Before considering the transition to solar energy and the installation of solar panels in your home, we recommend reading this guide to understand the fundamentals.
Solar Choice is an independent organization with no bias toward product brands or different types of solar systems.
The Basics: How does solar power work in Australia?
The majority of residential solar systems in Australia without a battery are grid-connected. If you are starting from scratch, you can find a full explanation of the main system types below.
Grid-connected solar systems
Allows you to keep your connection to the grid to buy power at night times (and when it’s cloudy).
Your inverter will work with grid power to use all solar power first before drawing any power from the grid.
Grid-connected solar systems also enable you to sell power back to the grid.
Generally speaking, it is not feasible or economically viable to disconnect from the grid altogether.
Off-grid solar systems
It is a standalone power source system.
They include solar panels and batteries to provide a 24-hour power solution and do not require any grid connection.
Often remote properties can be quoted over $50,000 to simply connect to the grid.
These systems are most common in new construction projects in rural parts of Australia.
In these scenarios, it can be economically and environmentally a better choice to put in an off-grid system.
Whilst Off-grid systems have a much larger upfront cost (usually min. $25,000) the power bill savings will be 100% from day one.
Hybrid solar systems
Grid-connected systems include a solar battery to store solar energy.
This energy can then be reused at times when there is no solar power (i.e. night-time).
Solar Batteries also provide an excellent backup power source and the ability to make greater use of your solar power.
You need to be aware that at their current pricing, they do not offer a great return on investment.
In fact, in 48 scenarios we recently modelled across every state in Australia. None provided a payback period under 8 years and most scenarios were over 20 years.
Given the typical lifetime of a modern battery is 10 years, you can see why less than 1 in 10 households are currently installing a battery with solar.
View solar system prices on an online quote comparison now
How Does Solar Power Save you Money?
First, it’s important to understand how installing solar panels will actively reduce your electricity bill in order to assess if it’s a worthwhile investment. For now, we will set aside the environmental benefits.
Offsetting your energy consumption
The primary way in which solar can help you tackle your energy costs is by reducing the amount of electricity you need to buy from your electricity retailer, which typically will cost between 15-40c per kWh.
A grid-connected solar system will prioritise solar energy and harmoniously supply any remaining energy needs from the grid.
A household can offset 30-70% of its energy usage with solar panels, based on the portion consumed during daylight hours.
This offset percentage can get closer to 100% by installing a battery storage system.
Feed in tariff for excess energy
The sun determines the amount of energy generated by your solar panel system, not your energy consumption. During certain times, you can sell surplus energy back to the grid at a rate called a ‘feed-in tariff’.
These feed in tariffs vary by state and which electricity retailer (e.g. AGL, Origin etc.) you are with. Typically you can usually find a feed in tariff between 3-12c per kWh.
Your ability to access a feed in tariff is usually limited to a maximum solar system size – for a full explanation of what is possible state by state read this guide.
Installing solar will reduce the quantity of energy you buy, and you will notice an additional line item for the Feed-in credit on your electricity bill.
Some options for increasing self-consumption
Increasing your self-consumption of solar energy will reduce your energy bills. To improve your return on investment you can consider applying a timer on common household appliances, such as:
- Electric hot water system
- Washing machine
- Swimming pool pump
- Underfloor heating system
You can buy programable wall-socket timers from a hardware store for under $50 or an electrician can install one for you.
Compare quotes from up to 7 installers in your area now.
How much will I save on my electricity bill?
To determine your energy bill savings, first calculate the appropriate system size for your requirements.
Understanding your self-consumed solar energy is crucial for estimating your savings.
To save money, know how much solar energy you’ll use (self-consumed energy) and sell for a feed-in tariff.
Different rates apply when buying and selling energy, so estimating savings requires understanding self-consumption.
Using the Solar Choice advanced calculator we have created the below 5 scenarios.
This helps you compare savings from different system sizes with some typical assumptions made on energy consumption. We suggest you have a play with one or both of our free-to-use calculators:
|System Size||Ave. Daily Solar Energy Created (kWh)||Ave. Daily Electricity Usage (kWh)||Annual savings from self-consumption||Annual savings from Feed-in Tariff||Annual Total Savings|
- Solar panels installed in Sydney at 30 degree slope to north. See examples of output of systems from Brisbane, Melbourne, Canberra, Adelaide, Perth, Hobart or Darwin
- Electricity price of $0.25 per kWh and a Solar Feed-in rate of $0.07 per kWh
- Electricity usage is focused in mornings (6am to 8am) and the evenings (4pm til 10pm) – under the ‘double peak’ profile
How much does home solar cost?
The price of solar depends on where you live, what type of system and products you select and which solar company you sign up with.
As part of our free compare the market service we collect live and up to date price information from 100s of solar installers around Australia and we publish average pricing by capital city on the Solar Price Index:
Note the average prices in the above table include:
- A full turnkey system – all products, labour, equipment hire
- The government STC rebate (more on this below)
Compare quotes from up to 7 installers in your area now.
Over time the cost of solar has decreased dramatically mainly from the reduction in equipment costs through increase manufacturing scale and improved efficiency of products.
Beware of cheap solar panels!
Inevitably once you start looking into solar you will start to come across some ‘too good to be true’ prices for solar – One Time Offer $2,500 for 6.6kW!
We recommend treating these companies with caution as usually they are making major sacrifices on customer servicing, product quality and installation procedures.
See this ABC coverage which covers some examples of what can go wrong.
They may be offering a 10 year + warranty on their installs or products but that warranty is only valuable to you if the company is still around and there is a clear Australian warranty claim process.
We receive many phone calls from orphaned customers from years ago who are trying to contact Chinese factories to claim warranty.
Ultimately if it looks too cheap, it probably is, and a too cheap solution will cost you more in the long run than a well-priced system.
Always do you research on the solar installation company and the products they are offering. See our 5 questions you should ask your installer or email us or call us on 1300 787 273 if you need any help.
What extra costs should I prepare for?
There are a range of additional costs that could apply in residential projects. Fortunately as part of our online quote comparison service we ask installers to advise what they would charge for the common extras that come up.
See below table to see if any of these common items would apply to your home:
|Extra Cost||Range based on our price database||Reason|
|2 Story Building||$200 to $800||Need to use edge protection and hire a scissor lift|
|Tile Roof||$10-$50 per panel||Extra work required for installers as they need to remove many tiles to fasten mounting structure to roof battens|
|Kliplok Roof Sheeting||$10-$50 per panel||Specialised non-penetrative clamps required which are not required for other roof materials|
|Tilt Frames||$25 to $50 per panel||Usually only required if your roof is south-facing or completely flat to correct tilt or prevent dirt build up|
|Switchboard upgrade||$1000+||No electrical contractor can install solar on a switchboard that isn’t to code without replacing it first|
|3-phase properties||$500+||Properties with a 3-phase power supply require compatible solar inverters that are more expensive than single-phase inverters|
Find out about Solar Panel Maintenance and Cleaning!
What about batteries?
The approximate cost of batteries currently stands at $1,000 per kilowatt-hour (kWh) of installed capacity.
This means a typical home battery would cost around $10,000. As we’ve demonstrated in-depth, the economic case for solar batteries is not quite there yet.
We expect that batteries will become viable for homeowners in the next 2-5 years, but that depends on manufacturers significantly increasing their scale of production.
Understanding Australia’s solar rebate
Introduced in 2011, the Small-scale Renewable Energy Scheme (SRES) was introduced to support the uptake of renewable energy in Australia.
The SRES works by issuing Small-scale Technology Certificates (STCs) to homes & businesses that install systems under 100 kilowatts (kW) in terms of the DC Solar Panel capacity.
The STCs are officially created once a Clean Energy Council accredited Solar Installer has commissioned the system.
The Solar Installer sells the STCs either on the market themselves or via a broker/aggregator, meaning the end-customer only needs to pay the difference.
How are STCs calculated?
The STCs are based on the amount of renewable energy your system will generate before the end of 2030. You should note that STCs are calculated based on your postcode, the solar panel capacity of your system and the time left until 2030.
The length of time before 2030 changes annually on the 1st of January, so there will be a slight difference to the rebate value if you install your system after each new year.
Roughly speaking the rebate equates to around 30-35% of the total system cost.
Solar Payback Periods
Now you have the pieces to work out your return on investment (Upfront cost of solar, the amount of electricity bill you can offset and earnings from selling solar electricity at a solar feed-in rate)
As a quick guide we have created the below table using some conservative assumptions for a typical residential scenario with a 5kW solar PV system:
|Average price for 5kW solar system (after rebate)||Price of electricity|
|Solar feed-in tariff |
|Internal rate of return|
- Electricity rates & feed in tariffs based on middle ground of what’s available
- Assumed that 50% of Solar Energy is used by the home (self-consumption rate)
- Panels are tilted to the North at 30% pitch
- Inflation at 2.5% and a 5% discount rate
Selecting good quality solar equipment
By now you’re likely a bit anxious about how to choose solar panels for your home.
As with many purchases, there are high quality products, cost-effective products and cheap and nasty products that will cause more problems than benefits.
Solar is a long term investment and given it requires accredited electricians to fix issues and replace equipment, our advice is stick with the good brands.
While there is no substitute to good old-fashioned research, we have identified three easy tests to determine if a solar panel brand is ‘good’. Firstly you can look at Bloomberg NEF’s tier 1 ranking.
This ranking highlights the most financially secure solar panel manufacturers which is an indicator of whether they are likely to be around if you need to claim warranty.
To further assess, you can verify if the solar panel brand is highlighted as a PV Evolution Labs’ annual ‘top performer’ in their independent tests.
Finally, through some googling, you should be able to establish whether the manufacturer has an Australian office and contact number. If your installer is no longer around this will be crucial if you need to claim warranty directly.
To see a list of brands that meet these tests – head to our Solar Panels Comparison Page. We have also independently written a review on almost all Solar Panels, Inverters and Batteries on our Product Reviews Page.
Selecting a ‘good’ solar installer
Selecting a good solar installer is more difficult.
Over the last 12 years we have vetted over 1,000 solar installation companies to be part of our comparison service.
You can click the link below to instantly compare quotes from good solar installers.
Compare quotes from up to 7 installers in your area now.
Solar Choice’s Due Diligence Process:
|1. Verify company trading history via ABN Lookup||1 year trading history (ideally 5 years +)|
|2. Check publicly listed reviews (Google reviews, Product Review, Trust pilot etc.)||Minimum of 20 five-star reviews and over four-star average|
|3. Check Clean Energy Council accreditation, Energy Contractors Licence and Masters Electrician membership||Clean Energy Council accredited for design and install of grid-connected Solar PV systems|
|4. Check products they are putting as their standard offers on the Solar Choice comparison portal||No ‘cheap and nasty’ products|
|5. Request feedback from each customer 6 months after install is completed||Customer reported issues are very rare. Any identified customer issues are resolved promptly and fairly.|
Get in touch with us
Still have questions. Feel free to browse through the hundreds of useful articles on our site and blog or get in touch with us directly:
Call on Monday to Friday (9am to 5pm) on 1300 787 273
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