Solar power systems: A complete guide
Solar power is a viable renewable energy source for consumers looking for a sustainable way to reduce electricity bills.Solar power is the process of converting sunlight into electricity using photovoltaic solar panels that harness the suns energy and convert it into electricity that can be used directly, or stored in batteries.
Our Solar power guide will help you evaluate the viability of using solar energy in your home or business. Our guide covers; solar power systems, rebates, feed-in tariffs, prices, payback periods, the suitability of your property for solar, buying tips and an explanation of how solar power works.
Additional resource: Our guide to selecting the best solar panels for your home.
Is solar energyfinancially rightfor you?
Solar power is a long-term investment. Whether it’s financially sustainable is dependent on the cost, the estimated payback and any government rebates and feed-in tariffs.
Use our solar calculator
You can use our solar power calculator to see if solar is financially worth it for your home or business. To get started all you need is the amount you pay for electricity and an estimate of your electricity consumption habits. It’ll provide an accurate assessment of the cost, expected payback, ROI, electricity savings and environmental benefits of a solar power system for your property.
use our solar calculator
Solar payback and savings
It’s not uncommon for solar panel systems to payback within 4 – 7 years, however, the payback period varies according to several solar power and property variables including system cost, electricity cost and when you use your power.
The image below shows solar power and financial cost and savings results from our calculator for a typical 5kW solar panel system in NSW.
You’ll receive a far more accurate assessment of what solar can do for you when you input your details into the calculator.
Solar power system prices
The below table indicates the average industry cost of a solar power system of different sizes. These prices are a good starting point before delving further into comparing the quality of different brands and installers.
|3kW||$4,000 – $5,500|
|5kW||$4,500 – $7,500|
|6.6kW||$5,000 – $8,500|
|10kW||$9,000 – $13,000|
The prices above include the solar energy rebate which varies according to how much electricity is produced by a solar power system.
The cost of installation is important, but you should consider the annual and lifetime savings that your investment in solar power can potentially bring.
How many panels do I need?
One question that stumps many consumers new to solar is how many panels do I need to power my home? If you have the roof space, and the budget, we typically recommend that buy a larger system like a 5kW or 6.6kW system. Solar power systems this size deliver better value than smaller systems.
You can of course size your system based on your electricity usage. If you want to add battery storage, then this will also impact on how many panels you need.
Further reading: How many panels do I need? A system size guide.
Size dimensions of solar panels
In terms of physical size, a 6.6 kW system can consist of 20 x 330W (Watt) modules or more likely 18 x 360W panels. The dimensions of each module, regardless of the system, will be roughly 1.0 x 1.7m2. The 18 module system is smaller and takes up less roof space.
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Rebates and incentives
There are three forms of solar incentives you should be aware of:
- Federal solar rebate
- Any state government rebate schemes
- Feed-in tariffs
The good news is if you go solar, you’ll receive a solar rebate from the Australian government. Although the incentive is slowly being phased out over the next nine years, it’s still a generous incentive that can reduce the cost of solar installation significantly. To receive the government rebate, your system components need to be approved by the Clean Energy Council and, your system needs to be installed by a CEC accredited installer.
The rebate varies depending on how much solar energy your system generates. The table below shows the solar rebates for different size systems.
|3kW||$1,200 – $1,600|
|5kW||$2,000 – $2,700|
|6.6kW||$2,800 – $3,600|
|10kW||$4,000 – $5,400|
Solar feed-in tariffs
Once your system starts generating solar power, you’ll receive financial credit from your retailer for any excess energy not used directly by your property. This financial credit is called a feed-in tariff and is separate to the solar rebate. The feed-in tariff is credited for each kilowatt-hour (kWh) of electricity exported back to the grid. The credit amount varies by state and the retailer. We list the average feed-in tariff by state below:
Is your property right for solar power?
There are several site-specific and geographical factors that impact the amount of solar energy that your system can generate for your home or business. While these variables may not impact on your purchase decision, they’ll nonetheless affect the output of your solar system. As such, they’re all factored into our calculations based on your inputs.
What impacts solar power output
Several factors affect the amount of electricity a solar power unit can produce, these include:
- Panel orientation
- Panel angle
- Panel temperature
- Shading or obstruction
1. Panel orientation
A northern orientation is best in the southern hemisphere for maximising solar output. However, a rooftop will still likely be suitable even if it doesn’t face north. Consider your roof’s orientation in conjunction with your consumption habits. An east/west orientation may suit your household if you use power at either end of the day, as the east facing modules generate electricity in the morning while the west facing panels do so in the late afternoon.
2. Panel angle
The pitch or angle of your rooftop is also a factor that affects solar output. Year round, the optimum panel angle is equal to the latitude of your location, e.g. Sydney 33.87°. If you have a flat roof, the system can be installed on an incline to achieve better output.
3. Panel temperature
The hotter your system gets, the less efficient it becomes. Higher quality panels are more effective at dealing with the effects of temperature.
4. Shading or obstruction
If your system is subject to shading or obstruction throughout the day, this will affect its output. If only some of your modules are obstructed from sunlight, the use of microinverters or power optimisers will allow your system to perform better under shading conditions.
The different types of solar power systems
There are different types of solar power systems available for domestic and commercial use:
- A solar panel system
- A hybrid system (panel and battery system)
- A battery ready system
- A stand-alone system
If you already own a solar panel system, you can upgrade by adding a battery to form a hybrid system.
How to select the best solar energy system for you
For most people, choosing a system type is based on consumption and usage habits, savings goals and of course, budget. We review each of the solar power systems:
1. Solar panel system
A grid-connect solar panel system is still the most suitable and viable system for most consumers. A 5kW solar system costs between $5,000 – $7,500 and is typically enough to power the average Australian household. Any excess energy is exported back to the grid where you will receive a feed-in tariff credit. With the lower cost of installation and higher feed-in tariffs, grid-connect systems can pay back within 4 – 7 years.
Solar panel lifespan
Importantly, all solar panels are expected to have a lifespan of 25+ years; however, the inverter, components used and the quality of the install can seriously impact on the performance of the system.
2. Panel and battery systems (hybrid systems)
Hybrid systems, also called, panel and battery systems, are grid-connect units that include solar panels, an inverter and a battery. Excess energy charges the battery so that it can supply electricity to your property when the sun is not shining.
Hybrid systems are far more expensive
Hybrid systems are far more expensive due to the high cost of solar battery storage in comparison to solar panel systems. As a guide, a 6.6kW solar system with a 10kWh battery may cost between $15,000 – $20,000. Payback on panel and battery systems is often around the 10-year mark; longer than for solar panels and payback time varies significantly depending on how much electricity you consume when you use it. Bear in mind, the battery storage component of the system will likely only last ten years.
Hybrid systems can provide backup power in the event of a blackout. Backup capability typically adds to the cost of the system.
Adding a battery
If you already have solar installed, you can add a storage solution to it and convert it to a hybrid system. We have developed a solar battery storage calculator that calculates the energy and financial effectiveness of adding a solar battery to your existing system.
3. Battery ready systems
Battery ready systems are for consumers that intend to install solar battery storage within 2-3 years. Battery ready systems are slightly more expensive than a straight solar panel system as a hybrid inverter is needed to accommodate a solar battery at a future date.
4. Off-grid systems
An off-grid system is a stand-alone unit that does not have a connection to the electricity grid. Typically, off-grid systems involve solar modules and a large amount of battery storage, as they need to power your entire home in even during winter seasons. Off-grid systems are significantly more expensive, and we only recommend you go off-the-grid if the cost of connecting your property to the grid is prohibitive. As a guide, it may cost anywhere between $30,000 – $50,000 for an off-grid system to power the average household.
Solar power systems: Batteries and components
Is it worth getting a battery?
One of the key decisions to make when purchasing a solar power system is whether to add a battery. Due to the current high cost of solar batteries, for most consumers, it makes economic sense to opt for solar system without a batteries. However, for households that use a lot of power in the morning and evening peak periods, and can afford the upfront cost, a hybrid system can generate good financial savings, paying off within ten years.
The 10-year payback period is key to hybrid systems, because the batteries aren’t likely to last beyond ten years.
Hybrid systems are suitable for:
- High evening and morning peak energy users
- Users that are prepared to pay more than $15,000 for a system
- Users motivated to minimise reliance on grid power
Other system components
We take a look at other system components that you may select when purchasing a system:
- Solar batteries
Solar batteries allow you to store energy produced by your solar power system for later use. Sizes start from as little as 1.2kWh and go up to 14kWh for domestic use, though you can combine multiple batteries for greater capacity.
Inverters are a necessary component of every type of solar system. They convert the direct current (DC) generated from photovoltaic modules into alternating current (AC) that you can use in your home or business. The quality of the inverter you select can have an impact on the performance and longevity of your system. As such, there can be significant price discrepancies between cheap inverters and top of the line models. A good inverter will generally last about 10 – 15 years.
If shading is an issue at your property, or you want a multi-orientation installation, you should strongly consider microinverters or power optimisers. A typical string inverter will shut down if one panel in a series stops generating power, whereas microinverters allow each module to operate independently. Microinverters are more efficient, but also more expensive, and you can expect to pay around 15 – 20% more for the system.
Buying solar power
Once you have an idea of the expected costs, the system type and size you need; the next step is obtaining different quotes so you can compare prices, brands, warranties, and select a good reliable solar installer. Here are the steps to follow:
1. Get quotes
We recommend comparing quotes from different solar companies before making a purchase decision. We provide a quote service and ensure that the Clean Energy Council accredits all installers. We vet all of the installer companies that offer quotes to customers through our website and turn many companies away.
2. Paying for your solar system
Investing in a solar power system can involve a significant financial outlay. If you’re not in a position to pay cash upfront for a unit, it’s possible to lease a system or take out a solar loan.
Both leasing and financing will add to the overall cost of the system, and increase your payback period and reduce your savings slightly, so it’s important to consider how you plan to buy the system in the solar power evaluation stage.
Leasing and financing
Solar leasing involves paying a monthly fee to the system owner so that you can benefit from its output. Solar financing allows you to own the system right away, but you’ll pay interest on the amount of the loan.
Solar panel installation:obtaining quotes
The installation of your solar power system is the most important step in the process. Finding and selecting a reputable installer company is critical to the safety and ongoing performance of your system. We recommend getting several quotes from installer companies before committing to a purchase. All suppliers you approach should be fully accredited by the Clean Energy Council.
What should be on your quotation
When you see prices quoted for a solar energy system, this quote should include the panels, inverter, your applicable solar rebate, GST and the cost of installation. State rebates may be separate to your quote.
It doesn’t just come down to price
Comparing solar quotes is not strictly a price comparison exercise; you are comparing: different products, warranties, reputation, accreditation and the quality of the craft of install.
The price of each quote will likely differ depending on:
- The quality and size of the system
- The quality and size of the inverter
- Type and quality of other components, i.e. mounting, cabling, etc.
- Height and accessibility of the rooftop
- The type of roof, i.e. tiled, tin, slate etc.
- Performance, product, service and entire system warranties
- After sales service and code of conduct
Best value for money
When comparing solar quotes, you will need to factor in the price, but more importantly, you should consider value for money. A cheap system may have a faster payback, but the risk of it failing within five years may be far greater, and; it is likely to deteriorate faster. Better value for money is likely in the long term with a good quality system installed by a reputable company.
An accredited solar PV installer
The solar company you select to supply and install your solar power system is just as important as the system itself. You should ensure the Clean Energy Council accredits the people installing your system. If you don’t use CEC accredited installers, you won’t be entitled to a government solar rebate.
Consider the system warranty
When comparing solar quotes, you must pay careful attention to the different warranties within the quotation. What is the process if the system stops functioning as it should? The solar company should also provide you with some comfort as to the longevity and sustainability of their own business; if they’re no longer around, your system warranty will become null and void.
Further reading: Solar system warranties explained
How solar power works
Photovoltaic (PV) solar cells convert sunlight into electricity. An inverter converts the direct current generated from the panels to alternating current that can be used to power electrical appliances in your home. We explain in detail how solar panels work.
Solar power systems only generate electricity during daylight hours
When the sun is shining, a solar energy system will directly power the appliances in your home. Any excess energy generated by your system will be exported back to the grid where you’ll earn a feed-in tariff from your electricity retailer. If you have battery storage, the excess energy can charge your battery for later usage. Solar power systems do not generate any energy at night, or when the sun is not shining.
Will I still need to pay for electricity?
Yes. If the household power demand is higher than what your system is generating, you will need to purchase power from the grid.