Calculate solar panel payback period, annual savings and 25-year return on investment.
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against Ofgem and Ofwat 2026 price caps and tariffs
Rates verified: 28 September 2026
Annual Saving
£702.44
Payback Period
8.5 years
Annual Generation
3,400 kWh
25yr Return
£11,561.00
Bill Savings (self-use)
£447.44/yr
Export Income
£255.00/yr
Disclaimer
This calculator is for guidance only. It is not financial or tax advice: check anything you rely on against the official source or a qualified adviser. Rates and figures come from Ofgem and Ofwat and are reviewed for 2026. Everything is calculated in your browser; nothing you enter is sent to our servers.
How It Works
Solar panels generate electricity from sunlight, reducing your reliance on grid energy. A typical UK domestic system is 3 to 4 kW, meaning 8 to 10 panels, and costs £5,000 to £8,000 installed. Output varies by location, roof orientation and panel efficiency, but a 4 kW system in southern England generates approximately 3,400 kWh per year.
You save money in two ways. Using the generated electricity directly avoids paying the unit rate on it, and surplus sent to the grid earns income through the Smart Export Guarantee, which replaced the old Feed-in Tariff in January 2020. SEG rates vary by supplier and typically range from 3 to 15p per kWh. Enter your location and system size and you get an estimate of generation, savings, export income and the payback period.
Battery storage costing £2,000 to £5,000 lets you hold daytime generation for the evening, lifting the share you use yourself from around 30 to 50% up to 70 to 80%. Without a battery, a 4 kWp array generating 3,400 to 3,800 kWh a year saves £350 to £450 on electricity, and with one that rises to £700 to £900. Add export income of £150 to £500 and the total benefit falls between £500 and £1,400 a year, depending on when you use power and which tariff you are on.
Installation prices have come down a long way, from about £15k before 2015 to between £6,000 and £9,000 for a 4 kWp system now, and quotes for the same specification still range from £6k to £12k, which is why two or three are worth getting. At £700 a year of savings the payback runs to 10 to 12 years. Panels are usually guaranteed to hold 80% or more of their output at year 25 and keep generating for 25 to 30 years, leaving £15k to £20k of lifetime savings after payback. A battery adds £4k to £6k up front and takes 8 to 10 years to pay for itself on its own.
Smart Export Guarantee payments require an MCS-certified installation, so use an installer listed on the Microgeneration Certification Scheme database. Export rates differ sharply between suppliers, with Octopus Outgoing paying variable rates that often reach 15 to 20p per kWh at peak while fixed-rate plans pay 4 to 6p. You can use one supplier for import and another for export, so pairing Octopus Outgoing with a cheaper import tariff is a common arrangement, and a smart meter records what leaves the property.
Roof orientation decides a great deal before any of the economics apply. South-facing is best, at a tilt between 10 and 30 degrees, east or west facing delivers 75 to 85% of that output, and north-facing is rarely worthwhile. Even partial shade cuts generation noticeably. The roof itself has to be sound enough to last the 25-year life of the panels, so a failing one is worth replacing first. Most installations count as permitted development and need no planning permission, although listed buildings, conservation areas and front-facing panels visible from the road may require it.
Example: 4 kW system in central England
- Annual generation: ~3,200 kWh
- Self-consumption (50%): 1,600 kWh × 26.32p = £421 saved
- Export (50%): 1,600 kWh × 10p (SEG) = £160 income
- Total annual benefit: ~£581
- System cost: £6,500
- Simple payback: ~11.2 years
Frequently Asked Questions
- How much do solar panels cost in the UK in 2026?
- A 3.5kW system, typical for a three-bedroom home, costs £6,000 to £8,500 fully installed including the inverter and basic battery monitoring. A 5kW system runs £8,500 to £12,000, and premium systems of 6kW and above £12,000 to £18,000 or more. Battery storage from Tesla or GivEnergy adds £4,000 to £10,000. Prices have fallen 60 to 70% since 2015, and residential solar has carried 0% VAT since April 2022, worth £1,200 to £3,000 on a typical installation.
- How much electricity will solar panels generate and save?
- A 3.5kW system in southern England generates 3,000 to 3,500 kWh a year, dropping to 2,500 to 3,000 kWh in northern England and Scotland. Without a battery you use 30 to 50% of that yourself, rising to 60 to 90% with one. Savings come to £500 to £900 a year against imported electricity at around 26p per kWh, plus £80 to £200 in Smart Export Guarantee payments. Most panels are guaranteed to retain 80% or more of their output at year 25.
- How much does the Smart Export Guarantee pay?
- The Smart Export Guarantee replaced the Feed-in Tariff in January 2020 and obliges energy suppliers to pay for solar electricity exported to the grid. Rates vary enormously, from Octopus Outgoing Agile at 15 to 20p per kWh down to British Gas at 6.4p and EDF at 5.6p, a threefold spread that makes the choice of supplier worth real attention. A smart meter is required to measure exports. On 3,500 kWh generated with half of it exported, 1,750 kWh at 15p brings in £262 a year.
- Is battery storage worth adding to a solar system?
- A battery of 5 to 10 kWh costs £4,000 to £8,000 and lifts the share of your own generation you use from 30 to 50% up to 70 to 90%, worth an extra £200 to £400 a year. Payback on the battery alone is 10 to 15 years against a typical 10-year warranty. Pairing it with a time-of-use tariff such as Octopus Cosy, charging at 7p and using that power against a 28p peak, adds £100 to £300 a year. It suits heavy users, people at home during the day and EV owners far more than lightly occupied properties.