4kW solar PV systems: Pricing, payback & returns

How much does a 4kW solar PV system cost in Australia, and what sort of return on investment can a household expect to see if they install one? This article takes a look at the business case for 4kW solar systems in Australia’s capital cities.

(This article was originally published in 2012. We’ve updated to reflect current realities.)

4kW solar PV system pricing

Solar PV system prices have dropped dramatically in the past few years, and the same goes for 4kW systems. Every month since August 2012, Solar Choice has been publishing pricing data for a range of solar PV system sizes across all of Australia’s capital cities. During this time, we’ve seen the average dollar-per-watt ($/W) price for a 4kW solar system drop from about $2.30/@ (or over $9,000 fully installed) to about $1.55/W (or about $6,200 fully installed) – approximately a 30% decrease.

4kW residential solar system prices Feb 2016Average 4kW solar PV system price trends by city between August 2012 and February 2016.

Keep in mind that these are average prices – prices on the low end of the range are more along the lines of $4,000, as per the tables below from February 2016.

Avg residential solar system prices table Feb 2016Average prices for various residential solar PV system prices, as of February 2016.

Avg high low per watt residential solar prices Feb 2016Average, high & low $/W prices for various residential solar PV system sizes in Australia’s capital cities as of February 2016.

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 conditions of the panels & inverter (e.g. temperature)

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, an 85% efficient 4kW solar system in Sydney would produce about 14kWh 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 20kWh. (Figures are approximate, based on outputs from NREL’s PVWatts calculator.)

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 access 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.

Examples: Payback periods and returns on a 4kW solar system in select capital cities

The chart below gives an rough idea of what payback periods a home can expect from a 4kW solar system in a handful of Australian capital cities. All of the situations below assume that the customer pays 25c/kWh for electricity from the grid and receives 8c/kWh for every unit of solar energy that they export to the grid. ‘Self-consumption’ refers to the ratio of the solar that they consume directly as opposed to sending into the grid – these days, homes save more money by self-consuming their solar energy than they do for exporting it into the grid. A 50% self-consumption ratio is more realistic (although it could be lower depending on the home), while a 70% self-consumption ratio is on the optimistic side.

(Read more about how to get the most out of your solar PV system.)

Indicative returns for 4kW solar systems @ average prices

(Assuming 25kWh electricity consumption/day, retail electricity @ 25c/kWh, solar feed-in rate @ 8c/kWh)

Sydney Brisbane
$6,190 $5,520
@ 50% self-consumption @ 70% self-consumption @ 50% self-consumption @ 70% self-consumption
~6.9 year payback ~5.7 year payback ~4.8 year payback ~4 year payback
~14% IRR ~17% IRR ~21% IRR ~26% IRR
~$863 annual savings ~1,050 annual savings ~$1,120 annual savings ~$1,360 annual savings
Melbourne Perth
$6,430 $4,730
@ 50% self-consumption @ 70% self-consumption @ 50% self-consumption 70% self-consumption
~8.5 year payback ~7 year payback ~4.9 year payback ~4 year payback
~10% IRR ~13% IRR ~20% IRR ~25% IRR
~$710 annual savings ~$870 annual savings ~$940 annual savings ~$1,420 annual savings


Want to learn more? Try plugging some figures into our solar system ROI calculator yourself! Self-consumption is just one of the variables that can be adjusted to determine your likely payback time and return on investment. (Calculator outputs are indicative only–please keep in mind that electricity rates and feed-in tariff rates may change over time.)

© 2016 Solar Choice Pty Ltd


  1. 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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