Low-cost loans for solar panels could save households hundreds on bills – thinktanks

A proposal to use Bank of England-backed low-interest loans for rooftop solar could save UK households about £250 a year and be installed on 8 million homes at no direct cost to the government, according to research by two thinktanks [1]. The scheme, outlined by the New Economics Foundation and the Finance Innovation Lab, would allow commercial banks to access central bank funds at low or no interest on condition they provide loans for solar installations at about 2% [1]. Households would repay roughly £45 a month over 15 years, offset by estimated bill savings of about £66 monthly [1]. The upfront cost of a solar and battery system is about £6,000 [1]. Jesse Griffiths, chief executive of the Finance Innovation Lab, said the mechanism could free up the £15bn budget currently allocated to the Department for Energy Security and Net Zero's Warm Homes Plan [1]. "The government's (warm homes) plan relies on government spending to subsidise cheap loans, but our research shows that, for rooftop solar, cheap loans can be delivered without direct costs to government," Griffiths said [1]. He noted that previous schemes, such as the coalition-era Green Deal, failed partly because they carried a cost to the state [1]. The proposal arrives as small-scale solar installations accelerate. In March, 25,000 systems were registered with standards body MCS, the highest monthly figure in 11 years, and about 125,000 installations have been recorded so far this year [1]. The total number of UK installations now exceeds 2 million [1]. Energy Secretary Ed Miliband said a new rooftop solar panel is being installed every two minutes in 2025 [1]. Chris Hewett, chief executive of Solar Energy UK, said the market "has never been healthier" as installation prices near record lows while grid power costs remain high [1]. Griffiths estimated that around two-thirds of UK homes could benefit, with at least half classified as "highly suitable" for panels [1]. Turkey offers a contrasting example of electricity market pressures. The country uses more electricity per person than the global average, with wholesale prices heavily influenced by the cost of imported gas [2]. Imports of gas, mostly for power stations, are one of the country's main expenses, and winter generation is vulnerable to reductions in foreign gas supply [2]. Solar and wind power are now the cheapest generators of electricity in Turkey, and more of both are being built [2]. The Bank of England declined to comment on the loan proposal [1].