Solar vs Insulation: Where to Spend Your Money

If you've got a limited budget for improving your home's energy efficiency, the question of whether to prioritise insulation or solar panels is genuinely important. The answer is almost always: insulate first. Here's why — and when solar should come first instead.

Cost and Savings Comparison

The figures make the case clearly: basic insulation measures (loft, cavity wall, draught-proofing) offer faster payback and lower cost than solar. They should almost always come first.

The exception is solid wall insulation, which is expensive and has a very long payback. If your home has solid walls, solar may offer better value than external or internal wall insulation.

Why Insulation Should Usually Come First

1. It Reduces the Problem, Not Just the Bill

Insulation reduces how much energy your home needs in the first place. Solar generates energy to offset what you use. It's more effective to need less than to generate more.

2. It Works 24/7, 365 Days

Insulation saves energy day and night, summer and winter. Solar only generates during daylight hours and more in summer than winter — precisely when you need heating least.

3. It Improves Everything Else

A well-insulated home:

• Needs a smaller heat pump (cheaper to buy and run)
• Gets more value from solar because less energy is wasted through the building fabric
• Stays comfortable at lower heating temperatures
• Has a better EPC starting point for solar to improve further

4. Basic Insulation Is Dramatically Cheaper

Loft insulation and cavity wall insulation combined typically cost £1,000–£2,000 and save £300–£600/year. That's a 2–4 year payback — far better than solar's 7–11 years.

When Solar Should Come First

Despite the general rule, there are situations where solar is the better first investment:

Your Home Is Already Well-Insulated

If you have 270mm+ loft insulation, filled cavity walls, double or triple glazing, and decent draught-proofing, there's little insulation left to add. Solar is the logical next step.

You Have High Electricity Bills

If your electricity usage is high (EV, working from home, electric heating), solar directly offsets expensive grid electricity. The savings are on electricity, not heating, so insulation's impact is less relevant.

Only Solid Wall Insulation Remains

If your home has solid walls (pre-1930s, typically) and you've already done loft insulation and draught-proofing, the remaining insulation option is solid wall insulation at £8,000–£22,000 with a 25–50 year payback. Solar at £6,000–£8,000 with a 7–11 year payback is clearly better value.

You're Planning to Sell

Solar panels are a visible improvement that buyers notice and value. Insulation is invisible. If property value improvement is a goal, solar has a stronger impact on perceived value.

The Optimal Spending Order

For a typical semi-detached house with a £10,000 budget:

Step 1: Draught-proofing (£150–£300) Seal gaps around doors, windows, letterboxes, and loft hatches. Payback: under 1 year.

Step 2: Loft insulation top-up (£300–£500) Bring existing insulation up to 270mm. Payback: 2–3 years.

Step 3: Cavity wall insulation (£500–£1,500) If you have unfilled cavity walls. Payback: 2–5 years.

Step 4: Solar PV with remaining budget (£6,000–£8,000) Now your reduced heating bills mean your electricity bill is a larger proportion of total energy costs, making solar more impactful.

Total budget: ~£8,000–£10,000 Combined annual saving: £800–£1,400 Overall payback: 6–9 years

Compare this with spending the entire £10,000 on a larger solar system with no insulation improvements — you'd save less overall because you're still losing heat through the building fabric.

LONGi Hi-MO X6 450W

£85

watt peak

450

efficiency pct

23

dimensions mm

1722 x 1134 x 30

weight kg

21.3

View on Amazon

Affiliate link — we may earn a small commission at no extra cost to you

What About Grants?

Both insulation and solar have grant options that can change the economics:

For insulation:

• ECO4 scheme: Free insulation for eligible households (means-tested)
• Home Upgrade Grant: For off-gas-grid homes
• Local authority grants: Various schemes across the UK

For solar:

• ECO4: Can include solar in some cases
• Home Upgrade Grant: Can include solar for eligible homes
• No universal solar grant exists in England (Scotland has some schemes)

If you qualify for free insulation through ECO4, take it — then spend your own money on solar. This gives you the best of both worlds.

JA Solar JAM54D41 450W N-type TOPCon

£82

watt peak

450

efficiency pct

22.8

dimensions mm

1722 x 1134 x 30

weight kg

21.5

View on Amazon

Affiliate link — we may earn a small commission at no extra cost to you

The Combined EPC Effect

Both insulation and solar improve your EPC. The combined effect can be dramatic:

Getting from F to B is realistic with a combined approach, whereas solar alone might only get you from F to E.

Bottom Line

The rule of thumb is simple:

1. Spend the first £1,000–£2,000 on insulation — it's the fastest-paying investment
2. Spend the next £6,000–£8,000 on solar — it's the best investment once the basics are done
3. The combination outperforms either alone — both in savings and EPC improvement

If your home is already well-insulated, skip straight to solar. If it's not, a small insulation investment first makes your solar investment work harder.

For details on how solar affects your EPC specifically, see our EPC improvement guide.

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