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Best Solar Panels Finance Options: A Guide to Affordable Payments

solar panel finance

Concerned about the cost of solar panels? Our solar panel finance options can help you to break this down in to small, manageable monthly payments. In this article, we explore ways to spread the initial cost of solar panels and make solar energy affordable for everyone.

Key Takeaways

  • Several financing options, including pay monthly plans, personal loans, and financing through solar panel installation companies, make solar panel installations more accessible by spreading the upfront cost over time.
  • Government schemes like the ECO4, Home Upgrade Grant, and Smart Export Guarantee provide financial support to make solar energy more affordable and offer additional income streams through selling surplus electricity to the grid.
  • Incorporating solar batteries enhances the benefits of solar panels by reducing reliance on the grid and can be financed through interest-free plans, further decreasing long-term energy costs.

Pay Monthly for Your Solar Panels

The rising costs of energy have driven a significant number of households across the UK to turn to solar panel installations as an alternative energy supplier.

It’s a trend that’s hard to miss, with over a million homes already benefiting from this sustainable energy solution. Solar energy offers an eco-friendly alternative to traditional electricity, which is becoming increasingly expensive, especially when buying the best solar panels.

However, the initial investment required for residential solar panel installation is substantial, often necessitating a large sum of money upfront. This financial hurdle deters many potential adopters.

The good news is that several financing options are available to help spread the cost of solar panel installation over time, making it more accessible to a broader audience.

In the UK, there are various ways to finance solar panels, including:

  • Subscription models
  • Personal loans
  • Financing through installation companies
  • Adding the cost to a mortgage

These options are designed to ease the financial burden by breaking down the total cost into manageable monthly payments.

This guide aims to explore the different solar panel financing options available to UK residents. By understanding these options, you can make an informed decision that aligns with your financial situation and energy-saving goals.

Solar Panel Financing Explained

Residential solar panel installation typically requires a significant upfront investment, which can be a major obstacle for many homeowners. Solar panel financing options are designed to alleviate this burden by spreading the cost over a period, making it easier to manage.

These financing options include subscription models, personal loans, and financing through installation companies, each with its own set of terms and benefits.

The concept of solar panel finance is simple yet effective. By offering various payment options, homeowners can choose a plan that suits their financial capabilities.

Whether it’s through a loan, a subscription model, or a mortgage extension, the goal is to make the transition to solar energy as smooth and affordable as possible. This approach not only helps in managing the initial costs but also allows homeowners to start saving on their energy bills immediately.

Our Solar Panel Finance Examples

borrow Amount £Length (180 months)APR interest rateMonthly PaymentsTotal repayable amountTotal Loan cost
£500015 years13.9%£63.54£11,438£6,438
£10,00015 years13.9%£127.09£22,876£12,876
£20,00015 years13.9%£254.18£45,752£25,752

What is solar panel finance?

Solar panel finance allows homeowners to acquire a solar panel system without needing to pay the entire cost upfront. Instead, the cost is spread over a longer period through a loan or subscription model, making it more manageable.

For example, a loan from a bank or financial institution can help cover the upfront costs, with the repayment made in monthly instalments over the term of the agreement. Subscription models, on the other hand, include maintenance and servicing, with an option to own the system at the end of the term.

The fixed term of a solar panel subscription contract is usually around 20 years, which helps to keep monthly costs low. After the subscription term ends, homeowners can choose to either purchase the solar panel system or have it removed..

Direct purchase of a solar system, although requiring a large upfront payment, results in full ownership from day one. This flexibility in financing options allows more homeowners to consider solar energy as a viable alternative.

Benefits of financing solar panels

Financing solar panels offers numerous benefits, including:

  • The ability to start saving on electricity bills immediately without needing to save up for the full installation cost
  • Spreading the cost over time, allowing homeowners to generate their own electricity
  • Reducing reliance on the grid and potentially lowering energy bills substantially

This approach makes solar energy accessible to more people, allowing them to enjoy the benefits of renewable energy without the financial strain.

When it comes to financing solar panels, there are several popular options to choose from. These include pay monthly finance plans, personal loans, and financing through installation companies.

Each option has its unique benefits and terms, allowing homeowners to select the one that best suits their financial situation and preferences.

Let’s delve into these options in more detail.

Pay monthly finance plans

Pay monthly finance plans for solar panels offer the following benefits:

  • Interest rates around 13.9% (fixed)
  • Repayment periods ranging from 24 to 180 months
  • Flexibility in managing monthly payments
  • Spreading the cost of solar panel installation without significant financial strain

These plans make financing solar panels a feasible option for many homeowners, allowing them to install solar panels with ease and benefit from the advantages of installed solar panels.

One of the advantages of pay monthly finance plans is that they typically do not require a deposit, although homeowners have the option to contribute up to 50% of the total cost upfront if they prefer.

This flexibility can be particularly appealing for those who want to minimise their initial expenditure while still investing in solar energy.

Monthly payments are usually made through direct debit, making it convenient to manage. Additionally, some financing options come with incentives such as no upfront costs, further reducing the financial burden on homeowners.

These plans are designed to be as accessible and straightforward as possible, encouraging more people to make the switch to solar energy.

It’s important to be aware of the interest costs associated with these financing agreements, as they are included in the monthly instalments. However, the overall savings on electricity bills can offset these costs, making pay monthly finance plans a cost-effective solution in the long run.

Personal loans for solar panels

Personal loans are another viable option for financing solar panel installations. These loans can be obtained through banks or financial institutions, helping to cover the upfront costs of solar panels.

The terms of these loans are often flexible, depending on the borrower’s creditworthiness and the loan duration. This flexibility allows homeowners to choose a loan that best fits their financial situation.

Interest rates for personal loans can vary based on the borrower’s credit score and other factors. Some lenders offer 0% APR for up to three years, making it an attractive option for those looking to minimise additional costs.

Whether secured or unsecured, personal loans provide a practical way to finance solar panels, spreading the costs over time and making the initial investment more manageable.

Financing through installation companies

Many installation companies offer their own financing options, often in partnership with specific financial institutions. These plans typically require a down payment, with the remaining costs spread over a set period through monthly installments.

This approach allows homeowners to start benefiting from solar energy without having to pay the full amount upfront.

Some installation companies also offer subscription models, which include maintenance and servicing as part of the package. These models provide peace of mind by ensuring that the solar panel system is well-maintained throughout its lifespan.

Additionally, some homeowners might opt for leasing solar panels, which allows them to rent the system without the need for upfront costs.

This variety of financing options, including Propensio consumer finance, ensures that there is something to suit every budget and preference.

Government Grants and Schemes

In addition to private financing options, there are several government grants and schemes available to support the installation of solar panels.

These include the Energy Company Obligation (ECO4), the Home Upgrade Grant, and the Smart Export Guarantee (SEG).

These programs are designed to make solar energy more accessible and affordable, particularly for low-income households and those looking to make eco-friendly home improvements.

The ECO4 scheme

The ECO4 scheme is a government initiative aimed at supporting the purchase and installation of solar energy systems, including batteries.

It is open to low-income, fuel-poor, and vulnerable households receiving benefits. Depending on the eligibility criteria, the ECO4 scheme can potentially provide free solar panels, offering up to 100% savings on electricity bills.

This scheme will run until 31 March 2026, providing ample time for eligible households to take advantage of its benefits.

By reducing the financial barriers to solar panel installation, the ECO4 scheme helps more households transition to renewable energy, leading to significant long-term savings and environmental benefits.

Home Upgrade Grant

Homeowners and landlords in energy-inefficient households located in 45 select local authorities across England may be eligible for up to £10,000 in funding through the Home Upgrade Grant. The grant aims to support improvements in energy efficiency.

The second phase of this grant runs until March 2025, providing substantial support for home improvements, including solar panel installations. To qualify, homes must be off the gas grid with an EPC rating of D, E, F, or G, and the household income must be £31,000 a year or less.

Local authorities cover 97% of the upfront costs for solar panel installations under solar panel grants for UK solar panel customers. To apply, applicants need to provide details such as:

  • their country of residence
  • property ownership
  • EPC rating
  • household income

This grant significantly reduces the financial burden of transitioning to solar energy, making it accessible to more households.

Smart Export Guarantee (SEG)

The Smart Export Guarantee (SEG) scheme allows households with solar panels to receive payments for the surplus electricity they export back to the grid.

Introduced as a rebrand of the former Feed-in Tariff (FIT) scheme, SEG provides an additional income stream for solar panel owners by compensating them for the excess energy their systems generate.

Rates for SEG can vary significantly, ranging from 1p to 20p per kWh, with an average of about 5.5p per kWh. Homeowners can also switch energy suppliers to find the best rates, with some suppliers offering higher rates to their own customers.

Potential additional earnings from selling exported electricity can be up to £678 annually.

By participating in the SEG scheme, homeowners can further increase their annual savings, potentially adding up to £1,060 by exporting surplus electricity to the national grid.

Adding a Solar Battery on Finance

Adding a solar battery to your solar panel system can offer significant benefits, including energy independence and increased savings. Financing options for the cost of solar batteries allow homeowners to spread the cost of this addition, making it more affordable.

By storing excess energy generated during the day for use at night, solar batteries can reduce reliance on the grid and further lower energy bills.

Benefits of solar battery storage

The best solar batteries offer numerous advantages, including:

  • Reducing reliance on the electricity grid
  • Storing excess energy produced during the day
  • Using stored power during peak hours when grid electricity is more expensive
  • Significantly lowering energy bills
  • Providing better energy independence during outages
  • Contributing to overall energy efficiency.

Additionally, solar batteries help decrease a household’s carbon footprint by maximising the use of clean energy and minimising greenhouse gas emissions. They also provide a reliable source of power during less sunny periods or at night, ensuring that the household continues to benefit from the solar energy system even when solar generation is low.

Financing options for solar batteries

Many financing plans for solar batteries offer 0% APR interest-free credit, allowing homeowners to spread the cost over a set period without additional interest charges. For example, adding a solar battery can be financed from £96.33 per month over three years with 0% APR interest-free, making it an affordable option. Flexible monthly installment plans are also available, providing homeowners with various options to suit their financial situations.

Homeowners can also choose to pay a deposit and settle the balance after installation, subject to a credit check. With the 0% VAT initiative on solar batteries effective from 1 February, this further reduces the cost, allowing homeowners to save and store as much electricity as possible. These financing options make it easier to enhance a solar panel system with battery storage, maximising the benefits of solar energy.

Eligibility for Solar Panel Finance

To apply for solar panel finance, applicants must meet certain eligibility criteria. Generally, applicants must be at least 18 years old, with a maximum age limit of 85 at the end of the finance agreement unless the term is no more than 12 months. Additionally, applicants need to be UK residents for at least the last three years.

Most lenders require a minimum annual income threshold to qualify for solar panel loans. Applicants must have a joint gross income of £10,000 or more per year and be employed, self-employed, retired, in receipt of disability allowance, or a homemaker. Proof of income, such as recent pay slips or tax returns, is typically necessary, along with identification documents like a passport or driver’s license.

Applicants need to meet the following requirements:

  • Have a bank account in their name to authorise monthly direct debit payments
  • Have a good credit history (credit checks may be required)
  • Some finance options may require the applicant to be a homeowner
  • Proof of residence, such as utility bills, might be needed

How to Apply for Solar Panel Finance

Applying for solar panel finance is straightforward, requiring some essential documentation. Applicants need to provide the following:

  • A valid mobile phone number and email address for the application process
  • Proof of income
  • Identification documents
  • Proof of residence

Contacting the chosen financial institution or installation company will help guide applicants through the specific requirements and steps involved in the application process.

Potential Savings with Solar Panels

Installing solar panels can lead to significant savings on energy bills, both with and without a solar battery. By generating your own electricity, you can reduce your reliance on the grid and lower your energy costs. The savings can vary depending on the system size, local electricity rates, and whether you include a solar battery for storage.

Savings estimates without a solar battery

Without a solar battery, potential annual savings on energy bills can be substantial. For example, a 3kW system costing £7,000–£8,000 can result in annual savings of about £440, with a break-even point of 17 years. A larger 4kW system costing £9,000–£10,000 can save approximately £660 annually, breaking even in about 14 years. These savings estimates demonstrate the financial benefits of solar panels, even without additional storage solutions. Considering solar panels cost, it’s important to weigh the potential savings against the initial investment.

For a typical three-bedroom house, if local authorities cover 97% of the upfront costs for solar panel installation, the typical saving can be £7,000 on a £7,200 installation. The calculated annual energy bill savings for such a house are £482, meaning the homeowner would only need to pay £200 if local authorities cover most of the upfront costs.

Savings estimates with a solar battery

Including a solar battery in your solar panel system can further enhance savings. A 6kW system with a solar battery costing £12,000–£13,000 can provide annual savings of about £1,005, with a break-even point of 12 years.

By storing excess energy and reducing reliance on the grid, a solar battery can help homeowners cut their electricity bills by as much as 70%.

Hidden Costs to Watch Out For

While solar panel installations offer numerous financial benefits, it’s important to be aware of potential hidden costs. One such cost is scaffolding, which may be required during the installation process. These additional expenses can add up, so it’s crucial to factor them into your overall budget when planning your solar journey.

Choosing the Right Solar Panel Finance Option

Selecting the right solar panel finance option requires careful consideration of your financial situation, the upfront costs, and the monthly payments. Evaluating each financing option will help you make an informed decision that aligns with your budget and energy-saving goals.

While purchasing solar panels outright offers the fastest return on investment, other options such as loans and subscription models provide flexibility and ease of payment.

Summary

Solar panel financing options make it possible for more homeowners to embrace renewable energy without the burden of high upfront costs.

By understanding the various financing plans, government grants, and potential savings, you can make an informed decision that benefits both your wallet and the environment.

Whether you opt for a pay monthly plan, a personal loan, or financing through an installation company, the key is to choose the option that best suits your financial situation and energy needs.

Frequently Asked Questions

What are the main financing options for solar panels?

The main financing options for solar panels include pay monthly finance plans, personal loans, and financing through installation companies. These options provide flexibility for homeowners looking to invest in solar energy.

What is the ECO4 scheme?

The ECO4 scheme is a government initiative that supports low-income, fuel-poor, and vulnerable households in installing solar energy systems. It aims to provide much-needed assistance to those in need.

How can I apply for the Home Upgrade Grant?

You can apply for the Home Upgrade Grant by submitting details like your country of residence, property ownership, EPC rating, and household income to your local authority. Good luck with your application!

What is the Smart Export Guarantee (SEG)?

The Smart Export Guarantee (SEG) allows households with solar panels to receive payments for excess electricity they export back to the grid.

Are there hidden costs associated with solar panel installations?

Yes, there can be hidden costs associated with solar panel installations, such as expenses for scaffolding during the installation process. Be mindful of these potential additional expenses.

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