Since the introduction of the Feed In Tariff in 2010 solar photovoltaic (PV) panels have become ever more popular with self-builders and homeowners, and legislation has now followed suit with the Future Homes Standard dictating that all new-build homes will require the equivalent of 40% of the floor area in PV panels on the roof.
However, while free energy is clearly a good thing, solar panel installation still comes at a cost, and in order to reap the rewards of investment, you need to make sure you optimise the energy generated. And therein lies the conundrum. If you don't use all the energy, what are your options?
It's a question that's become even more relevant with this year's heatwaves that have generated more solar power than normal. So should you store and use, or always sell your excess energy? Here I explain what you need to consider.
How can you sell your energy?
While the Government has legislated that all reasonably sized energy supply companies must offer to buy your excess generation under the Smart Energy Guarantee (SEG), unfortunately, they do not set any rate that must be paid.
Energy companies can therefore pay you anything from 1p/kWh - 34p/kWh (these were the variation in the different export tariffs that I could find at the time of writing). Many of the better export tariffs are tied to specified import tariffs as the energy companies don't really want you to charge up your battery at night when the energy is 7p/kWh and then sell it back to them during the day at 34p/kWh.
There are certainly a lot of different tariffs out there, so you will need to take some time and do your homework to figure out what best suits your needs. But, in order to answer the question of whether to sell or use solar energy, what do you need to take into account?
What to consider when weighing up your options
I suggest you start with your lifestyle. How much energy do you use and when do you use it? Then check how much energy you are likely to generate from the solar PV on your roof and see what options you have to try and use as much of that generation as possible.
Your smart meter, if you have one, should be able to tell you when you use the most energy. Take note of when you use different appliances and how often. It may be that you do not charge the car every day, or use the laundry appliances on a daily basis. Some activities, like cooking, will usually happen around the same time each day, but the amount of energy you use each day could also be very different.
Then, look at how much energy you could generate from your solar PV – this should be in the installer pack within the system when it was installed. You can also check your generation meter and do the maths per year on use vs generation.
On average in the south of England, you should generate around 1100 units of energy per year for every kW of capacity installed. This falls to around 600W per kW of installed capacity in northern Scotland. So, if you put 10 x 400w panels on a roof, that equates to an installed capacity of 4000W (or 4kW).
I would expect that system to generate around 4400 units of energy per year in the south of England and maybe around 2400 units in northern Scotland.
Energy across the year won't be uniform
However, you also need to remember that the energy generated as a whole is not evenly spread over the year. In winter you generate very little, and in summer you will often generate more than you can use.
What are your options for selling vs using?
The immediate solution is a solar battery, as if you have one, then you can store the excess generation from the day and use it in your home at night. But, the main question here is how big is the battery and therefore how much can it realistically store?
On my home solar PV system, especially during the recent heatwaves, I have been generating over 30kWh per day on average. The reality? A decent battery is only about 13kWh capacity, so it means I rarely use the other 17kWh per day at home because I don't have things like air conditioning, and I don't need to cook or do laundry during the daylight hours every single day.
Are smart controls an option?
Even though a washing machine, tumble dryer or dishwasher could be used during the day (even if you were not there) if it had smart controls, or was linked to a smart home system, and your EV charger could be topped up to work in the day, the reality is as soon as you have a few sunny days in a row you cannot feasibly use all the generation.
The average household simply doesn't use that much hot water, or drive that many miles (and even if you did do a lot of miles, this makes it unlikely you'd be at home every sunny day to harvest the generation).
Excess, in this instance, should therefore be sold if it's available.
Gas users could also benefit from selling energy
Redirecting energy to the hot water cylinder can be helpful, but it is also not a full solution. If you redirect the energy, but you have an EV tariff, then you are only offsetting around 7p with the cheaper rates at night. It therefore means you would be better to heat the cylinder at night, and export the excess solar PV generation for 14p.
If you have any appliances that are heated by gas, such as gas boiler for example, you are not excluded from getting SEG payments. Many of the big energy suppliers will still pay up to 15p/kWh for exported electricity.
In this scenario, as gas only costs around 8p/kWh, you would not want to direct your solar PV generation to any appliances that are heated using gas. Always check with your supplier before doing so as energy export tariffs change with every deal.
The problem vs the solution
I understand that energy companies change their tariffs all the time, but the fact is, using or selling excess energy isn't always a simple answer if you want to manage and optimise your energy costs.
If you have installed an EV charger you will likely have opted for an EV tariff at home as it will usually give you a cheap rate (around 7p/kWh for six hours every night – usually from 11.30pm until 5.30am in the morning).
The rest of the day will be at a premium rate of around 25p/kWh. Therefore, on an EV tariff, the best use of energy is to try and shift most of your electricity use to the night.
But, that has its challenges. Who wants to do laundry at that time, particularly given concerns around using tumble driers overnight? Who wants to cook dinner at that time? And heat pumps and other electrical heating systems really do not like to run in bursts, they like to be able to run low and slow across the whole day, as and when required.
The solution
In my view, what we ideally need is a solar battery that can be charged up in summer and then used in winter. However, as this doesn't yet exist, and would need to be a big and expensive battery to operate in this way, for now, looking at some other smart tariffs is perhaps the best solution.
Take the Intelligent Octopus Flux tariff as an example. This gives you two different energy rates. The peak rate is currently around 28p/kWh – 32p/kWh, but, the peak time is only three hours, from 4pm - 7pm daily.
The rest of the day (21 hours) is between 21p/kWh - 24p/kWh depending on your location. The key detail here is that they will buy back any excess generation from your solar PV system at exactly the same rates.
So, if you have a solar PV array that generates more energy per year than your household uses, then you should end up being cost neutral.
You do need to have a battery to qualify, and there are eligibility criteria that need to be complied with, but knowing what your energy needs are and then studying the available tariffs is what will really pay dividends and is the only real way to decide how much of your excess energy you should try and use, and what you should sell.
If you are reading this as part of your research before deciding if you want to install solar panels or not, find out what else you need to do to assess your energy needs and decide which renewables are right for you.
And, if you're wondering what's fact and fiction, we dive into the most common solar myths so you have the right information to hand.
