Pricing, production, and returns on 4kW solar PV systems

by James Martin II on July 30, 2012

in ACT,NSW,NT,QLD,SA,Solar and Renewable Energy Policy,State Government solar feed-in tariffs,TAS,VIC,WA

With solar power system prices falling and electricity prices on the rise, solar PV systems–including 4kW solar systems–are steadily becoming a more and more attractive investment for homes and businesses. What are the typical price ranges, power yields (in kWh), and financial benefits that a home or business should anticipate with a well-installed 4kW solar PV system?

4kW solar PV system pricing

The price of solar power has dropped significantly in the past few years, thanks to a number of factors, including increased production from China and falling incentives in Australia that have lead to steeper competition between installers.

The are a range of products and prices available on the market, however; a cost-competitive 4kW solar PV system consisting of cheaper, low-end products will be cheaper, while premium components will cost more.

Solar Choice publishes a monthly article on the current state of residential solar system prices. You can see the archive of these articles here: Solar Choice Solar PV Prices.

4kW solar system output

There are a number of factors that affect the actual power output of a 4kW solar system, however. These include:

-Geographical location of the system and the expected daily and annual solar irradiation and cloud cover levels there

Orientation and tilt angle of the solar panel array

Whether there is any shade cast on the panels

-Actual operating temperature of the panels

-Whether solar panel array capacity is accurately matched to inverter capacity

-The performance of the individual components–i.e. the panels and the inverter

Depending on where the system is located, it will receive different amounts of solar irradiation throughout each day and each year. The amount of sunshine falling on a solar system’s solar panels directly affects the system’s output. A solar system which is facing the right direction (i.e. north) in Australia can expect to receive around an annual average of 4 hours of ‘peak sun’ (peak sun hours, or PSH) per day, although Tasmania receives less than this, and Broome, WA receives more. This is only the daily average across the course of the year; it is important to keep in mind that the sun shines for more hours in the summer months and fewer in the winter.

For example, a perfectly efficient 4kW solar system in Sydney would produce about (3PSH x 4kW =) 18kWh of power on a day in the middle of winter, whereas in the summer output from the same 4kW solar PV system would be around (5PSH x 4kW =) 30kWh. (Figures are approximate only.)

4kW solar system financial returns

The financial returns from a 4kW solar PV installation are mainly dependent on the presence or absence of a Solar Feed-in Tariff to the owner/operator of the system. Solar Feed-in Tariff schemes pay solar system owners a premium for each kWh of power that they send to the electricity grid. Financial payback accordingly depends not only on the total output of the system, but also how that power is utilised by the occupants in light of whether or not a Solar Feed-in Tariff is being applied.

There are essentially 3 situations that owners of grid-connect solar systems might find themselves in regarding Solar Feed-in Tariff incentives:

1. They have acces to a Solar Feed-in Tariff, which encourage solar system users to export power to the grid at rates that vary from state to state, but which are above the retail electricity rate–that is, a premium.

2. They have access to a 1-for-1 ‘Solar Buyback’ scheme in which they are paid an amount equivalent to their retail electricity rate for every unit of solar power that they feed into the grid. People in this category should simply try to reduce their power consumption as much as possible, as they can neither gain nor lose by either exporting or self-consuming their solar p0wer.

3. No mandatory solar feed-in incentive scheme exists, or the rate offered is nominal–e.g. 7c/kWh. In this situation system owners should avoid exporting their solar power to the grid, and instead time their electricity usage to ensure that they are ‘self-consuming’ their solar power–using more electricity when the sun is shining, and less when it is not.

Read more: The economics of Solar Feed-in Tariffs vs solar buyback schemes

Download a 4kW Solar Power System ROI Calculator

How to use the calculator*:

1. Download the Solar Choice 4kW Solar System ROI calculator (Excel spreadsheet file)

2. Request a Solar Quote Comparison of the solar system installers in your area to obtain system prices,

3. Visit SwitchWise or a similar site to find the best deal on electricity,

4. Alter the variables in the light blue boxes (system size, system price, etc) in column B to calculate system Return on Investment (ROI).

(You may also open the file in Google Docs if you have a Google account.)

*Calculator outputs are indicative only–please keep in mind that electricity rates and Feed-in Tariff rates may change over time.

© 2012 Solar Choice Pty Ltd

James Martin II

James Martin II

James has been working as analyst and online development manager for Solar Choice since 2011. He holds a master's degree in Environmental Management from UNSW, and a bachelor's degree in Philosophy from Bridgewater State University in his native Massachusetts.
James Martin II

{ 1 comment… read it below or add one }

epc July 30, 2012 at 5:50 pm

Thanks,There is such a long way to go to convince people about solar power systems, in the UK i dont believe we are getting full backing yet,


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