Solar panels buying guide

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01 .Installing solar panels

Solar panels

The popularity of solar panels, which can be fixed to your roof to generate electricity, has grown significantly in recent years. Our recent report looks at typical payback times for a small system.

In this report you'll find:

  • What to consider when choosing a solar panel system.
  • Where to find an installer/designer.
  • How to calclulate your system's approximate payback time.
  • Government rebates and incentives that are available.
  • How to a avoid a dodgy import.
  • What 'feed-in' tariff will you be paid for electricity your panels produce?

How solar photovoltaic (PV) systems work

Flat solar modules are mounted on your roof and convert energy from sunlight into direct current (DC) energy. A device called an inverter then changes the DC energy into alternating current (AC) electricity. This can be used to power your household appliances. A grid-connected system can feed excess energy into the electricity network (grid), while a standalone system needs a battery to store excess energy.

Solar panels work best when they’re north facing, pointed directly at the sun, at the correct angle and not blocked by trees or shading. The effectiveness of solar panels also depends on where you live and the weather. Of the capital cities, solar panels in Adelaide and Darwin generate the most electricity on average each day, somewhere between 10% to 30% more than Hobart and Melbourne. These and other factors need to be considered to calculate a system’s payback time and likely energy output.

Tune into the CHOICE Radio podcast to hear Alan Dooley and Christopher Zinn discuss the myths and hidden costs of installing photovoltaic (PV) solar panels

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For more information onSolar energy, see Energy and water.


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Finding a designer/installer

The good news is that there's an accreditation scheme in Australia, which the industry claims is world's best practice. To be eligible for solar credits, your designer/installer must be accredited by the Clean Energy Council — that means they’re deemed qualified to design and install PV systems.

At the time of commissioning of your system, the installer must personally sign off on the installation report. Installer’s work is usually guaranteed for one year. Clean Energy Council provides a list of accredited designers/installers. Ideally you should also look for an accredited company that’s been in the business for a while and that has an established track record, relevant experience, specialist expertise, and a good reputation.

Does the panel and its components meet standards?

CHOICE has not tested solar panels. You should ensure that any panel you consider has met Australian standards.

To be eligible for the solar credits, your solar panels must be certified to international standards; ask your installer to supply proof. Grid-connected inverters must be approved for connection to the grid in Australia by complying with AS4777 and having a current Certificate of Suitability. Check the list of currently approved inverters and modules.

In the past there has been some concern in the industry about the quality of some cheap imported panels and their safety. In 2008 Ted Spooner of the UNSW School of Electrical Engineering, and chair of Standards Australia’s Renewable Energy Systems committee, commented on "some bad practices and shonky certificates appearing from labs saying that the panels meet a standard, when they don’t. And some panels have the 'CE Mark' from Europe, which is totally meaningless in Australia for solar panels. It’s self-certification." He said the risk is a poor module manufacturer can self-test and put a CE Mark on its product — "but this is not independent and not worth anything.” 

Make sure your panels meet the international standards and that you’re using an accredited installer. This is vital to the safety and reliability of your solar system installation.

How much panel capacity do you need?

An average Australian household's electricity use is comparatively high, at about 18 kilowatt hours of electricity per day – and growing. Average electricity consumption differs across states; Queensland is higher than the national average, for example. 

A one kilowatt system produces nearly 4 kilowatt hours (kWh) per day of electricity, depending on where you live. That’s about 20% of the average household’s electricity consumption. The bigger the system you buy, the more electricity you’ll produce. A 1.5 kW system produces approximately 2500 kWh of electricity per year – about one third of the average Australian household’s electricity consumption.

What warranty can you expect?

Manufacturer warranties or guarantees range from five to 25 years. Solar systems should last at least 25 years – obviously, a warranty or guarantee for that length from a company you trust is best.

Efficiency claims

Manufacturers and suppliers use energy efficiency claims to sell their PV systems, but according to the Alternative Technology Association (ATA), an energy efficiency rating doesn’t tell you how the panels will perform. “The most important figures to look at are how much energy the system will produce each year, versus the money spent,” the ATA says.

What should you pay?

Until recently the standard one kilowatt solar panel system including installation cost around $10,000, before the solar credit rebates, while 2kW systems cost about $20,000. After the solar credit rebates the costs were brought down to around $6,000 - $7,000 for a 1kW system fully installed; and around $11,000 to $12,000 for a 2kW system – depending on where you live and the current price of solar credits. However, lately we're seeing systems available for under $3000 (after solar credits) from companies such as Origin Energy, which also offers an interest-free repayment plan.

Domestic solar photovoltaic panels are still a costly way to reduce your energy bill and greenhouse gases, because of the up-front costs. Making your home more energy efficient is much cheaper.

But payback times vary widely depending on a range of variables. Here’s what to consider to get an idea of your system’s payback time:

  • Up-front cost of the panels and installation.
  • Are you eligible for a rebate?
  • Is your roof north facing?
  • What will you be paid for electricity you produce?
  • Does gross or net metering apply? (see feed-in tariffs). Net metering makes payback times more difficult to work out, as you don’t know what proportion of energy generated will be exported to the grid.
  • System size.
    What are the Renewable Energy Certificates worth? (see below).
  • The cost of upkeep. While proponents of solar panels say they’re reliable and require little maintenance, apart from occasional cleaning you’ll need to replace the inverter once during the PV system’s lifetime (an inverter usually costs several hundred dollars).
  • Ideally, you’d also take rising electricity costs into account. Producing your own solar electricity is becoming more financially attractive as coal-fired electricity prices are expected to rise.


The Renewable Energy Target and Solar Credits

Renewable Energy Certificates (RECs) are electronic certificates linked to the carbon emissions saved by installing renewable energy systems. Owners of solar power systems can sell RECs, which effectively gives additional financial support to households and businesses that install small scale solar PV, wind and hydro electricity systems. From 1st of January 2011, there has been several important changes to the scheme, including:

  • The renewable energy market has been split into two parts - the Large‑scale Renewable Energy Target (LRET) and Small‑scale Renewable Energy Scheme (SRES).
  • SRES will cover small generation units, such as rooftop solar panels and solar hot water (such as the ones discussed in this article).
  • The RECs created from small scale solar power units may be referred to as Small-Scale Technology Certificates (STCs).

There are also some important changes to the amount you will receive for your RECS. In the past, the price of these certificates was governed by supply and demand, which meant price fluctuations. To make it easier for people to estimate the cost of installing solar power, the government decided to fix the price of RECs at $40. However, the price you get will depend on how you choose to sell your RECs.

The most common option is to allow someone else - most likely the installer - sell your RECs. This may then be applied as a discount to your installation costs. The benefit is that the process is hassle free, which means all the paperwork is taken care of for you. The downside is that you probably won't get the full $40 value of the RECs, and you will still need to shop around and find a registered agent to make sure you are getting the best value.

The second option is to sell the RECs yourself, which involves considerable paperwork, applications and a few fees. Depending on the number of buyers and the time it takes to complete the process, it may be a couple of months after installation until you receive your funds. There's no way to tell exactly how long you could be waiting, which means unless you have the capital you might find yourself out of pocket. However, you will get the full value for the RECs.

Currently, the scheme applies a multiplier of five to the number of RECs your system can produce, and it allows you to claim the certificates you can potentially earn over the next 15 years today, regardless of if you later decide to sell the house or in the event of damage. A typical 1.5kW system is expected to produce about 31 RECs over 15 years (or 155 when multiplied by five as per the Solar Credits Scheme) in sunny locations such as Adelaide, Brisbane, Cairns, Canberra, Perth, Sydney and Townsville. Assuming you get the full value of the RECs, this means a return of approximately $6200.

However, the scheme is already scheduled to be gradually reduced. The multiplier will be reduced to four from 1st July, 2011, and it will be reduced by one every year until the multiplier is phased out in 2014. There's a lot of information to consider when it comes to the RECs solar bonus scheme, but don't let it overwhelm you. You can find out more information in this step-by-step guide from the Office of the Renewable Energy Regulator (ORER).

A viable alternative

GreenPower is a much cheaper and easier way to buy renewable energy that gets fed into the national electricity grid. Choosing the GreenPower option with an electricity supplier will only cost between $4 and $7 extra per week on top of your normal electricity bill. That extra amount is much less than the cost of installing your own solar panels. To have the best effect, choose 100% Accredited GreenPower. Some companies offer a solar power option.

However, GreenPower is not without its own problems under recent legislative changes.

A feed-in tariff is what you’re paid for energy you feed into the national electricity grid. The key distinction between feed-in tariff plans, apart from their rates, is whether you’re paid for all the energy you feed in (called a ‘gross metering’ system), or just the difference between the amount of energy your household uses and what it produces (‘net metering’).

Gross metering

Gross metering is best for households because it means you’re paid the higher rate for all the electricity you produce. That system has been used in most countries where solar power has been successful. It currently applies in just ACT and NSW.


Net metering

With net metering, you don’t know what you’ll get paid so it’s hard to estimate your system’s payback time — a disincentive to investing in solar panels. You’ll probably be paid less under net metering, because if your household appliances are being used at the same time as the panels are generating electricity (during the day), the ‘net’ effect is you’d be exporting little energy to the grid.

Feed in tariffs state by state

StateModel Rate paid (Per kWh)Max sizeProgram Duration Commencement
ACT Gross
50.05c (up to 10kW); 40.04c (up to 30kW);
Under 10 kW - premium rate; over 10kW - 80% of premium rate; over 30 kW - TBC 20 years  March 2009
10kW 20 years July 2008
NSW Gross
10kW 7 years January 2010
60c (credit only)
5kW 15 years 2009
SA Net
10kW 20 years July 2008
WA Net
TBC TBC August 2010
TBC TBC 2009
NT Net
45.76c (Capped at $5 per day, then reverts to 23.11c per kWh)
TBC TBC Available for 225 rooftop PV systems in Alice Springs.

Source and CHOICE research.


Before buying a solar panel:

  • Improving the energy efficiency of your home can save you up to 30% on your bills – turning off appliances, using the dishwasher when full and purchasing energy-efficiency appliances.
  • Check if the roof faces the right direction. Only north-facing panels will produce their full capacity.
  • Find out what local council approval is needed. Increasingly, local councils also have advisors that can assist you with making the best decisions on solar.
  • Determine what energy reduction you would like to achieve. Assess what energy you currently use and the capacity panel you need (and can afford).
  • Do the sums to estimate the system’s payback time and the environmental difference it will make. See Weighing up the costs.
  • Identify various providers/installers available. Seek quotes. Make sure the installer is accredited and that the panel meets the international standards. See choosing the panel/installer.

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