Solar panel prices continued their drop in June and July and have dropped now over 60% since early 2011. A 4kWp system (16 solar panels) that used to cost £15.000 is currently available for around £6.000. On a South-facing roof in these panels will pay back about £1.000 per year, which is a return of 18%. Due to these price drops, solar panels still provide an excellent return despite the Feed-in-Tariff subsidy cuts. 

Solar Panel Price Index: from £15.000 towards £6.000 and below

Our price index for solar panels (incl. VAT and installation) is currently 60% lower than early 2011. Our expectation is that prices will drop towards £5.800 due to lower consumer demand after the Feed-in-tariff cut of August. Only a few installers are currently offering these low prices (lowest prices are even at  £5.500), but the experience learns that once a lower price point is set, the rest of the market will follow.

Year One Return: Still excellent after August FiT cuts

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, which is around 18% on the best available solar panel prices (around £5.800), as shown in the second graph. Surprisingly, the financial return is better than many months that were on higher Feed-in-Tariff rates due to the strong price drops of solar panels. We expect the solar panel return to rise slowly in the next few months due to further prices cuts from solar installers.