Solar Panel Costs, System Sizes, and the Smart Export Guarantee
Solar PV systems are sized in kilowatts peak (kWp), which represents their maximum output under ideal conditions. A 4kWp system — comprising 10 to 12 panels, each around 400W — is the most common domestic size and costs between £6,000 and £8,000 installed. A 6kWp system suits larger homes or households with high daytime electricity consumption and costs £9,000 to £13,000. An 8kWp system — the maximum that fits on most domestic roofs — runs from £12,000 to £16,000.
Panel prices have fallen significantly over the past decade, with the hardware now representing approximately 40 to 50 per cent of the total installation cost. Labour, inverter, mounting hardware, AC and DC cabling, and scaffolding make up the rest. Always use a Microgeneration Certification Scheme (MCS) accredited installer, as only MCS installations qualify for the Smart Export Guarantee.
The Smart Export Guarantee (SEG) requires licensed electricity suppliers with more than 150,000 customers to pay homeowners for surplus electricity exported to the grid. SEG rates vary by supplier — typically between 3p and 24p per kWh — and can be switched at any time. A 4kW system that exports 50 per cent of its generation earns approximately £170 to £408 per year at current SEG rates, providing a passive income that offsets borrowing costs.
The payback period for a solar installation — the point at which cumulative savings plus SEG income exceed the upfront cost — is typically eight to twelve years in the UK, depending on the system size, roof orientation, shading, and household electricity consumption. After payback, savings are essentially free for the remaining panel lifespan. Over 25 years, a 4kW system can generate £15,000 to £25,000 in savings and income at current energy prices.
Owned vs Leased Solar Panels and Title Considerations
When funding solar panels with a secured loan, the panels are owned outright by you from the day of installation. This is an important distinction from earlier solar lease and rent-a-roof schemes, under which the panels were owned by a third-party company who installed them for free in exchange for the feed-in tariff income. Many of these legacy agreements are still in place on UK properties and create a complication at the point of sale.
If your property already has leased or rented panels, you should check the terms of the agreement carefully before applying for a secured loan. Some agreements include clauses that require consent from the panel company for a change of mortgage or secured lending, and the terms of removal can be complex. Conveyancers representing buyers regularly flag unexpired solar leases as a title issue, which can delay or complicate a sale if not resolved. Owning your panels outright — funded through a secured loan — avoids all of these complications and means the full value of the installation remains yours.
A mortgage lender or secured loan provider will require confirmation of ownership and will check that no solar lease is registered against the title. Where panels are owned outright and have MCS certification, lenders generally treat them as a positive feature of the property that may support a higher valuation. Some lenders also consider the energy bill savings when assessing affordability, though this is not universal across the market.
If you are considering solar panels as part of a wider renovation — perhaps alongside external wall insulation or a battery storage system — a secured loan can cover the combined cost of all the works, simplifying finance into a single repayment and potentially qualifying you for a larger borrowing amount than individual product loans would allow.
