What is the Smart Export Guarantee (SEG) and how much will I earn?

The Smart Export Guarantee (SEG) is a UK government scheme introduced in January 2020 that requires licensed electricity suppliers with over 150,000 customers to offer tariffs to small-scale renewable generators including solar PV owners. Under SEG, you are paid for every kWh of surplus electricity you export back to the national grid. Unlike the old Feed-in Tariff (FiT) which paid a fixed government rate, SEG rates are set by individual suppliers and vary widely. As of early 2026, rates range from approximately 1p per kWh to 15p per kWh. Octopus Energy's Outgoing Octopus tariff offers around 4.1–15p/kWh depending on whether you take their agile export option. To receive SEG payments, your system must be MCS-certified and your meter must be capable of measuring export.

What does a solar panel installation cost in the UK in 2025?

UK solar panel installation costs in 2025 typically range from £5,000 to £13,000 depending on system size, panel quality, and installer. A typical 4 kWp system (10 x 400W panels) costs £6,000–£10,000 all-in including scaffolding, inverter, and installation. A smaller 3 kWp system may cost £4,500–£7,500, while a larger 6 kWp system for bigger homes can cost £8,000–£14,000. Since February 2024, solar panel installations benefit from 0% VAT (reduced from 5%) as part of the Energy Security and Net Zero commitment — saving approximately £300–£700 on a typical installation. This VAT relief is currently scheduled to remain in place until March 2027. Adding battery storage (typically £2,000–£4,000 for a 5–10 kWh unit) increases the upfront cost but significantly improves financial returns.

How long is the payback period for solar panels in the UK?

The typical payback period for solar panels in the UK is 8–12 years depending on location, system size, energy usage patterns, and electricity unit rate. A 4 kWp system costing £8,000 installed in South England, generating 3,800 kWh/year with 35% self-consumption (1,330 kWh used at 24.5p/kWh = £326 saved) plus SEG export earnings of approximately £75/year, would save roughly £401 per year. This gives a payback period of approximately 20 years without battery storage. With rising electricity prices (forecast to increase further from the 2025 average of 24.5p/kWh), payback periods have improved considerably, and many homeowners now see 7–10 year paybacks. Solar panels typically last 25–30 years, meaning most systems deliver substantial returns after payback.

Do I need planning permission to install solar panels in the UK?

In most cases, solar panel installations on homes in England, Wales, and Scotland qualify as 'permitted development' and do not require planning permission, provided certain conditions are met. The panels must not protrude more than 200mm beyond the roof plane, must not be installed on a wall or roof slope that faces a highway, and must not be installed on a listed building or in certain designated areas without consent. In Conservation Areas or Areas of Outstanding Natural Beauty (AONB), additional restrictions may apply regarding panels visible from the road. You should always check with your local planning authority before installation. Separate from planning permission, all installers must notify your District Network Operator (DNO) for systems over 3.68 kW single-phase before installation. MCS-certified installers typically handle all required notifications.

Does adding a battery storage system improve solar panel returns?

Yes, significantly. Without battery storage, a typical household self-consumes only 25–40% of the solar electricity generated, because much of the peak generation occurs during the day when family members are at work or school. A 5 kWh home battery (such as the Tesla Powerwall, GivEnergy, Octopus Power Station, or similar) stores excess daytime generation for use in the evening, increasing self-consumption from around 35% to 70–80%. This reduces grid electricity purchases considerably. A battery system costs approximately £2,000–£4,000 installed (0% VAT applies). The financial benefit depends on your evening electricity consumption and electricity unit rate. At 24.5p/kWh, storing an extra 1,500 kWh per year saves £368 annually — potentially paying back the battery cost in 6–11 years. Batteries are compatible with heat pumps and EV charging for maximum savings.

Solar Panel Calculator UK 2025

Q: How much electricity do solar panels generate in the UK?

Solar panel generation in the UK depends heavily on location and roof orientation. A south-facing roof in South England generates approximately 1,050–1,200 kWh per kilowatt-peak (kWp) of installed capacity per year. In the Midlands, expect 950–1,050 kWh/kWp, in North England 900–1,000 kWh/kWp, in Scotland 800–900 kWh/kWp, and in Wales around 900–1,000 kWh/kWp. A typical 4 kWp system (10 panels) on a south-facing roof in the South of England would generate approximately 3,400–4,800 kWh per year. East or west-facing roofs typically generate 15–20% less than south-facing, while north-facing roofs are generally not recommended for solar PV in the UK.

Q: What is MCS certification and why does it matter?

MCS stands for Microgeneration Certification Scheme. It is a quality assurance framework for small-scale renewable energy technologies in the UK. Both the solar panels and the installing company must be MCS-certified for your installation to qualify for Smart Export Guarantee (SEG) payments. MCS certification ensures your installer meets minimum competency standards and that your equipment has been independently tested and approved. Always ask for the MCS certificate number of your installer before signing any contract — you can verify this on the MCS website (mcscertified.com). MCS certification is also important for home insurance purposes and for ensuring the installation meets Building Regulations (Part P for electrical safety). Never use a non-MCS installer if you want to claim SEG export payments.

Q: What government grants are available for solar panels in 2025?

In 2025, several UK government support schemes can reduce the cost of solar panel installation. The ECO4 (Energy Company Obligation 4) scheme provides free or heavily subsidised solar panels to eligible households — typically those in lower Council Tax bands (A–D) who receive qualifying benefits or have low incomes, or whose homes have an EPC rating of D or below. The Great British Insulation Scheme may also cover solar-compatible upgrades. In Scotland, Home Energy Scotland offers loans up to £15,000 for renewables (0% interest) and cashback grants up to £2,500. Wales has the Warm Homes Programme. The 0% VAT rate on residential solar installations (since February 2024) effectively provides a 5% discount versus previous rates. Always check the current schemes at gov.uk/improve-energy-efficiency and with your local council before purchasing.

Last updated: February 2026

Solar Panel Savings Calculator

Roof Area Available (m²) ~6m² per panel (400W each)

Roof Orientation

Location / Region

Annual Electricity Bill (£)

Unit Rate (p/kWh)

SEG Export Rate (p/kWh) Octopus default: 4.1p (agile up to 15p)

Add Battery Storage (+£2,500 for 5 kWh battery)

Increases self-consumption from ~35% to ~75%. Recommended if you are home in evenings or have an EV.

UK Solar Generation by Region (South-Facing, 4 kWp System)

Region	Annual kWh/kWp	4 kWp Annual Output	Est. Annual Savings*
South England (Cornwall, Kent, London)	1,050–1,200	4,200–4,800 kWh	£500–£650
Midlands (Birmingham, Leicester)	950–1,050	3,800–4,200 kWh	£450–£560
North England (Manchester, Leeds)	900–1,000	3,600–4,000 kWh	£420–£530
Wales	900–1,000	3,600–4,000 kWh	£420–£530
Scotland (Glasgow, Edinburgh)	800–900	3,200–3,600 kWh	£370–£480

*Based on 24.5p/kWh unit rate, 35% self-consumption, 4.1p SEG export rate. Includes battery when ticked.

Complete Guide to Solar Panels for UK Homes

How Solar Panels Work in the UK Climate

Solar photovoltaic (PV) panels convert sunlight directly into electricity using semiconductor cells, typically made from crystalline silicon. The UK receives between 900 and 1,200 peak sun hours per year depending on location — considerably less than southern Europe, but sufficient to make solar PV economically viable, particularly given the UK's relatively high electricity prices. Modern 400W monocrystalline PERC panels with efficiencies of 20–22% can generate meaningful electricity even on cloudy days, as they respond to diffuse light rather than requiring direct sunshine.

Choosing the Right Inverter

The inverter converts the DC electricity generated by your panels into AC electricity for use in your home. There are three main types used in UK residential installations: string inverters (the most common, cheapest option — one central unit for all panels), microinverters (fitted to each individual panel, better for shaded roofs or complex roof shapes, more expensive), and power optimisers (a hybrid approach, combining DC optimisation per panel with a central inverter). For most standard UK homes with an unshaded south-facing roof, a string inverter from manufacturers such as SolarEdge, Fronius, Growatt, or Solis represents the best value. Inverters typically need replacing after 10–15 years, with costs of £600–£1,200.

The Smart Export Guarantee Explained

The Smart Export Guarantee (SEG), launched in January 2020, replaced the Feed-in Tariff (FiT) scheme which closed to new applicants in March 2019. Under SEG, licensed electricity suppliers with over 150,000 domestic customers are legally required to offer at least one tariff paying you for electricity exported to the grid. As of 2025, the rates offered by major suppliers include: Octopus Energy Outgoing Octopus (4.1p flat or up to 15p agile), E.ON Next Drive Export (5.5p), EDF Export Select (5.5p), British Gas Solar Export (3p), and Octopus Agile Export (variable, tracking wholesale prices). To access SEG, your installation must be MCS-certified and your smart meter must be able to measure export separately from import.

ECO4 and Government Support Schemes

The ECO4 (Energy Company Obligation 4) scheme, running until March 2026, obligates large energy suppliers to fund energy efficiency improvements in low-income and fuel-poor homes. Solar panels are included under ECO4 for eligible properties — typically owner-occupied or private rented homes in Council Tax bands A–D where the occupant receives qualifying means-tested benefits (Universal Credit, Pension Credit, Child Tax Credit, etc.) or where the property has an EPC rating of D, E, F, or G. In Scotland, Home Energy Scotland provides interest-free loans up to £15,000 for renewable energy installations including solar, plus cashback grants of up to £2,500. The 0% VAT rate on residential solar panel installations (effective February 2024 until at least March 2027) applies to both panels and installation labour, saving several hundred pounds on a typical system.

Planning Permission and Building Regulations

In England, Scotland, and Wales, solar panel installations on domestic dwellings are typically permitted development — meaning no planning application is required — provided the installation does not protrude more than 200mm above the roof plane, the panels are not on a wall or roof slope facing a public highway, and the property is not a listed building. However, if your home is in a Conservation Area, a World Heritage Site, or within the curtilage of a listed building, specific restrictions may apply and you may need to apply for planning permission. All installations must comply with Building Regulations, particularly Part P (electrical safety) and Part A (structural integrity, as solar panels add approximately 15–20 kg/m² of load). MCS-certified installers will handle all regulatory compliance as part of their service. Always obtain written confirmation from your installer that the relevant notifications have been submitted to your local authority and District Network Operator (DNO).

Heat Pumps and Solar PV: A Powerful Combination

Air source heat pumps (ASHPs) and solar PV panels work particularly well together for UK homes. A heat pump uses electricity to extract heat from outside air, delivering 3–4 kWh of heat for every 1 kWh of electricity consumed (Coefficient of Performance of 3–4). When a solar PV system powers a heat pump directly, the effective cost of heating drops dramatically. Octopus Energy's Cosy Octopus and Go Agile tariffs offer off-peak electricity rates as low as 7p/kWh overnight, which can be combined with battery storage to pre-heat homes during cheap-rate windows. The UK government's Boiler Upgrade Scheme (BUS) provides a £7,500 grant towards ASHP installation — making the solar plus heat pump combination increasingly popular in UK retrofits during 2024–2026.

Battery Storage: Maximising Your Solar Investment

The business case for battery storage alongside solar PV has improved significantly as electricity prices have risen. In 2025, with unit rates averaging 24.5p/kWh, a 5 kWh battery that avoids purchasing 1,500 kWh from the grid each year saves approximately £368 per year. Popular UK battery systems in 2025 include the Tesla Powerwall 3 (13.5 kWh, ~£8,000 installed), GivEnergy All-in-One (5.2 kWh, ~£3,500 installed), SolarEdge Home Battery (10 kWh, ~£5,000 installed), and Octopus Power Station (partnered with various OEMs). Battery systems benefit from 0% VAT since February 2024 when installed alongside solar panels on the same installation visit.

Frequently Asked Questions

How much electricity do solar panels generate in the UK?

A 4 kWp south-facing system generates 3,200–4,800 kWh/year depending on location. South England generates ~1,125 kWh/kWp, Scotland ~850 kWh/kWp annually.

What is the Smart Export Guarantee (SEG)?

SEG is the UK government scheme requiring large energy suppliers to pay you for surplus solar electricity exported to the grid. Rates range from 1p to 15p/kWh. Octopus Energy offers the most competitive rates in 2025.

What does solar panel installation cost in the UK in 2025?

A typical 4 kWp system costs £6,000–£10,000 including installation. 0% VAT applies since February 2024. Battery storage adds £2,000–£4,000 for a 5 kWh unit.

How long is the payback period for solar panels?

Typically 8–14 years depending on location, energy usage, and energy prices. With a battery, self-consumption rises to 70–80% and payback can improve to 7–11 years in many UK regions.

Do I need planning permission for solar panels?

Usually not — most UK homes qualify for permitted development. Exceptions include listed buildings and some Conservation Areas. Always check with your local authority if unsure.

What is MCS certification and why does it matter?

MCS (Microgeneration Certification Scheme) certifies installers and equipment to a quality standard. You must use an MCS-certified installer to qualify for SEG payments. Verify your installer at mcscertified.com.

Does a battery storage system improve returns?

Yes. A 5 kWh battery raises self-consumption from ~35% to ~75%, saving an additional £300–£400 per year at current energy prices, with payback typically 6–11 years.

What government grants are available for solar panels in 2025?

ECO4 offers free solar to eligible low-income households. Scottish homeowners can access 0% interest loans up to £15,000 via Home Energy Scotland. 0% VAT on installations saves £300–£700 on typical systems.

Official Sources

Mustafa Bilgic

Renewable energy analyst specialising in UK residential solar economics. All estimates use MCS generation data, Ofgem energy prices, and published SEG tariff rates. Learn more about our team.

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