Methodology: How We Calculate Solar Cost, Savings and Payback

What Our Calculators Estimate, and What They Do Not

We give an estimate of cost, generation, savings, payback and a verdict for one home. We do not give a quote, advice or an offer. A result shows ten things:

• System size in kWp and the panel count.
• Installed cost, as one figure.
• Yearly generation in kWh.
• Self-use, with and without a battery.
• Yearly saving on your bill.
• Export income.
• Payback in years.
• Net return over 25 years.
• The installed cost after VAT rises.
• A verdict of Good fit, Borderline or Poor fit.

We give an estimate. Leads 2 Trade arranges a survey. Installers give the quote. Our figures are not advice, as the disclaimer sets out.

Our calculators share one engine, and six of them run the eight lines below: the home page, panel count, battery cost, payback, output and quote checker tools. The home page tool is the cost and savings calculator itself. It opens on an example system of 4.275 kWp and sizes for your roof once you say how many panels fit. A second tool matches panels to your yearly kWh use, which gives the number of solar panels your home needs. A third works out battery price, size and payback, and shows the solar battery price.

The Formula Block: Cost, Savings and Payback in Eight Lines

These eight lines produce the cost, saving and payback figures on a result card. kWp (kilowatt peak) is the system's rated output in full sun; kWh (kilowatt-hour) is the unit of energy on your bill.

1. Generation: G = P x Kk x SF
2. Self-used energy: U = G x s, where s comes from our self-use table, never more than your yearly use
3. Exported energy: E = G minus what you use directly, minus what charges a battery
4. Yearly saving: S = U x r
5. Export income: X = E x x_r
6. Installed cost: C = P x c_band, plus battery B = k x b_band when you pick a battery
7. Simple payback: T = C / (S + X)
8. 25-year net: N = the sum of (S + X) over 25 years, with output falling by d each year, minus C, minus I

The sections below explain each symbol.

How We Estimate Your Yearly Electricity Use

If you do not tell us your use or your bedrooms, we use 2,500 kWh a year, Ofgem's typical domestic consumption value for a medium electricity user, in force since 1 July 2026.

The calculator reads your use from the first of four sources that you give it:

1. Your own yearly kWh figure, if you type one.
2. Your monthly bill: yearly kWh = (monthly bill x 12, minus the standing charge x 365) / the unit rate. The standing charge is 54.83p a day in Great Britain, and the unit rate is your own if you typed one.
3. Your bedrooms, using the five values in the table.
4. The Ofgem typical value, when you pick "Not sure" or the tool does not ask for bedrooms.

The bedroom values are medians from the National Energy Efficiency Data-Framework (NEED), which DESNZ publishes. They cover the electricity year from 1 February 2024 to 31 January 2025 and count every home in the sample, including homes with electric heating. They are DESNZ figures, not Ofgem figures: Ofgem ties no value to a number of bedrooms.

A bill from Northern Ireland is turned into kWh on the standard Power NI tariff, which has no standing charge, and the result says so. Use sets how much of your generation you use at home. It does not set the size of the system on the home page.

How We Estimate What Your Panels Will Generate

We multiply the system size in kWp by a kWh-per-kWp figure for your postcode area, roof direction and pitch, then by a shade factor. This is the form of the MCS method, in which yearly output = kWp x Kk x SF.

The kWh-per-kWp figure is our calculation from PVGIS, the solar tool of the European Commission Joint Research Centre. We ran PVGIS version 5.3 once, on 11 November 2026, for one point in each of 121 UK postcode areas: a south-facing roof at 35 degrees, the PVGIS-SARAH3 radiation database for 2005 to 2023, and a system loss of 14%. Your postcode area is the letters at the start of your postcode. The calculator reads the stored figure for your area. It never contacts PVGIS, and your postcode is not sent anywhere. Credit: PVGIS © European Communities, 2001-2026.

The point for each area in England, Scotland and Wales is the postcode nearest the middle of all the area's postcodes, taken from OS Code-Point Open, which Ordnance Survey publishes under the Open Government Licence. Northern Ireland uses one point in Belfast. Contains OS data © Crown copyright and database right 2026. Contains Royal Mail data © Royal Mail copyright and database right 2026. Contains National Statistics data © Crown copyright and database right 2026.

Until you type a full postcode, the calculator uses a stand-in figure of 968.01 kWh per kWp, and the result card says so. The same stand-in is used for a postcode area that is not in our table, such as the Channel Islands and the Isle of Man.

Direction and pitch scale the area figure. The calculator holds the output of a roof, as a share of a south-facing roof at 35 degrees, for each of 8 directions at 3 pitches (25, 35, 45 degrees). We worked the shares out from PVGIS runs at 6 places across the UK and took the mean.

We do not use the MCS irradiance tables, which an installer must use on a quote. PVGIS gave a higher figure than the MCS table at the places we compared, so our generation figure can be higher than the one on an installer's MCS estimate for the same roof.

Shade is your own answer. No shade leaves output as it is. Some shade and heavy shade each cut it to a fixed share (89% and 60% of full output). Both shares are our own assumption, not the MCS shade method: an installer measures shade with a sun path chart. A north-facing roof or heavy shade makes the verdict a Poor fit whatever the payback.

How We Size a System and Count Panels

The home page calculator sizes for your roof. If you tell it how many panels fit, the system is that many panels. If you do not, the result is an example of 4.275 kWp and the card labels it as an example. Your yearly use does not change the size there. It changes how much of the output you use.

The panel count calculator matches the system to your yearly use instead: kWp = yearly use / kWh per kWp for your roof, with the panels that fit your roof as a cap if you give them. The home page shows that panel count beside the result for comparison.

Panels = kWp x 1,000 / panel wattage, rounded up to a whole panel, with a 475 W panel as the default (our rule), which you can change. A size matched to use stays between 1 and 10 kWp. We hold no roof sizes by house type, so the calculator never guesses how many panels fit. A system above 3.68 kW per phase gets a note that it may need approval from your network operator before it is fitted.

How Much Output Panels Lose Each Year

We reduce output by 0.5% a year for panel ageing. That rate is our own assumption: no official UK source gives one rate. Over the 25 years of the estimate we also take off the cost of one inverter replacement, around £800, the Energy Saving Trust's figure (last updated 13 August 2026).

How We Split Generation Into Self-Use and Export

The share of generation you use at home comes from our own model. It depends on how your yearly generation compares with your yearly use, on how often someone is home, and on the size of a battery if you pick one. The rest is exported.

Self-consumption, which we call self-use, is the part of your generation that your home uses. It can never be more than your yearly use. The share falls as a system grows against the home's use, because more of the output arrives when nobody needs it.

We built the model from two public datasets. Generation is the output of a south-facing system from PVGIS for 2013, taken to half-hourly steps. Use is the measured half-hourly electricity use of 3,612 single homes in Greater London in 2013, from "SmartMeter Energy Consumption Data in London Households" by UK Power Networks (Low Carbon London project). Each home keeps its own peaks and quiet hours. Half hour by half hour, a home uses what the panels make up to what it needs. A battery charges from the surplus and gives it back later, with a round-trip efficiency of 89%.

The data does not say who is at home, so the three answers to "Is anyone home during the day?" are our own classification, not a surveyed fact. For each home we measured the share of its yearly use that fell between 09:00 and 17:00 on working weekdays. We sorted the homes by that share and cut them into three groups of equal size. The figure the calculator uses is a cautious one: the 25th percentile of your group, so three in four of those homes used at least that share. The middle home of the group is shown beside it on the result card as the typical home.

We left out homes that took part in a time-of-use tariff trial, homes with long gaps in their readings and homes whose meter often read zero. The data has no flag for solar panels, electric heating, heat pumps or electric cars, so those homes could not be taken out or treated separately.

These values are our own calculation, adopted as the calculator method on 12 November 2026. The model has known limits. Half-hourly readings hide the short peaks of a kettle or a shower, and the generation data has no passing clouds, which both make self-use look higher than it is. The homes are Greater London homes of 2013, and the weather is modelled for one place in the same year, not the weather those homes had. When we compared the model with the lookup tables in MCS guidance MGD 003, which installers must use, ours gave a higher share. That is one reason the calculator uses the cautious figure and not the middle home. Even so, treat the self-use figure, and the saving and payback built on it, as likely to be too generous. We do not copy the MCS tables.

Contains data from SmartMeter Energy Consumption Data in London Households, UK Power Networks (Low Carbon London), London Datastore, licensed under CC BY 4.0. The data was cleaned, grouped and summarised by us. Licence: Creative Commons Attribution 4.0 International (CC BY 4.0). Source: UK Power Networks, on the London Datastore. Generation credit: PVGIS © European Communities, 2001-2026.

You pick the battery size on the label from 5, 10, 13.5, 15, 20 kWh. The saving is worked on the usable capacity, which is the label size times a usable share of 90%, the default in MCS guidance MGD 003 where a battery's datasheet gives none. A battery earns its value by raising self-use, not by adding generation.

How We Work Out Your Yearly Saving and Export Income

Each kWh you use from your panels saves you the unit rate you would have paid: 26.32p per kWh under the Ofgem price cap for 1 October to 31 December 2026, unless you enter your own rate.

The standing charge is left out of the saving, because solar does not change it.

Export income = exported kWh x the export rate. The default export rate is 13.00p per kWh, our calculation from Ofgem figures, and your own rate replaces it when you type one. Export payments come through the Smart Export Guarantee (SEG). For solar up to 50 kW, the installation needs an MCS certificate or an equivalent. The SEG is not the Feed-in Tariff, which closed to new applicants on 1 April 2019.

The Ofgem price cap and the SEG cover Great Britain only. A Northern Ireland postcode uses the Power NI unit rate of 34.15p per kWh, which includes 5% VAT, and the Power NI export rate of 11.88p per kWh.

How We Price a Solar and Battery System

We price a system as its size in kWp x the mean installed cost per kW for its size band, from DESNZ Solar PV cost data for 1 April 2025 to 31 March 2026, rounded to the nearest £100. The figure is the mean for home retrofit installations, per kWp of panels fitted (total installed capacity). It is a mean, not a median: DESNZ publishes no median for home retrofits.

Two size bands apply. A system of up to 4 kW uses £2,109 per kW, and a larger system of up to 10 kW uses £1,651 per kW. Because the larger band has the lower figure, a plain sum would price a system just above 4 kWp below a 4 kWp system. Our rule stops that: a larger system is never priced below a 4 kWp system. The result shows one installed cost, the DESNZ mean, not a range.

DESNZ publishes the data once a year, with a lag of up to about 14 months. The latest release, on 28 May 2026, covers installs in England, Scotland and Wales. We hold no cost data for Northern Ireland, so a home there is priced on the same bands and the result says so.

A battery is priced from the DESNZ statistics on MCS certified domestic battery installations for April 2025 to March 2026. DESNZ gives a median price per kWh of nominal capacity for three size bands: £1,300, £890 and £630. Nominal capacity is the size on the label, which is the size you pick, so the price is worked on that size as it is. The same rule as for panels applies at the band edges: a battery is never priced below the largest battery of the band beneath it. Solar with a battery is priced as the sum of the two.

The VAT Clock

Home solar panels and batteries carry 0% VAT until 31 March 2027 and 5% from 1 April 2027 (HMRC VAT Notice 708/6). The result shows both prices: the installed cost today, and that cost with 5% added and rounded to the nearest £100.

How We Work Out Payback and the 25-Year Return

Payback is the installed cost divided by the first year's saving plus export income: T = C / (S + X).

The 25-year net adds up each year's saving and export income, with output falling by 0.5% a year, then takes off the installed cost and one inverter replacement.

We hold electricity and export prices at today's rates for every year of the estimate, with no inflation and no discounting. That keeps the sum easy to check. It also means your real payback is shorter if prices rise and longer if they fall.

On the home page a battery is not given its own payback: its cost and its extra saving go into the one payback figure. The battery cost calculator shows the battery's own payback, which is its price divided by the extra saving it brings. A replacement battery within the 25 years is not counted.

The battery cost calculator can also count charging on a cheap night rate, and only when you give a day rate, a night rate and your cheap hours. You can type your own rates, or pick the named, dated example tariff (Octopus Energy Flexible Octopus on a two-rate meter, London, read 11 November 2026), which fills the two rate boxes. There is no default rate: Ofgem publishes no capped day rate or night rate, and suppliers' rates differ by region. The sum works day by day on the same measured homes as the self-use model. Those cheap-rate tables hold the middle home of each group only, so a result with a day rate and a night rate uses the middle home and not the cautious figure, and the result card says so. Solar fills the battery first, the grid fills the room left once a night at most, the battery only serves the hours outside the cheap window, and grid electricity is never counted as exported. Charging loses energy at the same round-trip efficiency of 89%, so charging at night counts for nothing when the night rate is not far enough below the day rate to cover that loss.

We then work out four yearly bills: your present single rate with no battery, the two-rate tariff with no battery, the two-rate tariff with the battery charged from solar only, and the two-rate tariff with cheap-rate charging too. The differences between them give three separate lines: the change from switching tariff alone, the saving from stored solar and the saving from cheap-rate charging. The battery's payback uses the saving against your present bill. If the switch alone costs you money, that cost is taken off the battery's saving. If the switch alone saves money, it needs no battery and is not counted for it. These cheap-rate values are our own calculation, adopted as the calculator method on 12 November 2026; the worked examples are ours. Tariffs with three price bands, the battery's charge power and a different standing charge are not modelled.

How We Set the Verdict: Good Fit, Borderline or Poor Fit

For a solar system, we call a result a Good fit when payback is 10 years or less and no Poor fit trigger applies, Borderline up to 15 years, and Poor fit beyond that or when a trigger applies. These limits are our rule, not a source figure.

The battery cost calculator judges the battery on its own payback. It is a Poor fit when that payback is longer than 10 years, and Borderline in the last 5 years before that. The 10 years is our rule: the shortest warranty length that the battery makers we read state, a warranty length and not a measured life. The 5 years is our rule too: the width of the solar system's Borderline band in the paragraph above, which is half that warranty length. So a battery is a Good fit only when it pays back within the first half of its warranty length, because our sum keeps the saving flat and does not reduce the battery's capacity with age.

Both payback limits are our own rule, not a source figure.

A tenant gets the estimate and a prompt to share it with the landlord, not a referral. The steps after a survey request are in what happens next. A survey request is also how Leads 2 Trade pays us. The verdict and the figures are the same whether or not you ask.

Where Every Input Comes From

Every input has a default and a named source or a plain note that it has none yet. The table lists the inputs, and whether you can change each one.

An input that is still example data shows here as a named gap, never as a figure.

How We Test the Calculator

After every change to the method or its rates, we rerun a fixed set of test homes and compare each result with a hand-worked answer. Three checks make up a run:

• Automated tests on the formula lines and the input limits.
• Hand-worked homes for each calculator, kept with the formula specifications.
• A second program, written without the calculator's code, that works those homes again and stops on any difference.

One more test guards a release: it fails while any rate in the calculator is still a working value. We publish no accuracy figure, because we have not yet compared estimates with installed systems.

Method Versions and What Changed

This is method version 1.0, in use since 14 November 2026. A change to a formula, a default or a verdict limit gets a new version number and a dated entry in the changelog.

Who Wrote and Checked This Method

The Solar Panel Cost Calculator Editorial Team wrote this method and maintains the calculator.

We are paid by Leads 2 Trade Limited when a homeowner we refer asks for a survey. You are never charged. It does not change our figures. Leads 2 Trade does not set our formulas or our rates.

If you find an error in a formula or a figure, tell us. Our editorial policy explains how to report it and how a correction is dated.

Questions About Our Method