Investing in solar panels and battery storage is one of the smartest ways to reduce energy bills, increase energy independence and make a positive impact on the environment. For homeowners, the upfront cost can often feel daunting or become a barrier to upgrading your home to make it more energy efficient.
The good news is there’s a variety of flexible financing options available to suit different budgets, goals and lifestyle choices. From loans and green financing to leasing and installer payment plans, there’s a solution to make solar energy accessible for everyone.
This guide will explore the different options open to you to finance your solar panel and battery storage installation. At SolarTherm UK we believe in providing all the information you need to make an informed decision for what’s right for your home and energy needs.
Why a Solar Panel and Battery Storage Installation Makes Sense
Energy prices remain volatile, rising a further 2% this October and set to rise again in December. While the energy price cap controls the maximum that energy suppliers can charge you, it isn’t controlling the fact that electricity costs in the UK remain amongst the highest in Europe.
By installing solar panels you can save up to 70% on your electricity bills by generating your own free electricity straight from your roof top – space that would otherwise likely be going to waste. A solar battery stores surplus electricity, generated by your solar panels, for use in the evening or during a low generation period, potentially saving you even more. Savvy solar owners also use time of use tariffs (like Octopus Flux) to capitalise on savings by charging their battery on low import rates and exporting surplus energy to the grid, receiving payments through the Smart Export Guarantee (SEG).
Financing Options
Outright Purchase (Cash)
With an outright purchase, you pay the full cost of the installation upfront. As you are paying in full, you have no interest or monthly payments to consider, potentially saving more in the long term. By paying outright, you fully own the system and benefit from savings on electricity and Smart Export Guarantee from day one.
Unsecured Personal Loan
When purchasing solar panels, you can seek finance from your bank or another credit provider through the form of an unsecured loan. The loan is granted on your credit worthiness alone and no collateral is required. With an unsecured loan you will usually pay a higher interest rate and your borrowing limit will be based on income, credit score and affordability. Unsecured loans can be repaid over 5-15 year periods which will be agreed before signing contracts. While your assets won’t immediately be at risk if you miss a payment, defaulting can result in collections and legal action and damage on your credit eligibility in the future.
Asset Backed Loan (Secured Loan)
An asset-backed loan is when your property or solar panels act as collateral for the loan, providing security for the lender. Because the loan is secured against a tangible asset, it often comes with lower interest rates and more favourable repayment terms, making it a cost-effective way to finance your solar installation while minimizing financial risk. The amount you can borrow is often linked to the value of the asset that secures your loan. If you default, you are at risk of repossession of the asset to recover the loan amount.
Green Loans
A green loan is a type of loan specifically designed to finance environmentally friendly or sustainable projects. The purpose driven loans are used for eco-friendly projects such as renewable energy installations, energy efficiency upgrades and renovations and low emission vehicles. They usually come with an incentive of lower interest rates and longer repayment terms to encourage homeowners and businesses to invest in sustainable technology. Lenders usually require proof that the funds have been used for green projects, requiring plans, receipts and certifications.
Solar Leasing and Power Purchase Agreements (PPA)
With a PPA or solar leasing, you don’t own the panels that are installed. A company will install and maintain the solar panels and often gain the benefits of Smart Export Guarantee payments, in return you enjoy the benefit of reduced energy bills and no upfront costs or maintenance. Solar leasing or PPA often incur a monthly subscription fee, and after a number of years the solar panels are owned by you. While every solar panel installed is a positive thing, at SolarTherm UK, we believe that solar leasing and PPAs can be counterproductive, leaving customers with substandard installations and paying above the odds for lower efficiency systems.
Finance Plans from Installers
Many solar installers offer their own finance plans, allowing you to spread the cost of your solar panels and battery storage over manageable monthly payments. These plans make it easier to invest in renewable energy without a large upfront payment. Working directly with your installer simplifies the process, as they handle both the installation and the financing, ensuring a seamless experience. It’s important, however, to review the terms carefully, including interest rates and any fees, to ensure the plan fits your budget and long-term energy goals.
At SolarTherm UK, our finance options can be arranged so your savings offset some of the cost of your monthly payment. In some cases, your system can generate greater monthly returns than your monthly finance payments.
Choosing the Right Option for You
When deciding how to finance your solar panels and battery storage, it’s important to consider several key factors, including your budget, long term savings goals, preference for ownership and eligibility for credit. If you goal is full control and maximum savings, paying cash or taking a loan is often the best choice. Those looking for minimal upfront costs and a hands off approach may find leasing or a PPA more suitable. Green loans are an attractive offer for those looking to benefit from sustainability incentives while financing their installation over time. Evaluating your financial priorities and energy goals will help you choose which option is best fitted for your household and budget.
Conclusion
Investing in solar panels and battery storage is a smart way to reduce energy costs, increase energy independence and contribute to a sustainable future. Financing options make a solar investment more accessible and affordable to a wider range of homeowners and businesses. By exploring the available options and consulting with a trusted solar installer, you can find the solution that aligns with your budget, ownership preferences and long term energy goals.
Contact SolarTherm UK today for a free no obligation quote and design, tailored to your property, usage and future energy needs. No hard sell, just honest, expert advice.
Your home. Your energy. Your future.
