What's in a solar panel?

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.

The rated power output, or capacity, of solar panels has increased over the years as manufacturers find ways to squeeze out more power. Not so many years ago, 250W panels were common; now, you might be offered panels of the same size that deliver 400W or more.

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

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 several 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 it's in, the more STCs it will generate. As an example, a 6.6kW system in Sydney installed in 2021 will generate 91 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.

Is the STC rebate going to end?

You may see scare campaigns from some solar installers, usually towards the end of each year, urging you to "buy solar now before the rebate ends". The STC scheme isn't about to end, but it does reduce slightly at the end of each year. It was never planned to run forever – its purpose is to incentivise more Australians to install solar and help make the solar market mainstream and affordable. It diminishes a bit every year and will eventually become zero in 2031.

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 (so it acts like a rebate). 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 a little 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 $35–39 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 you make selling STCs?

Using the above example, a 6.6kW system installed in 2021 in Sydney will generate 91 STCs. Assuming a sale price of $35 per STC, that's a $3185 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 do you 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 now usually in the range of 4c to 8c/kWh, depending on where you're located and which energy retailer you choose. However, they can go up to 15c/kWh or more, depending on your energy retailer, time of day and other factors.

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:

• ACT: Environment, Planning and Sustainable Development Directorate
• NSW: Energy Saver program 
• NT: Department of Trade, Business and Innovation
• Qld: Department of Energy and Public Works
• SA: Department of Energy and Environment
• Tas: Office of the Economic Regulator
• Vic: Department of Environment, Land, Water & Planning
• WA: Energy Policy WA

What's the problem with the electricity grid?

The electricity grid in Australia was originally built with the expectation that electricity went in one direction only, from power stations to homes and businesses. It wasn't designed to also allow for solar-generated power to flow back the other way. While that's been possible to a reasonable extent so far, the grid is starting to hit the limits of how much electricity it can handle from domestic rooftop solar.

The grid needs a lot of work to update it to become flexible enough to take full advantage of renewable energy sources including domestic solar feed-in, but also allow flexibility for all consumers. This work has to be paid for somehow. Currently, some consumers (renters, apartment owners, low-income households) have little access to the benefits of solar power but must still pay for electricity, and to some extent they subsidise the benefits that solar owners obtain.

Solar owners also are disadvantaged by the lack of flexibility and modernisation of the grid, in that in some areas, there is already limited or zero feed-in due to capacity constraints on the local grid. This means that some solar owners get limited or no feed-in tariff income, and their excess solar-generated electricity may be wasted.

What's the solution?

The Australian Energy Market Commission (AEMC) has proposed several changes to how the market and the grid operate, to allow more flexibility in how power is bought and sold, and to better accommodate domestic solar, batteries and electric cars in future.

New electricity infrastructure ("poles and wires") will still be needed, but we also need to use the electricity supply in a much smarter way, and rebuilding the grid so that it properly accommodates solar-generated electricity from homes is part of the solution.

The proposal includes the option of a surcharge to solar PV system owners who export power to the grid (the so-called "solar tax").

The AEMC expects that the proposed surcharge for solar owners will only have a small effect on their overall return from feed-in tariffs (FiTs). For example, a consumer with a 6–8kW solar panel system is expected to see their typical return from FiTs drop at worst by $106, from $1284 p.a. to $1178 p.a. 

For most solar owners the impact will be less than that, and possibly even a net increase in returns, if they're able to time their solar export to deliver excess energy when the grid needs it, such as late afternoon or evening (when energy retailers are likely to offer a better FiT to attract more exported power). The AEMC has published an explanation of the proposals and modelling.

This situation may make it more attractive to install panels that face partly east or west, to maximise power generation in the morning and late afternoon rather than only in the middle of the day. It may also make storage batteries more economically attractive. If FiTs end up as low as a few cents per kWh during the middle of the day, but increase to much better rates in the late afternoon and early evening when demand on the grid is highest, it may make sense to store your excess power in a battery and sell it back to the energy retailer in the evening.

It will also make sense (even more than it does now) to use as much of your own solar power as possible, as that will reduce any surcharge for exporting power to the grid.

When is all this going to happen?

The roll-out of the new charges and rewards is at this stage still a proposal and won't take effect for a few years, and there will be trial programs and consultations along the way. This is not to say all will be perfect – we need to keep watch and make sure the new system truly is fair and reasonable.

But in short, there's no need to panic, and it still makes sense to consider investing in solar power for your home right now.

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 make sure 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, and 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, but 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?

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.

A PERC cell, or Passivated Emitter and Rear Cell (also Passivated Emitter and Rear Contact), is a high-efficiency form of solar cell. The back of the cell is more reflective, which means that any light which passed through the cell and missed its chance to cause the silicon to generate electricity can be reflected back through the cell for a second chance. There's a lot more to it than that, and there are some potential pitfalls with this technology, but the basics are that PERC cells are generally more efficient at producing electricity than non-PERC 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.

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 in future.