StreetOwl · The economics of…

The economics of… Solar panels: are they worth it?

Edition 3 · 28 August 2026 · figures dated below · next review 2026-11-24

What a typical solar panel system costs to install in 2026/27, what it saves, and the break-even point for different roofs, usage patterns and owners versus renters.

What this covers

Whether solar panels pay for themselves, worked through for owners and renters, sunny roofs and shaded ones, and with or without a battery. Figures are for a typical UK home in 2026/27; your roof, usage pattern and supplier will change the exact numbers.

The one number this turns on

How much of the electricity you generate you actually use in your own home, versus how much you sell back to the grid — you save more per kWh by using it yourself (at the electricity price cap rate) than you earn by exporting it (at the Smart Export Guarantee rate).

What it costs to install

Item	Typical cost
3.5kW solar panel system	£7,000–£9,000
Home battery, added on	£4,000–£6,000
VAT on both	0% (legislated until 31 March 2027)

What you get back

• A well-sited, unshaded, south-facing 3.5kW system generates around 2,850 kWh a year.
• East- or west-facing roofs generate roughly 15% less: around 2,425 kWh a year.
• Electricity you use yourself is worth the price cap unit rate: 26.32p per kWh (direct debit, October–December 2026).
• Electricity you export is paid at your supplier's Smart Export Guarantee rate; a typical rate is around 15p per kWh.
• Without a battery, a household typically uses around 50% of what it generates itself, exporting the rest. A battery can raise self-use to around 70-80%.

Four households, worked through

Household	Generation (kWh/yr)	Self-used	Annual saving	System cost	Simple payback
South-facing roof, typical use, no battery	2,850	50%	£589	£8,000	~13.6 years
South-facing roof, mostly home during the day, no battery	2,850	65%	£637	£8,000	~12.6 years
East/west-facing roof, typical use, no battery	2,425	50%	£501	£8,000	~16.0 years
South-facing roof, typical use, with battery	2,850	75%	£669	£13,000	~19.4 years

Renting rather than owning

Solar panels are a fixed capital cost fitted to someone else's building. A landlord's consent is needed before fitting them, and the £7,000–£9,000 outlay and its payback belong to whoever owns the roof, not the tenant paying the electricity bill. The worked examples above assume ownership.

Is the battery worth adding on its own?

Moving from no battery to a battery on the same south-facing roof raises the annual saving from about £589 to about £669 — an extra £86 a year for an extra £5,000 spent. On its own, the battery add-on pays back in around 58 years on these assumptions, well beyond its likely working life.

What could change this

Electricity unit rates move with Ofgem's price cap every three months; a higher unit rate makes self-use more valuable and shortens payback, a lower one lengthens it. Smart Export Guarantee rates are set by individual suppliers and vary. The 0% VAT rate on installation is legislated to end on 31 March 2027, after which standard VAT would add to the upfront cost.

Sources

• A typical 3.5kW solar PV system costs between £7,000 and £9,000 to install — Energy Saving Trust, solar panels guidance, 2026
• A well-sited, unshaded, south-facing 3.5kW system generates around 2,850 kWh a year — Energy Saving Trust, solar panels guidance, 2026
• East- or west-facing roofs generate roughly 15% less electricity than south-facing ones — Energy Saving Trust, solar panels guidance, 2026
• A home battery add-on typically costs £4,000–£6,000 — Energy Saving Trust, battery storage guidance, 2026
• Without a battery, a household typically uses around 50% of the electricity it generates itself; a battery can raise this to around 70-80% — Energy Saving Trust, battery storage guidance, 2026
• Solar panels and battery storage installed in homes qualify for 0% VAT until 31 March 2027 — HMRC, VAT Notice 708/6: energy-saving materials and heating equipment
• The energy price cap sets a typical direct-debit electricity unit rate of 26.32p per kWh for October–December 2026 — Ofgem, energy price cap, October 2026
• Suppliers pay households for solar electricity exported to the grid under the Smart Export Guarantee, with a typical rate around 15p per kWh — Ofgem, Smart Export Guarantee, 2026