Calculate Your Solar Panel Savings: A Step-by-Step Guide

Installing solar panels is about more than just going green; it's about taking control of your finances. With energy prices remaining unpredictable, generating your own free, clean electricity is a powerful way to reduce your bills and even earn money. In this guide, we'll walk you through how to calculate your potential savings and explain how the Smart Export Guarantee (SEG) puts money back in your pocket.

How You Save Money: The Two Key Methods

There are two primary ways a solar panel system saves you money:

1. Direct Bill Reduction: Every kilowatt-hour (kWh) of electricity your panels produce is a kWh you don't have to buy from your supplier. You use your own free energy first, drastically cutting your monthly electricity bill.

2. Earning from Excess Energy (SEG): On a sunny day, you'll often generate more electricity than you can use. Thanks to the Smart Export Guarantee (SEG), you can sell this surplus energy back to the grid. All major energy suppliers offer an "export tariff," paying you for every kWh you send their way.

A Step-by-Step Guide to Calculating Your Savings

Let's use a simple example of a typical 4kWp system in the UK.

• Step 1: Estimate Your Annual Generation.

  • A 4kWp system in the UK typically generates around 3,400 kWh per year.

• Step 2: Estimate How Much You'll Use vs. Export.

  • A common assumption is that you will use 50% of the generated electricity and export the other 50%.

  • Electricity Used: 3,400 kWh×0.50=1,700 kWh

  • Electricity Exported: 3,400 kWh×0.50=1,700 kWh

• Step 3: Calculate Your Bill Savings.

  • Find your current electricity price per kWh on your bill. Let's assume it's 25p/kWh.

  • Annual Bill Saving: 1,700 kWh×£0.25/kWh=£425

• Step 4: Calculate Your SEG Earnings.

  • SEG rates vary by supplier, but a competitive rate is around 15p/kWh.

  • Annual SEG Earning: 1,700 kWh×£0.15/kWh=£255

• Step 5: Calculate Your Total First-Year Saving.

  • Total Annual Saving: £425 (Bill Saving) + £255 (SEG Earning) = £680

The Battery Bonus: Maximising Your Savings

Want to save even more? A solar battery changes the calculation. Instead of exporting your surplus energy for ~15p/kWh, you store it. You can then use that stored energy in the evening, saving you from buying electricity from the grid at the full rate of ~25p/kWh. This simple change can boost your annual savings by hundreds of pounds.

Conclusion

Calculating your exact savings depends on your roof, location, and energy habits, but this guide gives you a clear idea of the significant financial benefits. With potential savings of hundreds or even thousands of pounds a year, solar panels are a fantastic investment.

Want a precise, personalised savings projection for your home? Contact Think Free Solar for a free survey and detailed savings report. 0800 994 9678