Personal Finance

Would solar panels work well on my home? How can I tell?

NimbleFins looks at why solar panels are cost effective in one home, but not another.

Solar panels can be a solid investment for some; and a money-losing venture for others. What makes solar sunnier for some homes than others? If you're not just considering solar for environmental reasons, it's important to understand when solar might work out well and when it might not.

There are 2 main reasons why solar works great for one person and not so well for their neighbor. While a professional can come give you a proper assessment of efficiency potential at your property, below is data illustrating how the amount of direct sunlight (as determined by roof direction and amount of shade) and even how much you're home during the day make a big different to solar generation potential.

Direct sunlight (determined by roof direction and shade)

Geographic location and both the roof direction and level of shade on the roof affect how much strong, direct sun shines on solar panels—and therefore how much energy a set of solar panels can really produce. To see how these factors affect actual energy production, we ran the numbers to estimate energy generation under different scenarios.

Roof direction and shade level

In the following table, you can see the results for a standard 4kWp home solar system (typical for the UK). As you can see, the most energy is produced from a south-facing roof affected by less than 20% shade. No surprise there. That setup can produce 3,648 kWh of energy a year—the typical best-case scenario. (For reference, that's close to the amount of electricity consumed by the typical household in a year, although as we'll see in the next section, we can't usually make use of all the solar energy we produce at home.)

Energy generation for standard 4kWp solar system (kWh/year)No shading (less than 20%)Modest shading (20-60%)Significant shading (60-80%)Heavy shading (>80%)
South-facing roof3,6482,9192,3711,824
East/West-facing roof3,1062,4852,0191,553
North-facing roof2,5212,0171,6391,261
Graph showing how much energy solar panels can produce by direction and shade level

On the other hand, a similar south-facing roof that is heavily shaded would produce 50% of the energy of the non-shaded roof (just 1,824 kWh per year).

And roof direction has a similar impact, with east/west-facing panels generating around 15% less than a south-facing setup; and north-facing generates around 30% less than south facing.

Geographic location

Chicester is widely known as one of the sunniest locales in the UK, and no wonder, with an estimated 1,920 of sunlight hours per year.

Many areas receive far less sunshine. Glasgow, for example, receives around 1,282 hours of sunlight per year. That's 33% less.

Not surprisingly, the models estimating solar generation by area show that Glasgow homes would produce less solar energy than Chicester—but not 33% less. Nonetheless, you can see how some areas are better placed to produce more solar energy naturally.

Estimated max annual energy production by areakWh
Chicester3,855
London3,648
Manchester3,482
Glasgow3,284

This data assumes south-facing panels, less than 20% shading and a 4kWp system.

Daytime home occupancy

Solar is most cost effective when people are at home during the day. Those who are home during the day get the most from solar panels because they can run their electricity-guzzling dishwashers, washing machines, tumble dryers, ovens, etc. when their solar panels are functioning well under daylight conditions instead of drawing on expensive electricity from the grid. Using solar power enables you to save around 52p/kWh (the current cost of electricity) because you're not buying expensive electricity from your energy provider.

On the other hand, if no one is home to use up the electricity generated from solar while it's being produced (i.e. during the daylight hours), then you just end up selling much of that energy back to the grid under the Smart Energy Guarantee (SEG)—but those rates are really low (e.g. 3.2p/kWh - 5.5p/kWh range).

Since the rate at which you sell unused energy (via SEG) is so low compared to what you save when you use your solar energy (via not paying for electricity), solar works a LOT better for homes where someone is home to run appliances during the day.

In the table below we provide estimates of how much solar energy a household typically consumes depending on how much they are home and which direction their roof faces. (The remaining 48% - 83% can be sold back to the grid at those lower SEG prices.)

Self-consumption (% of solar generation)Home all dayHome in the morningsHome in the afternoonOut all day until 4pmOut all day until 6pm
South-facing roof40%32%29%20%17%
East/West-facing roof45%36%32%22%18%
North-facing roof52%40%37%25%21%

(Assumes 4kWp system, 30° roof slope, no shading.)

For example, a household that is home all day would typically be able to consume 40% - 52% of the solar energy they generate. This is typically the best-case scenario, although in some cases it could be higher.

It may be surprising, but 40-50% is the maximum amount a household can typically use—it's just not the case that people can use most or all of the solar they generate, unless they also install a battery to store the solar energy.

On the other hand, a household who is out at work all day and doesn't get home until 6 pm would only be able to use 17% - 21% of the solar energy generated. In this case, solar could be used to run appliances that are on all day like the refrigerator or perhaps those on a timer (e.g. a tumble dryer or dishwasher set to run at midday) but much of the solar energy would not be used by the home and would instead be sent back to the grid in exchange for a (low) payment.

In summary

If you're thinking about investing in solar, first take stock of your roof direction and level of shade. Also, think about how much you're home during the day and how many appliances you can only run at night or when the sun is not strong. If you have a south-facing roof and you're home much of the day to use the solar energy as it's generated, then it's a lot more likely that solar can pay off for you. We're running a separate analysis showing how long it takes to pay off solar panels, which we'll link to here when it's ready.

Also, have a look at the Energy Saving Trust's calculator (link below) to get estimates for your home as they may differ from the figures here.

Methodology

We ran a number of potential household scenarios through the solar calculator at Energy Saving Trust's solar calculator to gather data on what impacts solar generation and use.

Except for the section on geographical location, the data in this article reflects sun in London. Some areas in the north may generate 10% or so less energy; the sunniest areas like Chicester might generate 5% or so more energy.

We have assumed a 4kWp system and a 30° roof slope, as those are quite typical in the UK.

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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