Sydney holds one of the leading install rates for solar power across the world. In fact in certain suburbs of Sydney (such as Schofields) the data from the Australian Photovoltaic Institute shows that over 70% of the rooftops have a solar panel installation. This article aims to look at the investment case for solar and provides a guide on how to make a decision on solar power in Sydney.
If you’re interested in solar power for your Sydney-based business, see our article on Commercial Solar Power in Sydney.
How much power do solar panels generate in Sydney?
Although it may not be as sunny as Brisbane or Darwin, Sydney is still receives plenty of sun hours. With NREL’s PVWatts calculator we can see that for each kWh that is installed in Sydney you should be able to generate an average of 3.96 kWh per day. This factors in a system efficiency loss of 15% which would be typical of a reasonable quality Sydney solar system.
We’ve put together the below table of common system sizes to help you understand what this means. 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.
Estimated solar panel power production in Sydney (popular system sizes)
|Solar system size (kilowatts)||Avg daily system output (kilowatt-hours)||Annual output (kilowatt-hours)|
|2kW||7.9 kWh||2,891 kWh|
|3kW||11.9 kWh||4,336 kWh|
|4kW||15.8 kWh||5,782 kWh|
|5kW||19.8 kWh||7,227 kWh|
|7kW||27.7 kWh||10,118 kWh|
|10kW||39.6 kWh||14,454 kWh|
|15kW||59.4 kWh||21,681 kWh|
* 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 6.6kW of solar panels in Syndey that produces an average of 26.1kWh/day, but you only manage to self-consume 20% of that, then your savings will be smaller than if you managed to self-consume 40% – or even, ideally, 60%.
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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What solar rebates are available in Sydney and NSW
Federal STC Rebate
Like everyone everywhere in Australia, Sydney residents who install solar can benefit from the nation’s small-scale technology certificate (STC) rebate under the Renewable Energy Target. In simple terms the STC rebate offers an upfront discount of approximately 30% for any solar installation under 100kW in capacity in Australia. The rebate does differ slightly depending on your locations in Australia and on the current market price for the certificates it produces.
The rebate is designed to be collected by the company who installs your solar system, so they in turn offer you a net price which has deducted the STC rebate. Most quotes will provide a breakdown of the total costs (before the rebate) and the net cost to you (after the rebate).
To give you an example, a typical 6.6kW solar panel system in Sydney would generate 82 STCs (using the Clean Energy Regulator’s calculator) and at a current price of $36.9 per certificate that would result in a rebate of $3,026.
NSW Government interest free loans for batteries
The NSW government has introduced a program to provide interest-free loans to customers installing a battery. The scheme is only available to residents who are in one of the postcodes listed on this page, mostly covering the Hunter Valley and Blue Mountains areas.
We provide some information on the financial return of solar batteries further down this article, however in our view at Solar Choice an interest-free loan is not sufficient to change the economic story of installing a battery.
How much do solar panels cost 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 track 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 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 more than halved since we started publishing figures.
According to our data from March 2022, a typical 5kW system in Sydney costs about $4,450 on average after the STC rebate has been deducted.
Pricing will vary depending on if any additional costs are involved like tile roof installations or tilt frames. Solar Choice’s online quote comparison tool includes a comparison of all of these extra costs which might apply to your home.
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What is the financial return for a solar panel system in Sydney?
The short answer is that there is a great return on investment for Sydney homes with the ability to save up to $2,707 per year on your energy bill with a typical payback period between 4 and 5 years.
The table below shows payback periods and annual savings in the first year for a Sydney solar panel system for a several different scenarios. Note that we have attempted to match the system size to the energy usage, however the right size system also depends on what time of day energy is used within a home. The self-consumption rate of 40% means that a reasonable amount of power is being used in the middle of the day.
As we’ve used average prices from the Solar Choice Price Index, the financial return could be better for you if you can find a cheaper quote. Although be wary of quotes that are too cheap as workmanship, sales and install process and quality of products can drop away very quickly.
Indicative savings and payback periods for solar panel systems in Sydney
– Updated March 2022 –
|Solar Panel Size||Average Cost||Average Daily Energy Usage||Self Consumption Rate||Annual Savings||Payback Period|
|5kW||$4,620||15 kWh||40%||$902||5.0 Years|
|6.6kW||$5,290||20 kWh||40%||$1,196||4.4 Years|
|10kW||$7,860||30 kWh||40%||$1,804||4.3 Years|
|15kW||$11,590||45 kWh||40%||$2,707||4.2 Years|
Assumptions/limitations of this analysis
- Assumes an electricity price of 23c / kWh which is towards the middle of what is offered in Sydney
- Assumes an uncapped solar feed in tariff of 9c / kWh which on the better end of what you can find in Sydney
- Average costs come from the Solar Choice Price Index for March 2022
- Your self-consumption rate will vary depending on how you use power in your home. At higher rate, means less power is exported to the grid and improves your financial return
You can play around with the numbers specific to your Sydney solar panel project with our Solar Payback Calculator.
What about solar battery storage in Sydney?
The cost of solar batteries in Sydney is much higher than the cost to install solar panels. Although the battery functionality has been well established and there are different brands in the market, the return on investment still leaves something to be desired.
At Solar Choice, we have been tracking the costs of solar batteries in the battery price index and regularly performing an assessment of the financial return of batteries. We look at 3 typical use cases for solar batteries and adjust the size of the solar and battery solution to fit. See the below payback periods and annual savings from solar and batteries in Sydney.
|User Case||Solar and Battery Solution||Total Year 1 Savings||Payback Period Solar & Battery||Payback Period Battery Only|
|Young Adults / Older Family||5kW of Solar Panels and a 3.5 kWh battery||$828||11.7 years||> 20 years|
|Retirees / Young families||6.6kW of Solar Panels and a 6.5 kWh battery||$1,264||10.1 years||> 20 years|
|Big Energy User||13 kW of Solar Panels and a 13.5 kWh battery||$2,189||10.6 years||> 20 years|
To review our assumptions and the methodology of this analysis see our full article.
As most batteries have a warranty for 10 years, our analysis suggests that the battery will not be able to pay for itself during its lifetime. There is still quite a way to go on the cost of batteries before this story will change. Previously we have estimated that batteries will need to cost $200-$300 per kWh of capacity to offer a good return on investment while the current price is around $1,000 to $1,100 per kWh.
This analysis does ignore some of the non-financial benefits of batteries. Crucially as Australia is experiencing higher frequencies of flooding and more severe bushfires many households are attracted to batteries to provide back-up power in the instance of the grid outage.
There is also the benefit to the environment to assist in the reduction in Australia’s reliance of coal-fired power stations. Batteries, and many of them, will be required if we are going to eliminate fossil fuel power in Australia altogether.
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© 2022 Solar Choice Pty Ltd
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