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Solar, batteries and smart tariffs — how the money actually works

Where solar savings really come from, what a battery adds, and how export payments and time-of-use tariffs change the sums — the logic of our simulator.

The economics in one paragraph

A south-ish-facing UK roof with ~4kWp of panels generates roughly 3,400–4,000kWh a year — comfortably more than a typical household’s 2,700kWh of annual electricity use, but not generated when you use it. The value of each generated unit depends entirely on where it goes: used directly in the house, it saves you the full import price (~25–27p/kWh under recent caps); exported, it earns only what your supplier pays (anywhere from ~4p to ~15p+/kWh). That gap between import and export value is the whole game — every piece of solar economics (batteries, diverters, smart tariffs) is an attempt to capture more of the high number and settle for less of the low one. This guide explains the machinery; the Solar & Battery ROI Simulator runs your actual numbers, with honest uncertainty ranges.

Panels alone

A typical 4kWp install is quoted at about £5,000–£7,500 (0% VAT until 2027), though a fairly priced one lands nearer £1,100–£1,500 per kWp — £4,500–£6,000 — which is the gap the quote checker exists to catch. Without storage, a working household uses maybe 30–45% of generation directly; the rest exports. Combining self-use savings and export income, annual value is commonly £600–£900, for a payback of 7–11 years against a 25-year+ panel life with minimal maintenance (inverters need replacing once, ~£1,000, around year 10–15). Sensible, unspectacular, and quite robust — the main killers are a shaded or north-facing roof and an inflated quote. Get three quotes from MCS-certified installers; per-kW pricing varies by a factor of two for identical hardware, which is exactly what the simulator’s quote checker flags.

Export payments: SEG and its betters

The Smart Export Guarantee obliges suppliers to pay something for export, but “something” is the operative word — rates range from token (~4p) to genuinely good (~15p+, usually conditional on taking that supplier’s import tariff or buying their kit). Export is metered via your smart meter, so a working smart meter is effectively a prerequisite. Shopping your export rate is as valuable as shopping your import rate — on a 4kWp system exporting 2,000kWh, the spread between 4p and 15p is over £200 a year.

What a battery changes

A 5–10kWh battery (roughly £400–£550 per kWh installed, so £2,000–£5,500, and cheaper per kWh alongside panels) stores daytime surplus for the evening, lifting self-use from ~35% toward 70–85%. But its best trick is independent of solar: tariff arbitrage. Time-of-use tariffs sell off-peak electricity at 7–12p/kWh overnight; a battery charged cheap and discharged through the day earns the spread between off-peak and peak rates every single day, winter included — precisely when solar is weakest. Batteries add £300–£700 a year depending on size, tariff and usage; paybacks span ~6–12 years against a warranty life of 10–15 years, so the case ranges from clearly good (big evening usage, good tariff) to marginal (small usage, no smart tariff). It is genuinely case-by-case — which is why the simulator treats the battery as a separate decision from the panels.

Smart tariffs: the free upgrade

Even with no hardware at all, time-of-use tariffs reward shifting usage (dishwasher, washing, EV charging) into cheap windows. With an EV, dedicated tariffs at ~7p/kWh overnight make home charging cost ~2p per mile — often the single biggest saving in this entire subject area (the smart tariffs & EV charging guide does the full sums). With solar and a battery, an agile or off-peak tariff plus a good export rate can push effective electricity costs remarkably low. The prerequisite for all of it is a functioning smart meter.

The order of operations

  1. Fix the fabric first — insulation beats generation on payback.
  2. Get a smart meter and shop your tariff — free, immediate.
  3. Panels, if the roof is decent — sized generously, since marginal panels are cheap.
  4. Battery, if evening usage and available tariffs justify it — run it as its own investment case.
  5. Consider the interactions: a heat pump raises electricity usage and therefore the value of both panels and battery.

And keep expectations honest: this is a solid ~7–10% tax-free “return” with real uncertainty bands, not the free-money story installers sell. Check any quote against the simulator before signing.

The one-line summary

Solar pays through self-use, batteries pay through self-use plus cheap-overnight arbitrage, and smart tariffs pay with no hardware at all — do the maths on your own numbers, shop the export rate as hard as the import rate, and never sign a quote you haven’t sanity-checked.

Last reviewed: July 2026.