Solar panels: Are they worth the investment?

About 50,000 homes in Ireland have installed solar panels in an attempt to cut energy bills and play a part in moving away from fossil fuels – and that number is growing by the thousands every year.

As the days lengthen and with hefty winter electricity bills still to be paid off, it is as good a time as any to consider whether a switch to solar power makes sense in terms of your pocket in this less than sun-kissed country.

What is it and how does it work?

Solar photovoltaic (PV) panels look a bit like a large flat-screen televisions. They can be installed on the roof of your house or in your garden – facing south, east or west, for maximum exposure to sunlight. The materials on the panels generate DC electricity from the light. An inverter converts this to AC electricity – the power you use at home.

But is there enough sunlight in Ireland for them to work?

Yes, in short. But mostly in the summer – or at least from the end of spring to the start of autumn, which accounts for about three-quarters of our yearly sunlight. There are slight geographic variations – Wexford may have more sunshine than Donegal, say – but it is insignificant in terms of the amount of power to be generated. They won't produce too much power during the dark, dull months of winter.

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That’s when we need it most, surely?

True. But that doesn’t mean PV panels aren’t effective for much of the year and can have a significant impact on your electricity bills. The Sustainable Energy Authority of Ireland (SEAI) estimates an average family in Ireland will knock one-third off their annual bill by installing between four and six panels, with each panel usually generating 300-350 watts of power. Brian O’Mahony, of the SEAI, says size matters when it comes to installing panels – and four to six is optimal for most typical families. “Some people think that’s not a lot, they want to put more up. But then you’re generating a lot of energy at the height of the summer – are you going to be using it? Then, come November, December, January when lots of people use more energy, the panels aren’t generating as much electricity. Sizing for self-consumption is really important.” Those who have already installed panels are changing their behaviour to make the most of them – putting on the washing machine or the dishwasher during the day, for example, so they are solar powered.

What would six PV panels cost?

Somewhere between €4,500 and €5,500 typically, to include the inverter, controls and meters. Most systems come with an app on your smartphone or an in-home display, which will tell you how much electricity is being generated each day, both in kilowatt-hours and also in euro and cent. There are about 100 suppliers and installers countrywide, with varying rates. As always, it pays to shop around. While it is a costly enough purchase, many typical families will see savings of about €300 a year immediately in their electricity bill – with that figure rising with inflation. Also, after around 12 years or so, the technology should have paid for itself and will start effectively making you money.

Homes must have been built and occupied before 2011 and have an energy performance rating of BER C or better to apply for the one-off payment

I’m not sure I have that amount of money to spare ...

Well, there a few things to consider in that case. First, there is a grant scheme administered by the SEAI offering homeowners up to €2,400 towards the installation of PV panels, calculated on the energy that will be generated from them. Homes must have been built and occupied before 2011 and have an energy performance rating of BER C or better to apply for the one-off payment. So, if we consider six panels for an average home costing €4,500-€5,500, there is €1,800 grant aid available, significantly cutting the installation costs.

It’s fairly straightforward applying online on the SEAI website. First, get a few quotes from different installers. Choose the one that suits you best, and take five minutes to fill out the online form with relevant details, including your personal details, BER rating of house and electricity meter number.

Assuming no problems, the SEAI will email you back swiftly with a grant offer and you will have up to eight months to complete the work. Payment will be released six weeks after the installation is complete. But some installers will knock the value of the grant off your purchase price and claim it themselves afterwards to make it less expensive upfront for the homeowner.

Last year, about 1,800 grants were approved. The scheme will last until at least the end of this year, but no decision has been announced yet on whether it will be extended beyond that.

Another thing to consider when looking at the costs: a number of the larger installers offer payment plans over two or three years, typically. At the moment, Electric Ireland is offering an interest-free 36-month payment plan. Others offer Flexi-Fi finance options, with low-interest payment plans over the same time-periods.

Would I need planning permission?

Six PV panels would be less than 12 square metres – which means they would be exempt from the need for planning permission, as long as that also amounted to less than half the total area of your roof, assuming that’s where you would install them.

That would apply to most average-sized homes.

Reform of the legislation is expected later this year to further relax the rules and allow for a larger number of panels without planning permission. But this is aimed at houses that have particularly large electricity needs or businesses, such as bed and breakfasts, for example.

What happens to the solar electricity I don’t use during long sunny days?

It leaks into the national grid. Expect about 20 per cent of it to head that way. But from next year, you can expect to get paid a tariff for whatever you feed into the grid. But it’s probably not wise for a typical householder to install PV panels as a get rich quick scheme – the tariff is not anticipated to be huge. Going by current market rates, it might put an extra €50-€100 in your pocket every year.

I wouldn't be thinking of generating a revenue, I'd be thinking of maximising self-consumption

“It will likely about 6 cent per kw/h, but it has to be worked out yet,” said O’Mahony. “If I was putting in solar panels, I’d be doing it to reduce my electricity bills by about a third with it paid back in around 12 years. I wouldn’t be thinking of generating a revenue, I’d be thinking of maximising self-consumption. Currently, it costs around 20 to 25 cent for every kw/h you take from the main electricity suppliers. I’m better off getting that kw/h from solar panels, than making 6 cent selling it to them.”

Some installers also offer batteries, that soak up the surplus solar power for use later. There is a separate grant of €600 available through the SEAI for batteries, but they can cost upwards of €6,000 and not every home is suited to their use. Again, some suppliers offer payment plans.

Are there any maintenance or other costs involved?

PV panels are “relatively maintenance free”, according to the SEAI, with apps or companies able to monitor any issues. They should have a guaranteed performance lifetime of between 20 and 25 years. However, the inverter might need replacing over that lifetime. Expect that to cost in the region of €300 to €400.

So in the medium term, solar panels are worth it?

That’s assuming you have the money to spend and also subject to the current energy efficiency of your home. If you have a few thousand euro spare, and your old, cold house could do with insulation, smart heating controls, LED lights and the like, then that investment would be paid back much faster than solar panels. But if it is relatively energy efficient, solar panels will cut your electricity bills and, of course, help save the planet.