Rooftop solar

Is home solar power still worth it in Australia in 2017?

by Solar Choice Staff on February 16, 2017

in Installation advice,Historic Solar PV Power System Prices,Solar system sizes,3kW,5kW,ACT,NSW,NT,QLD,Residential solar system prices,SA,TAS,VIC,WA

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 Solar PV Price Index. 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.

Going solar: Then vs now

Lots of things have changed in recent years with regard to solar power for homes. The business case for going solar – the investment-worthiness of solar panels – has quickly progressed through roughly three stages since the solar panel boom began in Australia in around 2008.

Making a long story short, these stages were:

Stage 1 (until about 2011): High solar system prices, high incentives. Lots of people installed solar despite relatively high prices thanks to government incentives on the federal and state level. “Solar is a no-brainer, and there’s a deadline!”

Stage 2 (2011-2013/2014): Falling solar system prices, falling incentives. System prices fell, but so did incentives, creating a landscape of uncertainty. “Is solar still a good idea?”

Stage 3 (2014-present): Relative stability. Solar PV system prices come down significantly, and upheavals in the solar incentive sphere cease.

Solar power is here to stay

At this point, it seems fairly clear that residential solar power is here to stay in Australia. Over 1.5 million homes already have a solar PV system, and there is now more than one panel installed per human being in the country. Virtually all industry analysts and investment houses – both within and outside Australia – are predicting that solar (and battery storage) are the future.

Solar system prices for homes have come down

The strongest evidence for the permanence of solar as a household fixture in Australia is the solar system price trends witnessed over the past several years.

The chart below offers a glimpse into how average prices have changed since 2012. Systems cost about 25-30% less to install in April 2017 than they did in August 2012, according to the data that we’ve been keeping track of.

Residential solar system prices all sizes April 2017

You can also get pricing specific to your home and location by requesting a Solar Quote Comparison by filling out the form to the right of this page.

Average solar system sizes have increased

Several years ago, it was common for most homes to install 1kW, 1.5kW and 2kW solar systems. As prices have come down, however, the average solar system size has increased – and these days, 3kW, 4kW, 5kW and even 10kW solar systems are not uncommon. In fact, the larger system sizes almost always offer better value for money than smaller ones.

Not sure which size system is best for your home’s needs? Check out our Solar PV System Sizing Estimator Tool.

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)
Adelaide $5,000 $0.34 17 4.3 3.4
Brisbane $4,000 $0.26 15 4.3 3.5
Canberra $5,900 $0.18 26 7.9 6.8
Darwin $8,600 $0.26 25 6.4 6.4
Hobart $5,600 $0.26 27 7.2 5.9
Melbourne $4,500 $0.26 25 6.4 5.4
Perth $4,000 $0.35 20 3.2 2.5
Sydney $4,400 $0.24 19 6.1 5.3

*Solar feed-in rate for Darwin @26c/kWh, Sydney @12c/kWh (from July 2017) and Melbourne @11.3c/kWh (from July 2017); all other 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 HEMS 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

or

Get a free comparison of quotes from solar & battery providers in your area

© 2017 Solar Choice Pty Ltd

{ 4 comments… read them below or add one }

John Gallagher August 30, 2017 at 3:07 pm

I am with Simply Energy and get a 30% discount if I pay my bill on time. this lowers buying electricity from the provider to 21c. My electricity provider has just increased my feed in tariff to 17c from 6.8c I have a 5kw solar system on the Northern side of roof already and am seriously thinking of getting a further 5kw on the western side of the roof in the hope of eliminating my bills completely and possibly going into credit so that the gas bill is paid. What do you think of my idea?

Reply

Solar Choice Staff September 4, 2017 at 9:32 am

Hi John,

Interesting thinking – and you wouldn’t be the first to have this idea. The first thing you should do is work out the numbers and see if you could theoretically cover your bills with that much solar. Secondly, you’ll want to look into what the upper limit is on solar system sizes for solar feed-in tariff eligibility – in some network areas / states, solar systems over a certain capacity are not allowed to export excess solar to the grid, or if they are their export amount must be limited.

Hope this helps.

Reply

Tommy Tonkin February 21, 2017 at 11:11 am

Hello Solar Choice Staff,

I noted with interest your comment as follows:

“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.”

My understanding is that this is only possible if a digital smart meter is installed, ( ie. interval reading ) however, here in SA we only have basic solar import/export meters. When I contacted SA Power Networks, they advised me that they have no plans to upgrade these to smart meters at this stage.

Consequently, all generation from the solar array is exported to the grid at about 8 cents /kWh now that Govt. feed-in tariffs have expired, & imported at approximately 32 cents /kWh !!

I agree that it would be great if we were able to off-set the power used during daylight hours on a 1 for 1 basis instead of 8 for 32 !!

Do you have any idea when SA will convert to smart meters as Vic ( & perhaps other eastern States ) have done ?? Four members of my family are keen to install solar but are hesitant at the moment because of the current situation.

With respect, I must question the table above which suggests a payback period of approx. 3 to 4 years for a 3kW solar PV system in Adelaide based on self-consumption, unless smart (interval reading) meters are being installed by an electricity retailer that I am not aware of ??

Thank you ….. Tommy

Reply

Solar Choice Staff February 21, 2017 at 11:40 am

Hi Tommy,

Thanks for commenting – and for reading!

I think you may be confusing the general concept of ‘net metering’/’net billing’ with smart meters and interval meters. A net metering setup is simply one in which the solar energy flows first into the home, with only the excess, unused solar energy going into the grid. The opposite is a gross metering setup, in which all of the solar energy goes directly into the grid, with no opportunity for self consumption to happen. NSW homes on the (now defunct) Solar Bonus Scheme were all hooked up on gross meters, but in South Australia the default metering for grid-connected solar systems has always been net.

Whether a metering system is gross or net has nothing to do with whether a meter is a ‘smart’/digital or analog meter. In fact, most of the solar homes in SA are hooked up on net setups with analog meters. The main advantage of a smart meter is not that it allows for net metering (again – the two are unrelated), but rather that it allows the electricity retailer to read your electricity consumption & solar export in detail – and compose your bill without having to send out a meter reader.

No one in their right mind would be installing solar these days if their only option was a gross meter – and in fact many network companies (the local grid operators) discourage solar export to the grid if anything!

In summary: Check with your electricity retailer or SA Power Networks about what sort of meter you have in place (if you already have solar), and ask what procedures will be necessary (if any) to ensure a net metering setup (if you’re planning on getting solar). In neither situation is a digital smart meter necessary from a solar net metering perspective, although the state/network company/retailer may require a digital meter for other reasons (I’m not sure what the state policy is at the moment, unfortunately).

Hope this helps clear things up a bit!

Reply

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