Deep dive: Why is solar such a good deal in Australia?

In the words of Rewiring Australia, even a magic power plant providing free energy would be more expensive than rooftop solar because the cost of sending that energy over powerlines alone is more than the cost of installing solar panels.

Since you’re producing your own energy, you don’t need to buy nearly as much energy from the electricity grid.

This saves the average household thousands of dollars each year.

Payback periods can be as low as 3 years.

Why is solar in Australia so cheap?

Reason #1 – The cost of solar panels have plummeted

Just like how every generation of computers is faster than the previous, costs for solar panels have also come down rapidly with each generation as manufacturing capacity has scaled up.

Chart of solar panel prices dropping over time.

Reason #2 – Our climate

Solar in Australia benefits from some of the highest solar irradiance levels in the world (the amount of power received from the sun per square metre). Not only that, but our long sunny days and generally dry climate means there’s less cloud cover and snow than in many other parts of the world.

Reason #3 – Grid connection foundations

The electricity grid was designed to send electricity to homes, not receive it.

So you can imagine how it’s actually a significant challenge when a whole bunch of homes on the grid suddenly start producing energy, instead of always consuming it.

Luckily for us, we’ve actually done a great job on the foundational logistical work that enables efficient grid connection.

Thanks to this, not only do we get the benefits of cheaper solar panels and our unique climate. but we also pay half the price as New Zealanders do for solar power and quarter of what people in the US pay.

Why is solar so popular nowadays?

As of the end of 2023, almost 3.7 million households in Australia have installed solar panels.

The amount of solar panels installed last year in 2023 rose by over 7% compared to 2022.

Why is solar so popular, and why is it getting more popular?

Grid electricity is becoming expensive

Not only is the cost of solar panels decreasing, but since 2011, the price of grid electricity has been increasing faster than inflation. You’ve probably felt it in your electricity bills.

Chart of electricity prices rising over time.

With the right solar setup for your home, you care much less about grid electricity because you are buying much less energy as an “energy renter”. Instead you become the “owner” of solar panels that produce your own energy.

To continue with the property metaphor, you stop worrying about your rent going up, because now you own your own home.

Government rebates

Every single Australian home is eligible for government rebates if you install solar.

The federal rebate roughly depends on how many solar panels you install, where you live, and how soon you get them (rebates are reducing each year from now until 2030).

However, there are also various state, and local council rebates on offer.

Normally, your solar installer will process the rebates on your behalf and deduct the amount from the purchase price. Most of the quotes you see online will already have the federal rebate factored in.

Increasing desire to combat climate change

Australia has committed to reaching emission levels of 43% below 2005 level by the year 2030. A big part of this is planned to come from home solar.

According to projections by the Department of Climate Change, Energy, the Environment and Water, we are not currently on track to meet these targets.

This means that we need to accelerate the rate at which we install home solar. As an individual, this is one of the most impactful things you can do to help combat climate change.

How much does it cost to get solar in Australia?

The short answer is, it will cost you $6,000 – $20,000 out of pocket for a quality solar system. This amount has the federal government rebate already factored in.

The long answer is, it depends on your home, your energy consumption, where you live, and what providers and products you choose.

All the good solar providers provide an end-to-end service including getting the panels, installation, grid connection, and processing rebates.

Design life

Solar panels will last around 25-30 years (and will have a warranty which reflects that). So you can be confident that you’ll continue generating energy for a long time.

Maintenance

If your roof is on an angle, your solar panels will generally be self cleaning so there’s no ongoing maintenance cost. However, it’s a good idea to get someone to inspect your solar panels every few years.

How much would I save with solar in Australia?

The short answer is up to a few thousand dollars each year.

But it really does depend.

Where do savings come from?

Every salesperson will quote you a different figure so it’s worth understanding where savings actually come from.

  • The main way that solar panels save you money is by reducing the amount of electricity you need to purchase from the grid.
  • The second way that is that your house will automatically sell excess energy you produce back to the grid. This amount you get paid is called the “feed-in tariff”, and is gradually reducing over time.
  • The amount you get for selling is significantly less that the amount you pay for grid electricity, so most of your savings come from just buying less electricity.

This means that if you’re home during the daytime, solar is more worth it for you because you you’re using more of the energy that you generate.

Even if you’re not home, you’re still using energy from things like your pool pump, fridge, and hot water cylinder.

How do different products affect this?

Compared to all the other factors like the amount of sunlight, the specific products you choose doesn’t actually make much of a difference.

How does a battery affect this?

If you get a battery, you can store all the excess energy you don’t use in the daytime (especially if you’re not home), and use it at night.

This means you won’t need to purchase energy from the grid at night, as long as you have energy in your battery.

When do solar panels produce energy?

Modern solar panels are extremely efficient. As long as there’s a little bit of sun, they’ll work to some extent.

Although you’ll need a qualified and certified installer to look at your specific roof, many people dismiss the feasibility of solar for their roof far too early.

Solar works during the whole day

Predictable, you’ll produce the most energy at mid-day.

However, even at 6am and 6pm, you’ll still produce some energy, just not as much.

Solar works in any season – even outside of summer

Solar panels will still work well in winter despite there being less sunlight.

As a general rule of thumb, you produce half as much electricity in winter as you do in summer.

Solar works in any direction – even south facing

North facing panels are the best, but south facing panels still work (but they’ll be 28% less effective).

Solar works in partial shade or cloudy days

Full shade is a real killer for solar panels. However if your panels are partially shaded, or shaded at different times of the day, it’s still possible for you to generate meaningful amounts of electricity

Is solar worth it for me?

There’s no one size fits all answer, but generally speaking if your roof isn’t completely shaded by a big tree or another building, you’re better off with solar than without.

If you’d like to get a specific cost and savings estimate for your home use our solar calculator.