Net zero
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Living standards
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Prices & consumption

Sunny day savings

Assessing Government support for solar panels

Zachary Leather
Zachary Leather

The new Government’s plan to decarbonise the electricity system brings with it the lofty aim of tripling total solar capacity by the end of the decade. Although much of this will be driven by large-scale installations, ministers are also hoping for a “rooftop revolution” that could see millions more homes topped with solar panels by 2030. As well as providing carbon-free electricity, domestic solar can deliver significant reductions in energy spending – an average of £440 per year – to the households that get them. This means policy makers should think about rooftop solar like other ways of permanently reducing household energy spending, such as improving insulation. So in this briefing note we take a closer look at the case for installing more solar panels, discuss progress so far, and consider what, if any, policy might be needed to maximise the benefits.

Key findings

  • While rooftop solar can make a small contribution to Clean Power, it can cut household bills by an estimated £440 a year on average, equivalent to almost a quarter of energy spending for the poorest fifth of households.
  • Measured by savings per pound spent, solar panels compare well with other bill-cutting measures, yielding 7p-a-year per pound spent, a third more than cavity-wall insulation. Importantly, solar panels have had relatively low uptake compared to many other measures, having been installed on only 8 per cent of roofs.
  • Poorer households have the most to gain from lower bills but are least able to access solar panels without policy support, due to prohibitive up-front costs. Changes to policy support in the past decade has shifted the distribution of solar panels towards richer areas – in 2015 there were more solar panels installed in the poorest third of LSOAs than the richest (35 to 31 per cent), but by 2023 more than twice as many went to the richest places (45 to 21 per cent).
  • With a well-target package of support, solar panels could help to significantly reduce fuel poverty. We estimate that up to one-in-three fuel-poor households could be taken out of fuel poverty by typical solar savings, subject to the suitability of their homes.
  • Though most consumers seem to be paid relatively well for the electricity they generate, the Smart Export Guarantee isn’t doing enough to prevent some solar panel owners being paid very little for their generation, with 20 per cent of Smart Export Guarantee tariffs being “unbundled” tariffs that pay just 4p/kwh on average.
  • The government should consider more means-tested support with up-front costs, including both grants and subsidised loans targeted at low-to-middle income households.

Further reading

Sunny day savings
Assessing Government support for solar panels
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Zachary Leather
Are universities worth it?
A review of the evidence and policy options
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David Willetts
Whose price is it anyway?
Comparing the spending power of low-to-middle income families in Britain and abroad
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Zaynah Janan, Simon Pittaway
Zachary Leather
Zachary Leather Economist