Enter your planned investment amount, current savings interest rate, and electricity usage details. The calculator compares two scenarios: investing the money in solar panels for your home, or putting it in a savings account earning compound interest. Results show the cumulative value of each option over 25 years, accounting for electricity price inflation, panel degradation, and maintenance costs.
Electricity Prices Keep Rising
UK electricity prices have risen by an average of 5-7% per year over the past two decades. This means the value of every kWh you generate increases annually. A kilowatt-hour that saves you 24p today could save you 64p in 20 years at 5% inflation. Your savings account interest doesn’t benefit from this compounding price increase.
Solar savings are completely tax-free. The money you don’t spend on electricity bills isn’t taxed, and SEG export payments for domestic installations are tax-free too. Savings account interest, however, is taxable once you exceed your Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate). For larger investments, this tax advantage becomes significant.
Protection Against Future Price Shocks
The 2022 energy crisis saw UK electricity prices double almost overnight. Solar panel owners were largely protected from these increases. With geopolitical uncertainty and the ongoing energy transition, further price volatility is likely. Solar provides a hedge against unpredictable energy costs that a savings account simply cannot offer.
You Might Move Soon
If you’re planning to move within the next 5-7 years, you may not reach the solar payback point. While solar panels add value to your home (typically 1-3% according to studies), you may not recoup the full investment. A savings account remains liquid and portable.
Poor Roof Conditions
A north-facing roof, heavy shading, or very small roof area significantly reduces solar returns. If your roof suitability is poor, the numbers may not work. Our Roof Suitability Checker can help you assess this before committing.
You Need Liquidity
Solar is an illiquid investment — you can’t withdraw a portion if you need emergency funds. If you don’t have a separate emergency fund, or anticipate needing access to this money, keeping it in savings provides flexibility that solar cannot.
Exceptionally High Interest Rates
If savings rates significantly exceed 6-7% for extended periods (rare historically), the guaranteed returns might outweigh the variable benefits of solar. However, high interest rates often correlate with high inflation, which also drives up electricity prices.
⚡ Your Electricity Usage Pattern
Higher usage means more savings potential. If you’re home during the day (working from home, retired, young children), you’ll use more solar directly and save more. If the house is empty during daylight hours, more electricity gets exported at lower SEG rates. Battery storage can improve self-consumption to 70-80%.
Adding Battery Storage
Adding battery storage (another £4,000-8,000) increases self-consumption from ~50% to 70-80%, dramatically improving solar returns. However, batteries add complexity and have a 10-15 year lifespan. For this comparison, we’ve assumed solar-only to keep it simple.
Future Electricity Prices
We assume 5% annual electricity price increases based on historical trends. If prices rise faster (as they did in 2022), solar returns improve. If prices stabilise or fall (unlikely given grid investment needs), returns decrease. This is the biggest variable affecting the comparison.
What about stocks and shares instead of savings?
Stock market investments historically return 7-10% annually but come with significant volatility risk. Solar offers more predictable returns similar to bonds but with inflation protection built in. For risk-averse investors, solar compares favourably to both savings and equities. We use savings accounts as the comparison because they’re the most common alternative for home improvement funds.
Do solar panels really last 25 years?
Modern solar panels typically carry 25-year performance warranties guaranteeing 80-87% output. Real-world data shows many panels still performing well at 30+ years. The main component likely to need replacement is the inverter (typically year 10-15, around £1,000). We’ve included this cost in the calculations.
What if interest rates go up significantly?
Higher interest rates make savings more attractive, but they’re typically accompanied by higher inflation — which also increases electricity prices. The Bank of England targets 2% inflation; rates significantly above this are usually temporary. You can adjust the interest rate in the calculator to model different scenarios.
Does solar add value to my home?
Studies suggest solar panels add 1-3% to home value, though this varies by market and buyer preferences. With rising energy costs, buyer interest in solar homes is increasing. However, we haven’t included home value appreciation in this calculator as it’s harder to quantify and only realised upon sale.
What about the carbon benefit?
This calculator focuses on financial returns, but solar has significant environmental benefits. A typical 4kW system saves 1-2 tonnes of CO2 annually. If environmental impact matters to you, this adds non-financial value that savings accounts cannot provide. The carbon payback period for panels is typically 2-3 years.
For most UK homeowners with suitable roofs, solar panels offer better long-term returns than savings accounts — typically generating 2-3x more value over 25 years. The key advantages are tax-free returns, protection against rising electricity prices, and the environmental benefit. However, solar is an illiquid investment that requires commitment to your home. If you need flexibility or have a poor roof, savings may be the better choice. Use the calculator above with your specific situation to make an informed decision. What next? Find out how much solar panels cost.
