Personal Finance

How long does it take to pay back solar panels - and how much money will you make (or lose)?

With electricity prices skyrocketing, is now the time to install solar panels on your roof? NimbleFins digs into the data to see how long it takes to pay back a solar panel investment for different types of setups.

With electricity prices skyrocketing and the UK coming off a hot and sunny summer, you may be wondering if you should invest in solar panels for your home. But what are the economics of it? How long does it take to pay back the initial investment of around £7,000? The NimbleFins solar experts have previously calculated average solar payback times according to the energy your solar panel system produces each year.

But here we're going to dig even deeper and see how payback varies by factors like geography (i.e town), compass directions (i.e. which way the roof faces), amount of shade and even, perhaps surprisingly, how many hours you're home each day.

To find out how many years it takes solar panels to break even, and how much money you could make (or lose) on solar, we ran different scenarios through the Energy Saving Trust's solar calculator. Here's what we found.

Curious about whether or not solar panels are worth it? Read our in-depth article on Solar Panels for Home where NimbleFins solar experts dig into how much solar panels can save on electric bills and typical solar payback times, as well as information on what solar power can be used for and the potential downsides.

Solar Payback: Best Case (south facing, no shade)

For a south-facing roof that is unshaded, solar panels could pay off in 12 to 13 years, depending on home occupancy during the day.

The shortest payback time is for households in which someone is home all day to make use of the solar power as it is generated. By the end of 25 years, this homeowner could be ahead by around £11,000 (compared to just buying electricity from the grid).

But the economics are not as good for households that are home less during the day. When a home is empty most of the day, the payback time is 13 years and the benefit is under £9,000 over 25 years. The economics are worse here because no one is home to use as much solar energy as it's generated (but a lot will still be used to run the refrigerator and other items)—instead the energy can be sold back to the grid but the Smart Export Guarantee (SEG) rates for this are really low (3 - 4p/kWh range).

The table below shows the estimated payback time and economics for this 'best case' south-facing, unshaded setup ('best case' because it gets more direct sun than other compass directions or shadier conditions and therefore generates the most solar energy).

South, less than 20% shadingPayback period (years)Total benefit over 25 years
Home all day12£10,862
Home half the day13£9,535
Nobody is home during the day13£8,798

See our methodology section to read about our assumptions like future electricity prices, as these also affect the result.

Solar Payback: Worst Case (north facing, heavy shade)

At the other end of the spectrum are solar panel setups facing north and under heavily-shaded conditions. These clearly generate less energy—is it even worth getting solar panels in this situation? Does it make any economic sense?

Not really, economically speaking. It doesn't really matter if you're home all day or not—solar panels facing North, especially if they're heavily shaded, just don't produce much to cover your electricity needs.

In the table below, the data shows that households home all day with north, heavily-shaded setups can pay back in 25 years (compare this to the 12 years for the south, unshaded setup). And the positive financial impact after 25 years would be just £227 (compared to £10,862 for south, unshaded).

North, heavy shade (>80%)Payback period (years)Total benefit over 25 years
Home all day25£227
Home half the day25£227
Nobody is home during the day25£227

The reason the figures are the same for different uses (e.g. home all day) is that the solar generated in this Northerly setup is so low that it's all used up, no matter if you're home or not. The small amount of generation would be automatically used to run appliances like the refrigerator. If you're home running the dryer, you'll not benefit from solar but need to use the grid.

Solar Payback: Moderate Case (west-facing, modest shade)

In between the best and the worst case scenarios, we considered an east or west setup under modest shade. This pays back in about 14 years for those home all day, and 16 years for those out most of the day.

West, heavy shade (>80%)Payback period (years)Total benefit over 25 years
Home all day14£7,652
Home half the day14£7,062
Nobody is home during the day16£5,736

Solar Panel Payback by City

The time it takes for solar panels to be profitable (if at all) also varies by geography, as some towns simply get more sun than others. Chicester is known to be one of the sunniest locations in the UK. Here, the data shows that solar panels can pay back in just 12 years under ideal conditions (south facing, less than 20% shade, home all day). But even here, solar panels don't make much economic sense where conditions are poor (north facing, >80% shading, out until 6pm).

Glasgow, on the other hand, is less sunny but it only takes another year or two to pay back a solar panel investment than in sunny Chicester.

Location, location, location? Not when it comes to solar. While location is certainly important here, other factors like where the roof faces, amount of shade and home occupancy are bigger drivers of solar panel economics.

Solar Panel Payback Times by CityBest Case (south facing, less than 20% shade, home all day)Modest Case (west facing, modest shade, home half day)Worst Case (north facing, >80% shading, out until 6pm)
Chicester12 years14 years24 years
London12 years14 years25 years
Manchester13 years15 yearsDoesn't pay back in 25 years
Glasgow13 years16 yearsDoesn't pay back in 25 years


The team at NimbleFins ran a number of potential solar panel scenarios through the solar calculator at Energy Saving Trust's solar calculator to gather data on solar generation potential. We then ran these numbers through our model to determine how long the initial solar investment would take to pay back given these different solar production levels.

The data in this article reflects sun in London, unless otherwise specified. Some areas in the north might take a couple years longer to pay back; the sunniest areas like Chicester might pay back in slightly less time.

We have assumed:

  • 3kWp system
  • Initial cost of £6,200
  • Maintenance cost at 10 years of £750
  • Maintenance cost at 20 years of £750
  • 30° roof slope
  • Annual decrease in efficiency of 0.5%
  • SEG tariff (for selling unused solar energy back to the grid) of 4p/kWh
  • Initial electricity prices of 24.5p/kWh that holds steady for three years then start growing again at an annual inflation rate of 3.5%
  • No battery storage (battery storage changes the importance of home occupancy, but these come at an added cost)

Note, a primary limitation of this study is the impact of future electricity prices, which are unknown, on the results. We have estimated future electricity prices, but they could vary a lot from these estimates. In the table below you can see the electricity prices estimates that we used.

Here is what the model looks like for the best case scenario for London (i.e. south-facing roof with less than 20% shade)—at the end of 25 years, the homeowner is better off by £7,300 and was breakeven at year 9:

YearEnergy generated EnergySelf consumption SelfExportElectricity price ElectricityFuel bill saving Fuel billSEG tariff SEGSEG payments SEGAnnual benefit AnnualInstallation & maintenance InstallationNet benefit Net
Erin Yurday

Erin Yurday is the Founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.


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