Rooftop solar: No longer worth it for everyone in the UK

Your roof may be too small

When it comes to solar panels, bigger is better. Solar technology becomes more cost-effective as you install more panels, thanks to something called “economies of scale.” In simple terms, the more panels you put up, the cheaper each unit of electricity becomes, and the better your return on investment.

The main reason for that is that the “energy-producing part” of your installation – that is, the panels – actually account for only about 20% of costs in a typical solar PV installation. 80% go to fixed costs, including survey costs, scaffolding etc. As Figure 1 shows, an installation with 5 panels will be around of £6,000, while one can get 20 panels for about £11,000.

So you can get 4 times as many panels for less than 2-times the cost!

This means that, the smaller your roof, the unlikelier solar panels will be worth it for you.

If your roof can’t fit enough panels, it’s much harder to make solar work financially. In fact, for smaller systems (up to around 10 panels), it’s often cheaper to stick with buying your electricity from the grid.

Take a look at Figure 2, which shows the “cost per kWh” (or levelised cost of electricity, LCOE) for different-sized solar systems. LCOE helps you see how much each kilowatt-hour of electricity costs over time, factoring in everything: upfront costs, financing, and maintenance. What you can see is a very wide range in system size, from small systems with just 5 panels to 200,000 panels, which is about the size of UK’s largest solar installation (Shotwick Solar Park).

You’ll notice that for very small systems, the cost per unit is even higher than the average electricity tariff, at around 25 p/kWh (the red line). Large-scale systems, on the other hand, produce for 80% less.

Furthermore, a rooftop solar system furthermore does not always produce when you need the electricity. This means that, oftentimes you will actually need to export your electricity back to the grid at these times. Currently you can get around 15 p/kWh to do that (the green line) in conjunction with a fixed tariff. Note, however, that these rates are likely to go down over time, as we will further elaborate later in this article.

Abundant solar means lower returns

In the past 10 years, the capacity of solar installations in the UK has increased 3-fold, from about 6 GW to about 18 GW today. This has been driven by generous government incentives and has been a major factor in helping decarbonise the grid. Overall, about 5% of UK electricity were generated from solar PV in 2024, or up to 30% on particularly sunny summer days. That’s good news for the energy transition.

But there’s a catch: solar panels don’t always produce electricity when we need it most. Solar power generation peaks around midday, just as the sun is strongest. However, UK households typically use the most electricity in the late afternoon and evening—when kettles are boiling, ovens are running, and EVs are charging.

This mismatch between when solar produces electricity and when we need it has led to a new challenge. There are now times when so much solar power is being generated that it becomes “worthless.” For example, in 2024, UK wholesale electricity markets recorded 224 hours where prices were actually negative—meaning electricity companies were paying others to take the excess power off the grid (see Figure 5). These periods usually happened when there was too much electricity production from solar (always around noon) or wind power (typically at night). For more information on negative price hours, see our latest article on free electricity.

These trends are starting to affect homeowners directly. Smart Export Guarantee (SEG) rates, which determine how much you’re paid for selling solar power back to the grid, are expected to decrease significantly. While households don’t deal directly with wholesale electricity markets, large energy companies do. These companies currently pay more in SEG rates than they earn from selling the excess electricity. This isn’t sustainable, and SEG rates are likely to drop further. In fact, commercial rates have already fallen significantly, and residential rates are expected to follow suit soon.

Solar returns are going down, battery returns going up

Have you received a quote from your installer promising a quick payback period? The reason for that is that it most likely included a battery. It is this very battery - and not the panels - that drive the returns of your project!

While returns on solar panels have been declining, returns on batteries have been rising rapidly. Take a look at Figure 6, which shows how payback periods for solar panels and batteries have changed over time.

Back in 2017, the payback period for solar panels was just 13 years, thanks to generous feed-in tariffs of up to 4p per kWh. However, those tariffs have since been phased out. Although the cost of solar panels has dropped significantly, the rates paid for exporting electricity back to the grid have also fallen. As a result, payback periods for solar panels have increased to 17 years today.

Batteries, on the other hand, are a different story. Over the last five years, the cost of batteries has halved, while electricity prices have become much more volatile. There are now more frequent periods of cheap or even free electricity, which batteries can store and use later. This has brought battery payback periods down from 19 to under 7 years, which is noticeably shorter than for solar panels.

Conclusion: It’s time for “battery first”

We’re not against Solar PV at all—it’s a great technology at large scale. But we believe it’s time to adopt a “battery-first” perspective.

If you’ve asked your installer for a solar quote, think about flipping the approach: start with a battery and then consider adding solar panels. The great thing is that, even if you start without panels, you can always add them later on to your battery system, should you find they would be beneficial.

These days, batteries are the real driver of value in most solar + battery projects. For some people, particularly those with large roofs, solar panels might still make sense. However, solar panels are no longer worth it for everyone—unlike batteries, which make sense for almost anyone.

Feel free to reach out to us for your personalised battery quote—we’d love to help you explore your options!