Sydney is a great place for solar power, and roughly 10-20% of Sydney area homes have solar panels installed on their roofs. This article is 5-point guide to everything you need to know if you’re considering solar power for your Sydney home – including how Solar Choice can help you compare quotes.
This article is mostly about solar for homes. If you’re interested in solar power for your Sydney-based business, see our article on Commercial Solar Power in Sydney.
5 good reasons to go solar in Sydney
1. Sydney gets plenty of sunshine
The table below provides an overview of how much solar energy you can expect solar systems of various popular sizes to produce on the average day in Sydney. It’s helpful to remember that kilowatt-hours (kWh) are the units that appear on your electricity bill – and which your electricity retailer uses to calculate your quarterly or monthly electricity charges.
|Solar PV system output in Sydney (Popular system sizes)|
|Solar system size (kilowatts)||Avg daily system output* (kilowatt-hours)|
* Output was calculated using PVsyst software
What do these numbers mean for me if I go solar?
Solar power is a great investment for virtually any home that has a reasonably-sized, unshaded roof and some electricity consumption during the daylight hours (see the sections below). This is because your home-generated solar energy can save you money in two ways:
- Solar helps you reduce the amount of energy you need to purchase from your electricity retailer / the grid. This is commonly referred to as ‘solar self-consumption‘, and it is the key to making the most of your solar system – you should do everything you can to maximise your self consumption. In practice, self-consumption entails running your appliances (pool pump, washing machine, dish washer, etc) when the sun is shining. (Read more about shiftable loads.)
- You can earn credits on your electricity bill for your system’s surplus energy. This is usually referred to as a solar feed-in tariff. Any solar energy produced that is not immediately put to use in devices in your home will automatically be sent back to the grid, earning you a feed-in credit. A few years ago, feed-in tariffs were state-sponsored and quite generous; these days the rates offered are a bit lower but still enough to help make solar an attractive investment.
The value of your solar energy is based on a combination of how much you self-consume and how much you export. If you have a 3kW solar system that produces 11.6kWh/day (as in the table above), but you only manage to self-consume 50% of that, then your savings will be smaller than if you managed to self-consume 80% – or even, ideally, 100%.
It’s therefore important that the system you choose is appropriately sized for your home and electricity consumption. We have developed a tool to help you select a solar PV system size based on the amount of energy that you consume and your consumption pattern.
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2. Incentives through the federal government
Like everyone everywhere in Australia, Sydney residents who install solar can benefit from the nation’s Renewable Energy Target. In essence, the Renewable Energy Target provides an up-front
incentive off the cost of installing a solar PV system based on the system’s size and how sunny your location is, plus certificate market forces. These days, this ‘discount’ works out to about 30% off the sticker price of a fully installed solar system. Keep in mind that this incentive only applies if your system is installed by accredited solar installers using accredited products. In most cases, you should be able to see how much this incentive is worth in the quotes you get from installers.
As an example, a 4kW solar system installed in Sydney in 2020 would be eligible for a ‘discount’ of approximately $2,400-$2,600.
3. Solar power is affordable in Sydney
Thanks in part to the federal incentives explained above, Australia is home to some of the lowest solar PV system prices in the world – which is one of the reasons that so many homes and businesses have solar panels installed. Solar Choice has been keeping rack of installation price trends since 2012 and as you can see in the below table the cost of solar in Sydney tracks closely to the national average.
The chart below (click to enlarge) shows how prices have changed (in terms of dollars per watt of capacity – $/W) since 2012 for a range of popular system sizes. On average solar system prices in Sydney have dropped by about 35% since we started publishing figures. According to our data, these days, a typical 5kW system in Sydney costs about $4,270 on average – although both lower and higher-priced systems are out there.
4. Solar Panels offer attractive returns for Sydney households
The table below shows payback periods, ‘internal rate of return’ (IRR) and annual savings in the first year for a Sydney home, using 2 popular solar system sizes at average prices (as of March 2020). Keep in mind that returns may be better for systems whose price points are lower. But also be mindful that you’ll want to be selective about the products and companies that you consider – some deals are too good to be true.
Indicative returns for solar systems @ average Sydney prices
(Assuming 80% system efficiency, 25kWh electricity consumption/day, retail electricity @ 25c/kWh, solar feed-in rate @ 11c/kWh)
|30% self-consumption||50% self-consumption||20% self-consumption||40% self-consumption|
|~3.9 year payback||~3.3 year payback||~4.3 year payback||~3.3 year payback|
|~26% IRR||~31% IRR||~22% IRR||~31% IRR|
|~$854 annual savings||~$1,019 annual savings||~$967 annual savings||~$1,272 annual savings|
Want to explore with the numbers yourself?
5. Energy independence – like growing vegetables in your own back yard
Solar is about more than just saving money – to some degree it’s also about self-reliance. With the advent of affordable solar panels, Sydney homes are no longer completely beholden to their electricity retailer for their energy needs. A good analogy home-grown vegetables: having a garden in your back yard can not only help you save on your grocery bills, it also feels good.
Battery storage technology promises to support Australian households in reaching higher levels of energy independence. Interest in homes batteries has been steadily increasing over the past several years and the solar industry is rushing to catch up with it – there are now dozens of battery products available on the market. As technology prices come down over the next couple of years, more and more homes will be looking to make themselves mostly or completely energy self-reliant with solar & batteries. Most homes will remain connected to the grid (although a handful of the more adventurous will go off-grid), but even then will undoubtedly be quite proud that a good chuck of their electricity is home-grown.
What about solar battery storage?
Battery storage is the next frontier in solar power, promising greater energy bill savings and even higher rates of energy independence than solar alone (all whilst retaining a grid connection – just in case!) The table below provides a rough idea of payback periods on brand new solar+storage systems in Sydney, and from our article: Which Australian capital cities are best for solar battery storage? (Jan 2018 update).
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