Solar panels vs heat pumps - which will save more on your energy bills?

If you’re looking to decarbonise your home, improve its efficiency and save money on your energy bills, you might want to consider investing in solar panels or a heat pump

Solar panels vs air source heat pumps
(Image credit: Getty images)

Solar panels or a heat pump? Both can improve your home’s energy efficiency, reduce your carbon footprint - and crucially save you money on your energy bills.

Heat pumps use electricity to extract heat from the air and pump it into your home. This thermal energy can be used to heat your water supply and keep your home warm. 

Heat pumps produce so much thermal energy that they can dramatically reduce your dependence on your energy supplier and therefore save you money on your energy bills. 

Because all gas boiler installations will be banned across the UK by 2035 (opens in new tab), you might already be considering taking the plunge with an air source heat pump (ASHP).

Alternatively, you may want to jump on the solar panel bandwagon: solar power was fitted on 14,000 homes in September, according to the Microgeneration Certification Scheme (MCS). 

This is the highest number since the government removed tariffs that paid homeowners for generating electricity in 2019. 

Put simply, solar panels generate electricity which can be used to help power all the electrical systems in your home. 

Here we put heat pumps vs solar panels in a head-to-head.

Solar panels vs heat pumps

The pros of heat pumps

Heat pump mounted on brick wall

(Image credit: Getty images)
  • Heat pumps emit no carbon dioxide, nitrogen dioxide or particulates. They can help to improve the air quality both inside and outside the home.
  • Heat pumps are much more efficient than gas boilers and produce three or four times the energy they use.
  • Heat pumps are reliable, require little maintenance and may last 20 years or more before they need replacing. 
  • The government’s Boiler Upgrade Scheme (opens in new tab) is offering £5,000 grants towards heat pump installation until April 2025.
  • Energy firms Octopus Energy and Eon supply and install heat pumps: a good option if you struggle to find a local installer or are intimidated by the technology. Octopus is even working towards making it cheaper overall in the near future. 
  • Most heat pumps can be installed without planning permission, though check with the local authority if you live in a listed building or by a conservation area.

The cons of heat pumps

Unfortunately heat pumps have several downsides:

  • An air source heat pump costs between £7,000 and £13,000 according to the Energy Saving Trust (opens in new tab). With the government’s £5,000 grant it will still cost a significant amount.
  • Necessary additional upgrades can add thousands of pounds to the overall cost. This is because Britain has some of the least energy-efficient housing in Europe so it’s highly likely your home will need better insulation, double glazing, underfloor heating or different radiators. This is something the Brookes family discovered when installing a heat pump: “We are spending £20,000 overall because we need a different type of radiator and pipework to make it work. We also have to insulate the loft and cellar, and stud out one particular wall.”
  • Heat pumps use electricity and are therefore pricey to run. Remember, electricity is three to four times more expensive than gas per unit (opens in new tab) so energy bills can actually increase after getting rid of a boiler. 
  • Heat pumps only produce heat and cannot generate electricity so can only provide energy for certain systems within your home.
  • It’s difficult to find an installer and they are often booked for months. This is because the heat pump industry is still small in the UK.
  • Heat pumps do not warm a home as quickly as a gas boiler. Naturally cold homes will especially heat up much more slowly.
  • Heat pumps can be awkward to install in homes with combi boilers which will need to find space for a hot water cylinder.
  • Heat pumps can be noisy due to their fans though manufacturers are working to make them quieter.
  • Some homes do not have a suitable outside space for a pump.

The pros of solar panels

Overhead aerial view of a modern housing development with solar panels installed on the rooftops

(Image credit: Getty images)

Since 2010, the cost of solar panels has fallen by more than 60%, according to the Department for Business, Energy and Industrial Strategy. There’s lots of positives to installing solar panels.

  • Solar panels could reduce your annual energy bill by £522, according to the Eco Experts (opens in new tab).
  • Solar panels now pay for themselves within six years at the current energy price freeze, according to trade body Solar Energy UK. This will fall to two years if energy prices double in April 2023.
  • You can buy solar panels via your local council and group-buying schemes such as Solar Together (opens in new tab). This aims to provide more competitive pricing than going it alone as an individual homeowner. For example, Solar Together claims to have secured savings of 20%-35% against the average market price. This is something Natalie Ward signed up for when she spent £8,000 on solar panel installation on her house roof: "I’ve done it along with 600 other local households!" 
  • Solar power allows you to generate most of your electricity for lights and appliances
  • Solar power can also power an electric car. The average British car drives 5,300 miles a year, according to the National Travel Survey. At 0.35kWh per mile, you’ll need 1,855kWh of solar power or around two-thirds of what a typical solar panel system generates annually. (You’ll need to buy and install an electric car charger to do this too which adds around £1,000 to overall costs.)
  • You can sell electricity back to the National Grid or an energy supplier via the Smart Export Guarantee (opens in new tab), and typically earn £73 per year this way, according to the Eco Experts (opens in new tab). This is important if you don’t have a battery to store unused daytime electricity. On average you can sell it to the National Grid directly for 5.5p/kWh. If you’re an Octopus customer you can sell it to Octopus for 15p/kWh, the best deal on the market right now. Meanwhile, EDF pays 5.6p/kWh to its customers and 1.5p to customers of other suppliers. E.On pays 5.5p/kWh to its customers and 3p per to other customers. British Gas pays 3.2p/kWh to all customers irrespective of the supplier, Shell and SSE 3.5p and Scottish Power 5.5p.
  • Solar power systems are easy to fit, even in old homes. 
  • Innovations mean you no longer have to put up with ugly black glass.

The cons of solar panels

  • The average solar panel system for a three-bedroom house costs £5,420, according to the Eco Experts (opens in new tab). The Energy Saving Trust has an online calculator (opens in new tab) to work out your home’s likely installation costs, potential annual energy bill saving, potential CO2 saving and potential lifetime net benefit.
  • The cost of a battery - which you’ll need to use your solar energy at night when the sun doesn’t shine - adds £4,500 to the overall installation cost, according to the Eco Experts. This would allow you to be self-sufficient in a power cut or during potential blackouts in 2023 that the National Grid has forewarned. However, the best batteries last about 15 years.
  • Solar power won’t quite cut it when it comes to heating. You can easily generate most of your electricity for lights and appliances, but add heating and it gets tricky. Put simply, thermal panels are limited when the sun isn’t constantly shining so you need an extra source of hot water to help.

The verdict - solar panels save you more

There are similar installation costs but solar panels will save you more money overall. 

Of course, you can save even more money and carbon by combining solar panels with an electric car, battery or heat pump.

Ultimately, before choosing between a heat pump and solar panels, consider:

  1. If it’s thermal energy or electricity you want to generate
  2. How much energy you want to generate
  3. What uses you want to put it to
  4. How long you want your renewable energy system to last 
  5. How much you can afford to pay upfront and essentially invest in your home

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Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.