Rooftop solar on its own is already affordable enough to be a smart choice for virtually any Australian home with an unshaded roof and some daytime electricity usage. This is true even in the absence of generous, state-backed solar feed-in tariffs and the (slight) reduction of the up-front incentive for solar available through the federal Renewable Energy Target. In fact, Aussie homes have been installing solar at a steady pace long after the most generous incentive programs were closed to new applicants.
The key to getting the most out of a solar PV system these days is to use as much of the energy as possible directly, within the home (‘solar self-consumption‘). Self-consuming solar energy helps the home to avoid purchasing energy from the grid, thereby saving between about $0.20-$0.30 per kilowatt-hour (kWh) depending on where they live and their electricity retailer. Contrast this to the $0.06-$0.08/kWh generally offered for solar export these days. There’s no incentive to put solar into the grid.
Solar system installation prices have been steady for the past year – we know because we keep track of them in our monthly PV Price Index articles. No sudden reductions (or increases) are likely to be on the horizon; the market has stabilised after the initial turmoil of its first few years.
A look at solar payback periods in each capital city
Generally speaking, it’s important for homes to choose a solar system sized appropriately for their situation – meaning that they can use at least half the energy that it produces directly. However, if they can use even more (e.g. 70%), then the business case gets even better. According to our data, payback times for 3kW solar systems in most Australian cities are all easily under 7 years; in Adelaide, Brisbane, Perth and Sydney they’re easily under five years, as per the table below.
Note that the table below uses average system prices to be conservative. Solar system owners may see even shorter paybacks if they find systems for less without compromising quality.
Table: 3kW solar PV system payback times by capital city*
|Approx average 3kW system price (Feb 2017)||Electricity consumption charge ($/kWh incl GST)**||Average kWh usage per day**||Simple payback period with 50% self-consumption (years)||Simple payback period with 70% self-consumption (years)|
*All scenarios assume a solar feed-in rate of $0.08/kWh.
**Based on figures from government websites such as EnergyMadeEasy where available.
Conclusion: Is solar PV still worth it in 2017? Yes
In 2017, solar power systems are affordable – especially in Australia’s most populous capital cities. Solar feed-in rates may be low, but as long as you either a) size your system to meet your daytime electricity demand or b) make efforts to shift more of your electricity consumption to daylight hours (e.g. through an EMS or hot water diverter), there is a clear case for having solar panels installed.
In places where low system installation prices collide with high electricity prices, solar makes spectacularly good sense without much effort. But even in cities with higher average system prices put payback periods over 7 years in our examples, it doesn’t take much to improve the financial case. We recommend shopping around for the best deal possible and ensure that you can use the solar energy that your system will produce.
Explore solar PV system payback times for your home with our Solar PV System Payback Estimator Tool
© 2017 Solar Choice Pty Ltd