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 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 November 2016 than they did in August 2012, according to the data that we’ve been keeping track of.
The most recent article with current and historic system prices can be found here. 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.
Estimated returns on solar panels for homes
Of course, solar panel prices only make sense when one considers how well solar systems perform as an investment. There are a number of factors that influence a solar PV system’s return on investment – and installation cost is only one of them. Other important factors include: the amount of sunlight available (and orientation of the panels), the amount of solar electricity that the home consumes directly (as oppose to exports to the electricity grid), the feed-in tariff reward rate (if available), and the cost of electricity when purchased from an electricity retailer.
To provide some examples, we’ve crunched the numbers on payback period and returns for a 3kW solar system based on average system prices for each capital city as of November 2016. After the system has ‘paid itself off’, it will provide free electricity (minus occasional maintenance costs) until its 25-year lifespan has ended, yielding the results in the ‘net system value over 25 years’ column on the right.
Want to crunch the numbers for yourself? Check out our Solar PV System Payback Estimator Tool.
- Nominal system capacity of 3kW
- System price is equivalent to the average 3kW solar system price for each city (as of November 2016)
- Average daily household energy usage of 25 kilowatt-hours (kWh)
- Solar panel array orientation is facing due north with optimal tilt angle
- 80% of solar electricity produced is used directly by the home (only 20% of all solar exported to the grid)
- Overall system efficiency of 85% of nominal capacity
- Flat retail electricity rate of $0.25/kWh (no time-of-use metering) in year 1
- Solar feed-in rate of $0.08/kWh
- Annual electricity inflation rate of 2.5%
- Besides inverter replacement in year 14 for $3000, no maintenance or repair costs
- Discount rate of 5%
|Estimated returns & payback periods for a 3kW solar system|
|City||Payback period||Annual rate of return||
Estimated energy bill savings
The figures in the table above are intended to be indicative only, but they do provide some insight into how attractive a home solar PV system currently is as an investment in Australia – outperforming standard savings accounts by well over 4-fold in some cases.
If you’re thinking about solar panels, now might be a great time to make a move.
Compare solar & battery storage prices instantly: Complete our Quote Comparison request form on the right of this page
© 2016 Solar Choice Pty Ltd