There are many different ways to invest money in Ireland, but when looking at the returns on savings accounts, shares, or government bonds, people should also consider the value of home upgrades.

Installing solar panels on a home can deliver substantial immediate savings on electricity bills, continue to deliver monetary returns after the initial cost has been paid for, and improve property values in the long term.

Solar panels can have a return on investment (ROI) of more than 15%, far exceeding the value of conventional savings accounts, and without the same risk levels of financial products with potentially higher gains, such as playing the stock market or investing in property.

Before putting money into any major investment, people should think about how much risk they are willing to accept, how much they need to gain from their investment, and when they need these gains to be realised.

Risk is something you cannot overlook before investing money in any product. Retrofitting your home with solar panels, or buying state savings products, carries very little risk, while other options such as buying shares carry a potential risk of losing the initial investment.

Different investments will have different ROIs. The best options from savings accounts in Ireland tend to max out at approximately 3% yearly interest for example, a very low ROI. Installing solar panels can have an ROI of more than 15%, while pension funds or other managed funds may also have similar returns.

Different investment options will pay out over different periods of time. Installing solar panels can have a very high payout over decades, but they must first pay off the upfront cost. Pension contributions are also a long term investment, while other savings products, stocks, or funds can offer quicker results.

A good rule of thumb for solar panels, particularly for domestic solar PV, is that they can pay for themselves in approximately 6-7 years. This makes them extremely cost effective and with a strong return on investment of 14% – 17%  per annum.

This means that for every €100 spent on solar panels, they will return approximately €14 – €17 each year. Solar panels have an expected lifespan of 25 – 30 years, which means that there is a huge profit potential long after the panels have paid for themselves.

The average size of solar PV systems installed in Q1 of 2024 was 5.5kWp. The median cost of solar panel installations before the SEAI grant was €11,386, with households receiving an average grant of €2,400. This leaves the average cost of solar panels at €8,986 after receiving the SEAI grant.

A 5.5kWp solar PV system could pay that back in 6 years depending on electricity prices and its location, giving it an ROI of 16%, far above most other financial investments.

The larger the scale of the solar PV system, the quicker its payback period tends to be. Some very large commercial solar panel installations of 200kWp or more can pay for themselves in as little as 4 years. Factors such as installation complexity will affect the cost and corresponding payback period.

The exact benefits of solar panels are tied to electricity prices, which can fluctuate greatly over time. While prices have declined in recent years, the massive spike which occurred with the invasion of Ukraine and COVID-19 shows that there are massive financial risks which come from remaining dependent on the electricity grid.

The cost of solar panels has also declined drastically in recent years as huge amounts of money have been invested in the industry.

Irish government policy has also made them more affordable, with direct grant funding of up to €2,100 available for homeowners and the elimination of all VAT on solar panels.

Pros

Cons

On top of the direct savings which come from having solar panels reduce electricity bills, they can also improve the value of the property by significant amounts.

Studies have shown that having solar panels installed can increase the price of home by up to 4% on average. This can increase the financial gains from solar panels by anywhere from €7,000 to €15,000 or more depending on factors such as where the property is located.

There are a number of reasons for this. The most obvious selling point is reduced energy bills on electricity and hot water if using a power diverter. The reduced carbon footprint which comes with renewable energy is also attractive to homeowners, as is less vulnerability to blackouts.

Installing solar panels will also help to substantially affect the BER of a house. A house’s BER is directly linked to its value, with an estimate that for every increase in rating level, property prices go up by 1%.

The average BER achieved by a property after having solar panels installed in the first quarter of 2024 was a B2. While houses are not required to have a BER done before getting solar panels installed, this is still indicative of a substantial improvement.

Where installing solar panels differs from other financial investments is that the initial sum as lost as the cost of their purchase and installation. This must be paid back first through money saved on electricity bills before they start generating a profit.

In comparison, if someone purchase government bonds or puts money in a savings account, they retain the initial sum along with the interest gained.

However, the ROI of solar panels is several times greater than most financial products. This means that even with a 6-7 year payback period they will generate far more income over the course of their lifetime.

See below the sum of value created by solar panels versus government bonds or savings after a period of 20 years.

In this scenario a 5.3kWp solar PV system takes roughly 7 years to pay for itself, but is still capable of creating more than €20,000 in value from money saved on electricity bills over the following 13 years.

For the purpose of these calculations, a 5.3kWp solar PV system is capable of generating up to 4,800kWh of electricity each year, and we use the current SSE Airtricity 24-hr smart plan unit price of 33.31c per kWh.

It should also be noted that the value of the personal savings account does not take into account DIRT which would be paid on the interest generated based on a €10k investment.

State savings products can also be an attractive investment for people looking for a safe place to put their money, though they won’t come with the same level

Compared with investing in stocks, one great advantage of investing in a fixed term state savings product is the low level of risk, and the certainty of what you can get from it. There is no possibility of the money being lost, with all savings being guaranteed by the state.

State Savings products are also exempt from DIRT, the tax paid on deposit interest on accounts of Irish residents. Unlike investing in managed funds or pension funds, there are also no fees associated with state savings products.

There are five main areas of state savings products currently available, three fixed-term bonds and two instalment savings schemes.

• National Solidarity Bond: 10 Year Bond – 2.01% AER – 22% Tax-Free Return after 10 years
• Savings Certificate: 5 Year Bond – 1.74% AER – 9% Tax-Free Return total
• Savings Bond: 3 Year Bond – 1.32% AER – 4% Tax-Free Return Total

These bonds allow for investments of up to €120,000 per person, with a fixed rate of return for the period of the bond.

Beyond fixed bonds, state savings also have Savings schemes, where monthly payments are made for a period of 12 months, and then that money is invested for a further five year period.

• Instalment Savings: 6 Year Total Bond – 1 Year of Savings, reinvested for a further 5 years – 1.75% AER – 10% Total Return
• Childcare Plus: 6 Year Total Bond – 1 Year of Savings, reinvested for a further 5 years – 1.75% AER – 10% Total Return

Unlike other investment funds, these state products have a fixed rate of return. This return is likely far lower than most private funds, but also carries near zero risk.

A simple way to invest money is to put it in a savings account, whether with an Irish bank or by looking abroad for more lucrative options. Banks will pay you interest on the money deposited in a savings account.

However, interest rates are not very high on Irish deposit accounts right now. If going with this option, your best bet is to lock the money away for longer. Fixed term deposit accounts typically offer more lucrative rates than on-demand accounts.

Savings accounts with Irish banks offer up to 3% AER as a maximum interest rate for the most part. This is a far lower ROI than can be achieved from solar panels reducing energy bills.

The chief advantage savings accounts have over other investments is that you can begin to see the results within the year.

Contributing to a pension can be one of the most cost-effective ways to invest money, with pension funds offering a wide range of options for risk and returns, with the goal of creating an income for your retirement.

The majority of occupations and private pension schemes in Ireland allow for income tax relief on pension contributions at your marginal rate, up to a certain threshold which is determined by your age. 

These percentage limits are:

Another benefit of putting money into a pension scheme is that you are able to draw down a tax-free lump sum of up to €200,000 from the pension on retirement.

However, the pension fund in question will eventually be subject to income tax when it is drawn down. In addition, for people who are looking for ways to benefit from their uninvested money right now, the eventual returns of a pension can be decades away.

A Managed Fund is essentially a way to allow financial professionals to decide the best way to invest your money, whether it is in stocks, commodities, bonds, or other markets.

The advantage of a managed fund is that investors are typically able to choose between funds with different profiles of risk and return. This allows a freedom of choice in what level of risk is acceptable, versus what profit investors hope to achieve on their investment.

While this is generally safer than for a first time investor to start dabbling in stocks themselves, the downside of having investment managers handle the work for you is that they will be taking fees.

There are many banks and other financial institutions offering investment fund options in Ireland. 

It can be hard to find a good way to invest your money today, but solar is one of the bet options out there for homeowners, one that they may be completely unaware of.

Retrofitting your home with solar panels combines the best aspects of all investment options. Solar power offers extremely high returns on the initial investment by saving hundreds of euro, at least, on electricity bills each year. There is little to no risk associated with home energy efficiency upgrades such as solar panels, as long as homeowners make sure to use a reputable installer with high quality materials.

There is an upfront cost with installing solar panels which must be paid paid back before they can start turning a profit. While this cost is not insubstantial, the level of return on investment combined with their 25-30 lifespan means that over the long term, solar panels will outperform other options.

Finding the right installer is key for home retrofitting to avoid the pitfalls of poor quality materials and shoddy installation. At Energy Efficiency Ireland we can connect homeowners with the best solar installers in the country who will work to create solar PV solutions for any needs.

The value of electricity produced by solar PV in this page is based on estimates using 435W panels on a south facing roof at 30°, with electricity prices of the SSE Airtricity 24-hr Smart Rate of 33.31c per kWh. Electricity prices may vary over time, and the output of solar panels can change based on location, climate, and orientation. Calculations also assume 100% consumption of electricity generated by the solar panels.

• Residential Property Price Index June 2024 – https://www.cso.ie/en/releasesandpublications/ep/prppi/residentialpropertypriceindexjune2024/additionalindicators/
• Daft Q2 2024 House Prices Report: https://ww1.daft.ie/report/2024-Q2-houseprice-daftreport.pdf?d_rd=1
• National Retrofit Programme Q1 2024 Report: https://www.seai.ie/publications/SEAI-Retrofit-Quarterly-Report-Q1-2024.pdf
• State Savings Products: https://www.statesavings.ie/our-products
• Solar Panels Property Values: https://www.architecturaldigest.com/reviews/solar/do-solar-panels-increase-home-value / https://www.zillow.com/research/solar-panels-house-sell-more-23798/