Could plug-in solar panels cut your energy bills? Our simple formula shows how long it may take to recover the cost

Plug-in solar panels have only recently been approved for household use in England, Scotland and Wales, yet interest is already running high. For many homes, they offer a way to trim energy bills as fuel costs rise again.

Like conventional roof-mounted panels, they produce electricity for use in the home. But they are much cheaper and do not require professional installation — they can even be connected through a standard plug socket.

The panels can be placed in gardens, on outbuildings or on balconies. For the first time, they are being sold by high street retailers such as Screwfix and Argos for under £700 each. Demand has been strong, with Octopus selling out of its first stock within two weeks.

Its panels are roughly the size of a single mattress — 5ft 11in by 3ft 7in (1.8m by 1.1m) — and weigh 3st 7lb (22kg).

For some households, a plug-in solar panel could pay for itself in just a few years. Others may need more than a decade to recover the upfront cost, while homes with very high electricity use may be better off paying more for a rooftop system.

Solar specialist Simon Bones, founder of Genous Retrofitting, says the panels can help households save money, but the savings are likely to be modest because the Government has limited the size and power of plug-in panels.

“The absolute amounts are small,” he says. “And you have to have somewhere to put it. If you’re losing your balcony to a solar panel, it is a question of whether that’s something you want to do.”

Whether plug-in solar makes sense for you depends on how much sunlight the panels get, how much electricity you use during the day and how much you pay for the kit.

We have created a simple four-step checklist, called LAMP, to help you judge whether plug-in solar is likely to save you money.

LAMP stands for Lifestyle, Aspect, My electricity and Purchase price, and it produces an estimated payback period.

All you need is a pen and paper to note down your four ratings. You can then use our formula to work out how many years it could take for the electricity savings to cover the purchase price.

First, though, it is worth remembering that plug-in panels are not suitable for everyone.

Tenants and flat owners may need permission from a landlord or freeholder, and not every property has a suitable outdoor space. For example, if the only available area faces north, the panels would struggle to produce much power because they would not receive enough direct sunlight each day.

L is for Lifestyle

To get the best value from the panels, you need to use appliances while the sun is shining.

Under the new rules, plug-in solar systems cannot include built-in battery storage, unlike larger professionally installed systems.

That means you cannot store the electricity for later use; you need to use it as it is produced.

If you regularly run a washing machine, dishwasher, computer or other appliances during daylight hours, you are more likely to make use of the power your panels generate.

To assess your household, choose the option that best fits your routine. The closest match gives you your “Lifestyle figure”, which estimates the share of solar electricity you may use yourself.

Lifestyle figure

• Everyone is usually out during the day – 40 per cent
• Somebody is home for part of the week – 50 per cent
• Somebody is home most days, with regular daytime appliance use – 60 per cent
• Substantial daytime demand, such as regular daytime electric car charging – 75 per cent

A is for Aspect

Next, think about where the panels will be installed. A spot that is unshaded, south-facing and tilted towards the sun is usually best.

East- or west-facing panels can still generate useful electricity, although output is likely to be lower. Panels mounted vertically, such as on balcony railings, may produce less over a year.

Select the number that best matches your planned position.

Panel position

• South-facing, suitably tilted and unshaded – 1.0
• East- or west-facing, suitably tilted and unshaded – 0.8
• South-facing but mounted vertically – 0.7
• Less favourable position – 0.5

To estimate how much electricity your panel could generate, measured in kilowatt hours, multiply your aspect rating by 700.

This is an estimate based on the maximum 800W system allowed under the current rules. If your system has a lower maximum, you will need to adjust the calculation.

The 700 figure is based on Energy Saving Trust estimates that an 800W system in Manchester, facing south with a 30-degree tilt and no shade, could generate about 700 kilowatt hours (kWh) a year.

M is for My Electricity

Now find an electricity bill and check your unit rate. This is the amount you pay for each unit, or kWh, of electricity.

Every unit of solar electricity you use is one less unit you need to buy from your supplier.

Ofgem’s average rate is 26.32p a unit, but you should use your own tariff in the LAMP calculation.

Your M figure is simply the price you pay for electricity.

P is for Purchase price

Finally, work out how much you will need to spend to get the panels up and running. This is your P figure.

Remember to include the cost of the panels and any extras such as mounting equipment.

Do not assume that any outdoor socket or extension lead will be suitable. Follow the product instructions and seek professional advice if your electrical installation needs checking or adapting.

Many households may need a qualified electrician to fit a waterproof outdoor socket.

Work out your result

You now have the four pieces of information you need.

Step one: Calculate how much electricity your panels might generate. Multiply your Aspect figure by 700 to estimate how many kWh — often called “units” — your panels may produce in a year based on how well placed they are.

Step two: Estimate how much of that electricity you will use. Multiply the result from step one by your Lifestyle percentage to work out how much of the solar electricity you are likely to use because you are at home while the sun is shining. For example, if you expect to generate 700 units and are home most days with regular daytime appliance use (a lifestyle score of 60 per cent), you will be able to use about 420 units on average.

Step three: Work out your annual saving. Multiply the number of solar-generated units you will use (420 in the example above) by your electricity price per unit (for example, Ofgem’s 26.32p per unit) and divide by 100 to convert the figure into pounds. This shows how much you save by using your own electricity instead of power from the grid.

Step four: Calculate how long it takes to recover the cost. Divide the total purchase price and connection cost by your annual savings to see how many years it would take to recoup the upfront expense.

What the result means

Less than five years: You are an excellent candidate. Your panels could pay for themselves relatively quickly, leaving you with more years of potential savings.

Five to eight years: You are a good candidate. Plug-in solar could make financial sense, especially if you expect to stay in the property or can take the panels with you when you move.

Eight to 12 years: Think carefully. You may still save money, but it is likely to take a long time to recover the initial outlay.

More than 12 years: Poor financial prospect. The savings may be too small to justify the investment.

These figures are estimates rather than guaranteed returns. They assume electricity prices stay the same and do not include maintenance, replacement costs or any export payments.

In practice...

Consider a couple who work from home and have a south-facing balcony, but whose panels would need to be mounted vertically on the railings.

Their Aspect figure is 0.7, so multiplying by 700 gives an estimated annual output of 490kWh. They regularly use appliances during the day, giving them a Lifestyle figure of 60 per cent. That means they would use about 294kWh of the 490kWh generated each year.

At 26.32p per unit, that would save about £77 a year — the 294kWh they use multiplied by the unit cost.

The kit costs £660, with another £120 needed for electrical work, bringing the total to £780. That gives a LAMP result of 10.1, meaning it would take 10.1 years to recover the £780 through annual savings of £77.

They could still benefit, but the vertical mounting and extra connection costs make the purchase less appealing.

They would also need the necessary permissions.

A bright decision?

Plug-in solar could give more households a relatively low-cost way to generate some of their own electricity.

But a large electricity bill does not automatically mean the biggest savings. What matters is how much electricity the panels generate, whether you can use it while the sun is shining and how much you must spend to get started.

Some heavy users may be better off with a fully installed system, which can generate far more electricity.

According to the Energy Saving Trust, a typical 4.5kW rooftop system costs about £7,600 to install, compared with £660 for these plug-in kits.

However, it can cut bills by hundreds of pounds a year, and you can earn money by selling surplus electricity back to the grid through the Smart Export Guarantee. You could also add a battery so you can use the solar power whenever you want.

Changes could also be on the way that would make plug-in panels suitable for more people.

Energy provider Octopus hopes to launch a version with a battery in the first quarter of next year, subject to regulatory changes. That could mean even people who do not use much electricity during the day could benefit from plug-in solar power.

What do they cost and which are legal?

Plug-in solar kits are now sold by a number of retailers, but prices vary.

Octopus Energy advertises a two-panel kit for £650, while Screwfix sells a similar two-panel PowerXpress kit for £669. Both include two 460W panels and an 800W inverter.

Cheaper options include Octopus Energy’s single-panel kit at £450 and single-panel kits at City Plumbing from £348, although these will not produce the 800W maximum used in the calculations here.

At the higher end, an Argos UKSOL two-panel kit costs £1,199.

Check exactly what you are buying. Solar kits include an inverter, which converts the direct current produced by the panels into the alternating current used by mains electricity.

Before buying, make sure the exact make and model appears on the Energy Networks Association’s Connect Direct LCT Device Register as compliant with UK standards. You will also need to register your system before using it on the UK Plug-In Solar Registration website.

Have you tried a plug-in solar panel? Let us know by emailing [email protected]