Solar panels are increasingly being installed by homeowners who are worried by rising electricity costs, and who want a system that both cuts their bills and produces greener energy. We explain what you need to know before installing a solar photovoltaic (PV) system on your roof.
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What size solar panel system do I need?
To size your solar panel system you need to work out how much electricity you use and when you use it.
As a guide, a typical home uses 20kWh of energy a day. A 5kW solar system would meet most of the daytime power needs of such a home.
How many solar panels do I need?
- The power output of your whole solar system matters more than the size or number of panels.
- The higher each panel's nominal power rating (and actual power output), the fewer panels you'll need (or the more power you'll generate).
- 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.
- The panels in our solar panel reviews are each about 1.6 square metres in area, but they vary in length, width and power output.
CHOICE tip: Fewer panels can mean a quicker installation.
An example: You could use four 250W Jinko panels, taking up 6.5m2 of roof space, to make a 1000W array. But four 327W Sunpower panels would take up the same overall area and form a more powerful 1308W array (although the Sunpower panels would cost you more).
How much do solar panels cost?
According to SolarQuotes, these are the current price ranges for qood quality solar panel systems:
- 3kW: $3,500 – $5,000
- 5kW: $4,500 – $8,000
- 6.6kW: $5,000 – $9,000
- 10kW: $8,000 – $12,000
Those prices include the usual rebates and incentives. Expect to pay the higher end of the range if you're going for top-quality components or if your home has unusual installation requirements.
CHOICE tip: Compare prices for whole systems, not just individual panels.
How much money will I save using solar power?
It takes anywhere from two to seven years for a solar system to pay for itself – after that is when you can start counting the savings.
Payback times vary depending on where you live in Australia. The infographic below shows averages for capital cities.
The time it takes for a 5kW system to pay for itself in capital cities.
Perth: 3-4 years
Darwin: 5-6 years
Brisbane: 4 years
Sydney: 4 years
Canberra: 4-5 years
Melbourne: 5 years
Hobart: 5 years
Adelaide: 2-3 years
Solar incentives
There are two main incentives that can help you make money off your solar PV system: small-scale technology certificates (STCs) and feed-in tariffs (FiTs).
What is an STC?
An STC is a form of currency available to owners of small-scale renewable energy systems. 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.
A new solar PV system will generate a certain number of STCs depending on the size of the system and its location. Generally, the bigger the system and the sunnier the region its in, the more STCs it will generate. As an example, a 6kW system in Sydney will generate 99 STCs.
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.
How to sell your STCs
Have the installer sell your STCs for you: The easiest and most common option is to allow someone else – usually the installer – to sell your STCs 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 as the installer will take a cut of the transaction (or impose an administration fee) for handling the STCs. You can usually expect about $30 to $40 per STC.
Sell your own STCs: 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. You might be able to get a better price than that offered by the solar installer, though maybe not enough to be worth the effort.
How much money will I make selling STCs?
Using the above example, a 6kW system installed in 2019 in Sydney will generate 99 STCs over 12 years. Assuming a sale price of $35 per STC, that's a $3465 saving off the cost of the system.
Tip: To calculate how many STCs your system will generate, use the government's calculator.
A FiT is the rate you're paid for feeding electricity back into the grid (assuming your panels are grid-connected). Nowadays you don't make much money from FiTs, so it's best to maximise your own use of your solar PV and minimise your export to the grid.
How feed-in tariffs work
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.)
How much money will I make from feed-in tariffs?
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:
Do I need a solar storage battery?
A home storage battery lets you store the electricity generated by your solar panels to use at night or on a cloudy day.
You may want to consider a system that includes battery storage; the Tesla Powerwall is the best-known solar battery but there are many other brands in the market. But generally, storage batteries don't make full economic sense yet for most homes.
CHOICE visits the CSIRO's solar ground station where our tests are carried out
Solar panel buying guide checklist
- 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 help people make the best decisions on solar.
- Try to figure out your system's payback time.
- The inverter (which converts DC power from the panels into AC power for your home) is a key part of the system. See our guide to buying a solar inverter for all the details.
- If you're considering adding a battery, see our buying guide to solar storage batteries to understand the pros and cons of these.
- Get multiple quotes from installers to ensure you're getting a good deal, and make sure your installer is CEC-accredited (see below).
- Make sure your solar panels meet the required standards (see below).
- Check your solar panels' product and performance warranties; see below for what these are.
Installation, standards and warranties
If you want to be eligible for small-scale technology certificates (STCs), your system must be installed by a CEC-accredited installer. The Clean Energy Council (CEC) is Australia's peak body representing the clean energy sector. It accredits both installers and systems that meet certain standards.
Look for a CEC-accredited company:
- that is a signatory to the CEC's code of conduct
- has been in business for a while
- has an established track record
- relevant experience
- specialist expertise, and
- a good reputation.
Retailers can also sign up to the CEC's voluntary code of conduct, which demonstrates a commitment to best-practice installation.
See our guide to finding a good solar installer.
Solar panels in Australia work best when they're facing north, pointed directly at the sun, at an optimal angle and not blocked by trees or shading.
Solar panels to suit a very hot climate
Some panels have better temperature tolerance than others (look for a lower 'temperature coefficient') and are therefore a better choice in hot climates.
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'll 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).
Panels should be installed in a way that allows air to circulate underneath to help keep them cooler.
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.
Also, the Clean Energy Regulator has partnered with the solar industry and peak bodies to introduce the Solar Panel Validation Initiative. This scheme allows businesses in the Small-scale Renewable Energy Scheme supply chain to check if solar panels are genuine before they are installed. Participating installers and suppliers will be able to use the scheme to provide you with a verified report confirming that the panels they've installed on your roof are genuine and that you're getting what you've paid for.
There are two warranties provided for solar panels: one for the product, another for its performance.
Product warranty
This is the warranty for the panel itself; it's the typical type of warranty that offers repair or replacement if there are any manufacturing faults. Most solar panel product warranties are for 10 years; some manufacturers offer 12, 15 or even 25 year product warranties.
It's important to know the difference between the product and performance warranties; you'll see a 25-year performance warranty promoted more loudly than a 10-year product warranty, but the product warranty is the one that you're more likely to call on if there's any problem.
Performance warranty
The performance warranty is a guarantee that that as long as the panel is functioning and undamaged, it will still produce at least 80% of its claimed power rating after 25 years. The warranty usually also promises that the panel will degrade in an orderly, linear fashion; that is, it will only lose a small and predictable amount of power output each year.
Most solar panels have 25-year performance warranties, and most solar PV systems should last at least that long.
Note that it can be hard to tell whether your panels are truly performing as they should, especially after several years. If you believe your panels aren't performing as expected, the performance warranty may put the onus and cost on you to have the panels tested in order to make a warranty claim.
It's also a question as to whether a manufacturer will still be around in 20 + years to honour a warranty claim. Nevertheless, the 25-year warranties do give some assurance that manufacturers are confident in the long-term performance of these products.
Other warranties
As well as the warranties for the solar panels, you should also get a warranty from the installer for their workmanship in installing the system; the mounting racks, wiring and connections. This will typically be one or two years - which should be enough to detect any major problems - but as always, a longer warranty is better.
The inverter will also have its own warranty, typically five years but they can be up to 10 years or more.
Home insurance
Your solar panels and inverter are part of your house and as such are covered by your home insurance. However you should make sure your home's insured amount is increased, to cover the replacement cost of the solar panel system. See our guide to solar panels and home insurance.
- 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 smart 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?
How do solar panels work?
- Some materials can be made to produce electricity when light falls on them; this is called the photovoltaic effect. Solar panels use this 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 or to your own battery storage system.
What are solar panels made of?
Most solar cells are made of silicon. Solar panels, also called modules, are each made of several solar cells (most in our test have 60 cells), connected together and sandwiched between protective glass and a backing plate. The whole panel is usually surrounded with an aluminium frame. A typical installation includes several panels connected together in an array.
Types of solar panels
Almost all panels used in home solar systems are mono- or multi-crystalline. While there are technical differences between these types, don't put too much consideration into this; it's much more important to consider other aspects such as price, rated power output, and warranties.
Monocrystalline panels are typically black in colour and have a reputation for higher efficiency than multicrystalline (or polycrystalline) models, which are typically dark blue and are sometimes said to have better temperature tolerance. 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.
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.
Bifacial panels have (as you'd expect) solar cells on both sides, front and back. When mounted in the same way as a regular solar panel, the front faces the sky as usual, and the back picks up scattered and reflected sunlight from the roof.
They can also be mounted vertically, for instance facing east-west, to maximise solar power generation all through the day (one side catching the morning sun in the east, while the other side catches the afternoon sun in the west); this may be particularly useful in mass arrays on a commercial solar farm.
Depending on how they're mounted and how much reflected sunlight is available, they can deliver anything from 5% to over 20% more power than a single-faced panel of the same power rating. Their power output is very dependent on how they're mounted (more so than for regular panels) and industry is still working on an agreed standard method to rate their overall power output. We've included one in our current review for experimental purposes, but aren't including it in the published results until we have more clarity around how to rate the results. The results for the first year are encouraging and indicate that when used in a well-designed installation, bifacial modules can indeed deliver more power than an equivalent single-faced panel.
Bifacial modules are fairly new and not widely used yet, but we think it's likely they'll become more common over the next few years.
PHOTO: CSIRO Energy Centre
