Millions of UK households could save hundreds of pounds a year on energy bills if the government approved low-cost loans for solar panel installation, according to research by the New Economics Foundation and the Finance Innovation Lab. The thinktanks propose a scheme backed by the Bank of England that could benefit up to 8 million homes.
Solar panels with batteries cost about £6,000 upfront, putting them out of reach for many households. The scheme would allow the Bank of England to offer commercial banks low or no-interest funds, conditional on providing loans to households for solar installations at about 2% interest. This would give banks an incentive to participate while covering scheme costs.
Households would save an average of £250 per year on energy bills. Repayments would be about £45 per month, offset by bill savings of roughly £66. Even with loan costs, households would save money during the 15-year repayment period and beyond for the panels' remaining life. Loans could be recouped through energy bills or collected by banks.
The proposal could free up government funds from the £15bn Warm Homes Plan, which is under threat due to potential defence spending increases. Jesse Griffiths, chief executive of the Finance Innovation Lab, said the scheme would allow the government to spend Warm Homes Plan cash elsewhere. Previous schemes like the 'green deal' failed due to direct government costs, but using the Bank of England's preferential rates avoids this, as seen in Japan and China.
Energy Secretary Ed Miliband has championed rooftop solar. The UK's solar market is booming, with 25,000 small-scale installations in March alone, the highest monthly figure in 11 years. Last year, 258,000 homes and businesses installed panels, bringing the total to over 2 million. However, previous stop-start incentives depressed uptake, with only about 50,000 installations per year from 2016 to 2021.
