 kWp; larger properties may install 5 to 6 kWp.
Installation cost: The total installed cost, including panels, the inverter, and installation. Current UK market prices range from £5,000 to £9,000 for a 3-4 kWp system, depending on the installer and specification.
Annual energy generation: Based on your system size and location, a rule of thumb is approximately 850-1,000 kWh per kWp per year in the UK (higher in the South, lower in Scotland).
Self-consumption rate: The percentage of generated electricity you use directly. Self-consumption reduces your energy bill; exported electricity earns the export tariff. Typical self-consumption without a battery is 30-50%.
Energy unit rate: Your current electricity unit rate in pence per kWh.
Export tariff: The Smart Export Guarantee (SEG) tariff from your supplier for exported electricity – currently 1 to 15p per kWh, depending on the tariff.
Reading the result: The calculator shows annual savings and income, as well as the payback period in years. Typical payback periods are 7 to 12 years, though this varies significantly with installation cost, energy usage, and export tariff.
Frequently asked questions
Do I need planning permission for solar panels? In most cases, solar panels on a domestic property fall under permitted development and do not require planning permission. Exceptions include listed buildings, properties in conservation areas, and panels that protrude significantly above the roofline. Check with your local planning authority if in doubt.
Does adding a battery improve the payback? A battery allows you to store solar energy generated during the day and use it in the evening, increasing self-consumption and reducing the amount exported at the lower export tariff. However, batteries add £3,000 to £6,000 to the installation cost, which extends the payback period – the benefit depends on your usage pattern and tariff. The calculator can model both scenarios.
What is the Smart Export Guarantee? The SEG requires licensed energy suppliers with more than 150,000 customers to offer an export tariff to eligible solar generators. The rate varies by supplier and is not fixed – compare SEG tariffs when choosing a supplier.
The information on this site is for educational and informational purposes only. Nothing on Be More Peter constitutes financial advice, and nothing should be treated as such. The calculators, articles and tools on this site are designed to help you understand financial concepts and run indicative numbers - they are not a substitute for professional advice tailored to your specific circumstances. Before making any financial decision - including decisions about mortgages, pensions, investments, savings or insurance — you should seek independent financial advice from a qualified adviser who is authorised and regulated by the Financial Conduct Authority (FCA). Calculator results are estimates based on the information you enter and the assumptions built into the tool. They are illustrative only and should not be relied upon as accurate projections. Rates, thresholds and rules change regularly - always verify figures with an appropriate professional or official source before acting on them. Be More Peter is not authorised or regulated by the FCA. The content on this site does not constitute a financial promotion.
Related tools and posts
- Energy bill calculator — your baseline energy cost
- Home improvement ROI calculator — value added to property
- Monthly budget calculator — reduce energy bills in your budget