Solar panel prices continued their price drop into 2013 and have dropped by two-thirds in price since early 2011. A 4kWp system (16 solar panels) that used to cost £15.000 is currently available from £5.100. On a South-facing roof in these panels will pay back about £1.000 per year, which is a return of 20%. Due to these price drops, solar panels still provide an great return despite the Feed-in-Tariff subsidy cuts. 

Solar Panel Price Index: from £15.000 towards £5.100

Our price index for solar panels (incl. VAT and installation) is currently 65% lower than early 2011. More and more installers are currently offering prices below £6.000 The lowest prices are around £5.000, and we expect the rest of the market to follow this direction. Our expectation is that prices will stabilize around £5.000-£5.500 due to consumer demand picking up this Spring.  Some actual examples of low prices are:

Newcastle solar panels: £5.600 for 4kWp (Advanced Renewable Power)
Manchester solar panels: £5.100 for 4kWp (CTS Renewables)
Kent solar panels: £5.400 for 4kWp (RK Solar)
Bristol solar panels: £5.000 for 3.8kWp (Your Power UK)

Return excellent on 15.4 pence Feed-in-Tariff

On a South-facing roof in e.g. Exeter a 4kWp system will produce around 4.000 kWh per year. This will provide a year one return of around £1.000 (based on 15.44 pence FiT and 50% of electricity exported), which is around 20% on the best available solar panel prices (around £5.100), as shown in the second graph. The current financial return is better than nearly every month during the high (21p or 43p) Feed-in-Tariff rates due to the strong price drops of solar panels. We expect the solar panel return to stabilize in the next few months due to fewer prices cuts from solar installers.