Solar Panels vs Heat Pumps: Which Upgrade Saves You More Money in 2025?

Across the UK, rising energy prices have pushed many households to explore greener, more efficient alternatives. Two of the most popular solutions right now are solar panels and heat pumps. Both are backed by government schemes and can significantly lower household bills, but they work in very different ways.

The big question is: which option saves you more money — solar panels or heat pumps?

In this article, we’ll break it down by looking at costs, savings, grants, property suitability, and return on investment, so you can choose the best upgrade for your home in 2025.

What Are Solar Panels?

Solar panels (solar PV systems) capture sunlight and convert it into electricity. Even in cloudy UK weather, solar panels can generate power year-round. They work silently, require minimal maintenance, and can drastically reduce your reliance on the National Grid.

How Solar Panels Work

Daytime power generation – Panels generate electricity when exposed to daylight (not just direct sun).
Home usage – Electricity powers your appliances first, reducing the amount you need to buy from your supplier.
Exporting excess energy – Any unused power is fed back into the grid, and you can earn payments through the Smart Export Guarantee (SEG).
Battery storage option – Many households add a solar battery to store excess power for evenings or peak tariff times.

Average Cost of Solar Panels in 2025

3kW system: £5,000–£6,000
4kW system: £6,500–£8,000
6kW system: £9,000–£11,000
Solar battery (optional): £3,000–£6,000

Average Annual Savings

Typical household: £500–£900 per year on electricity bills
With battery storage: savings can rise to £1,000–£1,200 annually
SEG payments: £100–£200 per year from exporting power

Over 25 years, most households save £15,000–£25,000 with solar panels.

Key Benefits of Solar Panels

Generate your own clean electricity
Immediate reduction in bills
Long lifespan (25+ years)
Increases property value and EPC rating

What Are Heat Pumps?

Heat pumps are energy-efficient heating systems that use natural energy from the air, ground, or water to warm your home. Instead of burning fuel, they move existing heat into your property.

Types of Heat Pumps

Air Source Heat Pump (ASHP)
- Extracts heat from outside air, even in cold temperatures.
- Cheapest and most common option.
- Works best in insulated homes.
Ground Source Heat Pump (GSHP)
- Extracts heat from underground pipes buried in your garden.
- More efficient but requires significant outdoor space.
- Higher upfront cost.

Average Cost of Heat Pumps in 2025

Air Source Heat Pump: £7,000–£12,000
Ground Source Heat Pump: £15,000–£25,000

Average Annual Savings

Switching from electric heating: £900+ per year
Switching from oil heating: £500+ per year
Switching from gas: £150–£250 per year

Key Benefits of Heat Pumps

Reduce heating costs significantly if replacing oil or electric systems
Supported by grants like the Boiler Upgrade Scheme (BUS)
Works year-round for heating and hot water
Lower carbon emissions compared to gas/oil heating

Government Grants for Solar Panels and Heat Pumps

One of the biggest considerations when comparing solar and heat pumps is what financial support is available.

Solar Panels – Available Funding in 2025

ECO4 Scheme – Low-income households may qualify for free solar panels as part of a whole-house energy upgrade.
Smart Export Guarantee (SEG) – Earn money by selling excess electricity back to the grid (rates vary by supplier).
Local Authority Schemes – Some councils offer additional support under the Home Upgrade Grant (HUG2).

Heat Pumps – Available Funding in 2025

Boiler Upgrade Scheme (BUS) – Provides up to £7,500 towards installation of a heat pump.
ECO4 Scheme – In some cases, heat pumps can be installed for free for eligible households.
Regional Incentives – Certain devolved governments (e.g., Scotland’s Home Energy Scotland grants) offer extra support.

Grants make both technologies far more affordable and can dramatically reduce payback times.

Installation and Property Suitability

Solar Panels Suitability

Solar panels are a flexible option for most properties.

✅ Ideal for south-facing roofs with little shading
✅ Work on terraced, semi-detached, detached, and bungalows
✅ Suitable for urban and rural locations
❌ North-facing or shaded roofs reduce efficiency
❌ Roof size may limit system capacity

Heat Pump Suitability

Heat pumps are slightly more complex and depend on insulation and heating systems.

✅ Best for well-insulated homes with EPC rating C or above
✅ Ideal for rural, off-gas properties (currently using oil or electric heating)
✅ Works especially well with underfloor heating
❌ May require radiator upgrades or larger pipes
❌ Ground source systems need outdoor space for pipe trenches or boreholes

Running Costs and Maintenance

Solar Panels

Running costs: almost none (panels have no moving parts).
Maintenance: occasional cleaning, inverter replacement after 10–15 years (£800–£1,200).
Lifespan: 25–30 years, often with 20–25 year performance warranties.

Heat Pumps

Running costs: lower than oil and electric heating, but depend on electricity prices.
Maintenance: annual service recommended (£150–£200 per year).
Lifespan: 15–20 years, with warranties of 5–10 years.

Return on Investment (ROI)

When deciding between solar and heat pumps, ROI is crucial.

Solar Panels ROI

Payback period: 7–10 years (faster with high usage + battery storage).
Lifetime savings: £15,000–£25,000+.
Increases property value by up to 4%.

Heat Pump ROI

Payback period: 10–15 years, depending on the system being replaced.
Lifetime savings: £5,000–£12,000.
More valuable in off-gas areas (oil/electric homes).

Which Saves You More Money – Solar or Heat Pumps?

The answer depends on your current energy system, property type, and funding eligibility.

If you spend most on electricity, solar panels usually deliver faster and higher savings.
If you spend most on heating with oil or electric systems, a heat pump may cut bills more effectively.
If you’re on mains gas, solar panels will almost always be the better financial choice.

Best case scenario: install both. Solar panels can power your heat pump, creating a self-sufficient, low-carbon home with maximum long-term savings.

Pros and Cons of Solar Panels vs Heat Pumps

Solar Panels – Pros

Lower upfront cost
Faster ROI
Works for most UK homes
Long lifespan with minimal maintenance

Solar Panels – Cons

Doesn’t directly reduce heating bills
Roof suitability is key

Heat Pumps – Pros

Cuts heating costs if replacing oil/electric
Supported by £7,500 grants
Provides heating and hot water

Heat Pumps – Cons

Higher upfront cost
Requires good insulation
Less savings if replacing an efficient gas boiler

Final Verdict – Which Should You Choose in 2025?

If your priority is quick savings on electricity bills, solar panels are usually the smarter choice. They’re cheaper to install, deliver a faster ROI, and work in most UK homes.

If your priority is reducing heating costs and you qualify for a heat pump grant, a heat pump may save you more in the long run — especially if you live in an off-gas property.

The best option for many homeowners is a combined system: solar panels to generate electricity, and a heat pump to efficiently heat the home. Together, they can slash bills by up to 70% and future-proof your property.

Check If You Qualify for Solar or Heat Pump Funding

Not sure which upgrade is right for your home? Use our free comparison tool to:

Check your eligibility for ECO4 grants
See if you qualify for the Boiler Upgrade Scheme
Compare quotes from accredited UK installers

👉 [Check Your Eligibility Today] and discover whether solar panels, a heat pump, or both could save you the most money in 2025.