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Solar panels could be cheaper for people on lower incomes if the government stepped in to reduce the cost of loans, a report argues.

Solar panel installations can save households hundreds of pounds a year in energy bills, but at an initial cost of about £5,000 to £10,000 they are beyond the reach of many households.

Loans are offered by some commercial companies to enable people to repay the cost over a longer period, but these come at high interest rates that can wipe out most of the energy bill savings for the first decade.

The rising cost of gas is set to pile on further hardship this winter, with the cap on UK energy prices likely to rise by 4% from this October to the equivalent of £1,729 a year for the rest of the year, according to forecasts published this week.

The Common Wealth thinktank is urging the government to step in by providing a universal entitlement to solar panels, which would be paid for by “solar bonds”. These would be retail investment products that the government could offer on a similar model to national savings investments, or premium bonds – savers would receive interest payments on their cash in return for funding the scheme.

In this way, both households installing panels and those with spare cash to invest could benefit, according to Donal Brown, a senior researcher in energy policy and political economy at the Environmental Change Institute at Oxford University, and the lead author of the Common Wealth report.

Households would pay a much lower interest rate for their panels than they would on the open market – about half of the current market interest rates for panels, which are at about 9% to 10%.

Such a scheme could cut household energy bills by about £250 a year, Brown estimated. The loans, which would run to 25 years, could be repaid through households’ standard energy bills by an addition to the standing charge, and could be attached to the property so that if sold the loan would pass to the next occupier.

Brown said people were unlikely to be put off by the loan attaching to the property. “If you move out, the loan and finance stays with the home, and without any kind of complex means testing. This is a state-backed product that everybody would be eligible for. Default rates on the standing charge are incredibly low, so it’s a secure way of tying those repayments,” he said.

People with extra cash could benefit by investing in “solar gilts” or “solar bonds”, an investment vehicle that the government could offer, which would pay out interest of about 4% to 5% and would finance the purchase and installation of the panels for other people. “This is good retail politics that you could put Andy Burnham’s face on,” said Brown. “The government doing it would also drive down the installation cost.”

Solar is booming in the UK, as high energy prices and long sunny days have prompted thousands of people to investigate the clean energy option. The government is also making it easier for households without the cash for a conventional rooftop installation to buy “plug-in” models, which can be fitted to balconies or other outdoor spaces.

Gemma Grimes, the director of policy and delivery at the Solar Energy UK trade association, said: “We welcome Common Wealth’s proposal for green bonds as a further means of accelerating the rooftop revolution. Alongside initiatives in the [government’s] warm homes plan – which will include additional sources of finance for households – the creation of solar bonds could help many more households to benefit from solar and battery storage, providing lower energy bills and increased energy independence.”

The Department for Energy Security and Net Zero told the Guardian that ministers were already promoting clean energy and lowering energy bills, including by cutting VAT on electricity, which would take £45 off bills, and a further £150 from annual bills removed by changes to “green levies”, though that was partly offset by rising costs.

Miatta Fahnbulleh, the energy secretary, said: “Homegrown power is the only way to deliver energy security for the country and financial security for families. The British people are showing record demand for solar power, with almost 150,000 installations in the first six months of 2026 – equivalent to one every 74 seconds. We are also bringing in zero and low-interest loans for solar panels, batteries and heat pumps which could save families around £550 a year, alongside easy-to-install plug-in panels.”