How Solar Panel Companies Calculate Your Monthly Repayments

If you’ve seen offers for solar panels “from £40 a month,” you might be wondering how that figure is worked out. The truth is that many solar panel installers in the UK offer flexible payment terms, allowing homeowners to spread the cost of their solar setup over time, just like you might with a new boiler or kitchen.

In this article, we explain how those monthly payments are calculated and what’s included in the cost of a solar installation. While we don’t provide financial advice, this guide aims to give a general overview of how the numbers stack up.

What Makes Up the Cost of a Solar Panel System?

A solar panel installation is more than just the panels on the roof. Here’s what can be included:

• Solar panels (depending on your roof and energy usage)

• Inverter (essential to convert solar energy into usable electricity)

• Optional battery storage (stores excess electricity for use at night)

• Mounting hardware and scaffolding

• Electrical work and installation labour

• Monitoring systems and smart meters

• VAT (currently 0% for most residential systems under UK government incentives)

  
  

For smaller homes, a panels-only system (around 3-4 kWp) might cost in the region of £5,000 - £7,000. Larger homes or systems with batteries may come in at around £10,000 - £14,000.

How Monthly Payments Are Calculated

Installers typically offer finance options through personal loans, either in-house or via third-party lenders. The repayments are calculated based on:

• The term - usually running between 10 to 25 years

• Interest (APR) - often between 2% and 10%, depending on your credit score and interest rates

• Initial deposit 

  
  

Example: £40 per month for a typical home

Let’s take a common scenario:

• System size: 3.2 kWp (approx 8 panels)

• Total cost: £6,000

• Loan term: 20 years

• Interest rate: 5.5%

Monthly repayments work out at around £39.82, making the “from £40” claim representative of smaller systems designed for typical three-bed semi-detached homes with average energy use.

What If You Need a Bigger System?

Larger households or those with higher energy needs, such as electric vehicle owners, may need a 5-6 kWp system with a battery. These can cost £12,000 or more. But with a 25-year term at 6% APR, monthly payments could still be below £80.

While this isn’t a one-size-fits-all number, it demonstrates how finance can make solar more accessible across a range of property types and budgets. 

Every Home Is Different

It’s important to note that no two solar installations are the same. Factors like roof size, energy usage, home orientation, and whether or not you add battery storage will all influence the total cost and the monthly payment.

In Summary 

The advertised monthly figure is simply a reflection of three things: What system you install, over how long, and at what interest rate (APR).

It’s a legitimate finance structure used by many UK installers to make solar more affordable. Always speak to your installer about what’s included in your quote, and remember: finance is subject to eligibility and terms set by the provider.