As energy prices around the country soar and concern about electricity bills mounts, solar panels are increasingly being installed by homeowners wishing to take advantage of a system that produces greener energy and insulates them from rising energy prices. But what do you need to know before installing a solar photovoltaic (PV) system on your roof?
This article explains how solar panels work and the many things to consider about rebates, feed-in tariffs and more.
- For information about specific brands and models, see our solar panel review for details of our current test, and our member survey for the best brands for solar panels and inverters as rated by our members.
About solar panels
How does a solar PV (photovoltaic) system work?
Certain materials can be made to produce electricity when light falls on them; this is called the photovoltaic effect. Solar panels use this effect to convert energy from sunlight into direct current (DC) electrical energy. An inverter unit then changes this into alternating current (AC) for your home's electrical circuits. Any excess energy can be fed back to the electricity grid, for which you may be paid an agreed feed-in tariff, or it could be fed into a battery storage system so you can use the stored power later (at night, for instance).
Solar panels work best when they're north facing, pointed directly at the sun, at an optimal angle and not blocked by trees or shading. The effectiveness of solar panels also depends on where you live and the weather.
Cells, modules, panels and arrays
Most solar cells are made of silicon. Solar panels, also called modules, are each made of several solar cells, connected together and sandwiched between protective glass and a backing plate, the whole panel usually surrounded with an aluminium frame. All the tested panels have 60 cells except the Sunpower which has 96. The solar panels we're testing weigh around 18 to 19kg each. A typical installation includes several panels connected together in an array.
Types of solar panel
Monocrystalline panels are typically black in colour and have a reputation for higher efficiency than multi-crystalline (or polycrystalline) models, which are typically dark blue and are sometimes said to have better temperature tolerance (see efficiency below). The differences come from the manufacturing processes of the silicon cells in each case. In practice there's not necessarily a clear advantage either way; as with most high-tech products, solar panels are a complex assembly of many components and the overall performance depends on more than simply the type of cell.
Interdigitated back contact solar cells (IBC), or rear contact solar cells, are a variant of standard solar cells. They can achieve higher efficiency by having all the electrical contacts on the rear of the cell (rather than at the front), so there are no metal contact strips preventing light getting to the cell surface. The Sunpower panel in this test uses IBC cells.
Thin film solar cells are made from a thin layer of photovoltaic material (such as amorphous silicon, cadmium telluride or copper-indium-gallium-selenide) on a base plate of glass, metal or other substance. This technology is evolving and while it promises more flexible applications than standard solar panels, it's so far generally less efficient and is rare in rooftop arrays. It’s used in various large and small applications, from building-integrated PV systems to solar-powered calculators and garden lamps.
This is simply a measure of the panel's electricity output (in watts) compared to its surface area. Generally, the higher the efficiency, the more power you can get from a given roof area, and you might have lower installation costs too. However, if you have plenty of roof space, you might find it more economical to buy cheaper panels with lower efficiency and just use more of them.
This may come as a surprise, but although solar panels are meant to sit on roofs in direct sunlight, they actually become less efficient as they get warmer, due to the physics of the photovoltaic effect. So you will sometimes get less power from the panels on a very hot day than on a mild day (and remember, even on a 25°C day, your rooftop panels could be operating at well above 40°C). Solar panel power ratings are based on standard conditions (25°C panel temperature). Some panels have better temperature tolerance than others (look for a lower 'temperature coefficient') and are therefore a better choice in hot climates. Correct installation is also important; that's why panels should be installed in a way that allows air to circulate underneath the panels to help keep them cooler.
Choosing an installer
The Clean Energy Council (CEC), Australia's peak body representing the clean energy sector, accredits both installers and systems that meet certain standards. To be eligible for any small-scale technology certificates, systems must be installed by a CEC-accredited installer.
Retailers can also sign up to the CEC's voluntary code of conduct, which demonstrates a commitment to best-practice installation.
So your best bet is to look for an accredited company that is a signatory to the code of conduct, has been in business for a while and has an established track record, relevant experience, specialist expertise, and a good reputation.
Does the solar PV system meet standards?
You should ensure that any solar PV system you consider has met Australian and international standards. To be eligible for small-scale technology certificates, your solar panels must be certified – ask your installer to supply proof. You can check the CEC's list of currently approved inverters and modules to confirm.
How much panel capacity do you need?
Nowadays you don't make much money from feeding electricity back into the grid. So you want to maximise your own use of your solar PV and minimise your export into the grid.
Unless you're able to get (increasingly rare) high feed-in tariffs or store your surplus energy using (still expensive) batteries, to get a system that is going to pay for itself quickly, you need to calculate how much electricity you use in your home during daylight hours when your panels are generating at their peak and match the size of your system to that consumption pattern. You can find useful information about your energy use by looking at the previous year's energy bills.
If you don't consume much energy during the day then you'll want a smaller system. If you do, you'll want a bigger one.
Manufacturer warranties range up to 25 years. Solar systems should last at least that long, so you look for an installer who's offering a warranty or guarantee for that length of time.
The solar panels we've chosen for our test have 25-year performance warranties (typically warranting that the panel will still produce at least 80% of its claimed power rating after 25 years) plus a 10 to 12 year warranty for the product itself. An installer may also give warranties for the mounting frame, workmanship and so on. Sunpower is an exception, with a 25-year warranty for both performance and product, and higher performance criteria in the warranty.
How much do solar panels cost?
The cost of a solar PV system will depend on many variables including the system size and the quality of components used. According to the Alternative Energy Association (ATA), the overall average cost of a fully installed 2.0 kW system, before rebates and discounts, in 2013 was roughly $4400. But larger systems will cost more – in our recent solar survey, we found on average our members paid $8243 after all rebates and discounts. This price difference could probably be accounted for by system size – 90% of those surveyed had systems over 2.0 kW, with 49% installing systems of over 4.1 kW.
There are two main incentives that can help pay off solar PV systems: small-scale technology certificates (STCs) and feed-in tariffs (FiTs).
Small-scale technology certificates (STCs)
Under the federal government's Solar Credits Scheme, eligible households receive money for STCs created by their PV systems. STCs were formerly known as renewable energy certificates or RECs. Currently, the scheme allows you to cash in the certificates you could earn over the next 15 years straight away.
While the government has set a price of $40 per STC sold through the STC Clearing House, the price you get will vary depending on how you choose to sell your STCs.
The easiest and most common option is to allow someone else – usually the installer – to sell them on your behalf. This may then be applied as a discount to your installation costs. The benefit is that the process is easy, with all the paperwork taken care of for you. The downside is you're likely to get less money per STC – you can expect about $30 per STC.
The second option is to sell the STCs yourself, which involves considerable paperwork, applications and fees. Depending on the number of buyers and the time it takes to complete the process, it may be months after installation before 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 should get a better price. On average, CHOICE members who sold their STCs themselves got a price of $33 per STC, with the highest price per STC being $37.25.
A typical 2.0kW system installed in 2015 in Sydney will generate 41 STCs over 15 years. Assuming a sale price of $30 per STC, that's a $1230 saving off the cost of the system. To calculate how many STCs a system will generate, you can use the government's calculator.
Feed-in tariffs (FiTs)
A feed-in tariff (FiT) is the rate you're paid for electricity that grid-connected panels contribute to the local network. There are two types of FiTs: net and gross.
Almost all FiTs around Australia are now net FiTs. This means a household is only paid for surplus electricity fed into the grid after domestic use is subtracted. If your system produced 3000kWh, for example, and you used 2500kWh of electricity in your home during the day (the time when your PV system was generating power), the rate is only paid for the 500kWh difference.
Gross feed-in tariffs, where households are paid for all the electricity their panels produce, irrespective of their own domestic electricity consumption, are no longer available for new applicants in any state or territory.
FiT rates around the country have plummeted over the past few years. Coming off a high of up to 60c per kWh in some parts of the country several years ago, FiTs are currently sitting at close to 8c, depending on where you're located and which energy retailer you choose.
Note: in some states and territories, newly installed solar PV systems no longer qualify for a guaranteed FiT; however, many energy companies offer a voluntary FiT instead. Check with your energy company or the appropriate regulatory authority in your state.
Solar panel buying guide checklist
- Improve the energy efficiency in your home to save up to 30% on your bills. You can do this by turning off appliances, using the dishwasher and washing machine only when full and purchasing energy-efficient appliances.
- Assess what energy you currently use and the system capacity you need (and can afford).
- Check if your roof faces the right direction. Only north-facing panels will produce their full capacity.
- Ensure there are no trees, power lines or other structures shading your roof.
- Find out what local council approval is needed. Increasingly, local councils have staff on hand to assist with making the best decisions on solar.
- Try to figure out your system's payback time.
- Get multiple quotes from installers to ensure you're getting a good deal.
- If you can't afford the upfront costs, consider solar leasing and power purchasing agreements.
- Make sure the installer is accredited by the CEC and that the panel meets the required standards.
- Check out the CEC guide to installing solar in your home.
Questions to ask a potential installer and energy retailer
- What is the FiT you'll be paid and how often will you get it? How will you receive it: as a discount off your energy bill or as a standalone cash payment?
- Will you need to change to a new meter and what will it cost?
- What is the cost of the electricity you purchase from your retailer (in cents per kWh), and will you lose your off-peak rates if you install solar?
- Will you be charged a higher daily fixed charge if you connect your solar PV system?
- Do you have to pay any additional fees?
For more information on feed-in tariffs state by state, contact the following government bodies: