As electricity prices continue to rise, more and more Australians are looking to reduce their power bills by switching to renewable energy—and the question we get asked the most is “how much money can I save with solar panels?”
The short answer is, there’s never been a better time to invest in solar power for your home or business.
Right now, the cost of solar panels is at an all-time low—with a high-quality, average-sized, 8kW solar system costing as little as $8000-$9000 fully installed. And, with solar technology advancing at such a rapid rate, it’s possible to get a return on your investment in just three to five years—while paying less for your average electricity usage along the way.
So, let’s break the numbers down to see how much you can save when you install solar.
Understand the upfront cost of solar panels
Before we can work out your ongoing savings from switching to solar power, we first need to understand the initial outlay involved in installing solar panels for your home or business.
There are a number of variables that will affect costs—from where you live, to solar installers you choose to work with—so keep these in mind as you plan your initial budget:
- Any government (or Clean Energy Council) rebates and incentives for solar power.
- The solar installation process—varying by the retailer or installer you choose.
- The type of solar panel system—including the number of solar panels.
- The type and size of solar inverter.
- Whether you buy solar batteries.
- The type of framing equipment and other solar panel system components.
- Any after-sales service warranties and agreements.
Considering the above variables, the following tables show the approximate upfront price range across Australia for residential and commercial solar systems. As you can see, these can vary widely—so keep these costs in mind before trying to calculate your ongoing solar savings.
Estimated prices for residential solar systems
|System Size||Estimated Price Range|
|2 kW||$2,800 – $5,600|
|3 kW||$2,900 – $6,950|
|4 kW||$3,400 – $7,900|
|5 kW||$3,500 – $9,500|
|10 kW||$7,600 – $14,100|
Estimated prices for commercial solar systems
|System Size||Estimated Price Range|
|10 kW||$12,100 – $14,700|
|30 kW||$30,200 – $38,200|
|50 kW||$49,800 – $63,900|
|100 kW||$101,400 – $115,500|
Understand the factors that affect ongoing solar power savings
Now we know the typical upfront costs of implementing solar power for your home or business, we can start to work out how much money you can save on your ongoing electricity bills.
Again, your potential solar savings are affected by a number of variables—so let’s look at those in more depth.
Your feed-in tariff rate
Most customers will sign an agreement with their electricity retailer, who will buy back any excess solar electricity that doesn’t get used. This is called a feed-in tariff, and it’s where you send any solar energy back into the grid from your house—while receiving a rebate on your power bill.
Depending on your state, Australian energy providers will typically offer a rate of between 7-11 c/kWh. So, before you start planning your savings, shop around to secure the best deal for your needs.
Consider solar storage
This is the time you should also consider whether adding a solar battery solution will better help you save money. Because solar panels can only generate energy when the sun’s out, solar batteries store that energy so you can access it at any time—like on an overcast day or at night.
While there’s an upfront cost, the lower energy costs of using your stored solar could provide a far cheaper overall electricity cost than the rebate you receive from your feed-in tariff.
Your current energy usage—and the size of your solar system
To truly maximise solar savings, finding a system that suits your energy consumption is key.
The first step is to understand how much electricity you currently use on a monthly basis, which you can find on the back of your recent power bills, shown in kilowatt-hours (kWh).
The size of the solar energy system you need influences the amount of money you save. So the goal is to maximise your return on investment by choosing a system that can generate electricity at a rate that covers your power usage, while lessening the payback period.
This takes a careful balance. If your home or business uses more electricity than your solar energy system can produce, it will then source power from the grid. But, installing a solar system that’s too large will mean you’re exporting a surplus of renewable energy back into the grid—and if the feed-in tariff rate drops, you may be selling solar power back to your energy provider at less than the costs of your electricity rates.
How your location affects solar power production
Like with your upfront solar panel costs, where you live will affect your ongoing savings too.
Australians enjoy the highest solar radiation per square metre of any continent in the world, so there’s plenty of opportunities to harness the power of the sun. But even within the country, the total energy production you will achieve will vary—and people in Queensland may require different sized solar systems to achieve the same results as those in Perth, who enjoy the second most sunlight hours of any city in the world.
The table below shows what a 3kW system can save on average per annum, based on location, for exporting 5% and 25% of electricity back to the grid.
|Location||Savings at 5% export||Savings at 25% export|
|New South Wales||$1126||$934|
Compare your traditional energy cost to the cost of solar power
Solar power only costs around 5 to 6 cents a kWh to produce, making it a no-brainer to run as much of your home as possible off renewable energy.
Considering the above factors—like the advancement in solar power and solar battery storage technology, the number of sunlight hours in Australia, feed-in tariffs, and your existing electricity usage patterns—the below table shows the potential annual solar savings you can make.
|System Size||Solar Daily Output||Cost of Power||Potential Annual Savings|
|5kW||20 kWh||30 cents||$2190|
|8kW||32 kWh||30 cents||$3500|
|10kW||40 kWh||30 cents||$438|
How long do solar panels take to pay for themselves in Australia
Most Renew Energy customers who pay for a high-quality solar system find it pays for itself in as little as three to four years—while increasing their property value and significantly lowering their carbon footprint.
Those customers typically put the money they save on electricity toward paying for their panels. And this leads us to one of the most important considerations of all: how quickly do you want your solar system to pay for itself?
As a general rule, a solar system will save you up to around $400 per year, per kW. So, a 5kW system—enough to power the average home in Perth, for example—will save you up to roughly $2000 a year.
Knowing this savings rate, you can decide whether you want mid-range panels for a three-year return on your money, a top of the range system with a five-year return, or the fastest return possible, but with the cheapest panels.
In our experience with solar, you get what you pay for. There are significant differences between the different industry price points, and you should understand these before signing up for an installation.
Cheap solar panels—know your risks
Trying to beat that average three to four-year return—say to make your money back in less than three years—typically requires you to buy solar panels with cheap components, which is extremely risky.
The cheaper end of the solar industry is plagued with under-performing panels that require expensive maintenance, no-name manufacturers who go bust (and take your warranty down with them), and unprofessional installers that don’t respond to service requests.
So, think twice before going for the cheapest price.
It’s easy to strip a few hundred dollars out of the installation, which is something no reputable provider company would do. But, we know certain solar companies will—and it’s always the customer who ends up taking the hit.
Premium solar panels—what are the advantages?
If you can be more patient, paying for a mid to premium solar power system with an ROI of three to five years comes with many advantages, especially if you’re planning to add solar battery storage later down the line.
A premium system will generate plenty of solar energy with absolutely minimal maintenance. And, it will come with a far longer product warranty and better aftercare from your installer—while lasting on average seven years longer than cheaper panels.
Of course, it depends on how long you plan to stay in your current house or premises, along with your budget. But if you’re comfortable with a longer return on your money, choosing premium solar power panels is the best option. That’s why at Renew Energy, we offer access to the highest quality solar power system—because choosing premium solar solutions pays off in the long run.
So is a solar power system worth it?
In short: absolutely yes—if you have the budget for a decent quality solar system and shop with reputable solar companies.
And that’s why millions of Australian households and businesses are turning to solar power—because the numbers simply make sense. When sized up properly, solar power can cost as little as 5 cents a kWh—giving you a return on your investment in just three to five years.
By doing the right due diligence, like understanding both your upfront costs and the variables that affect your ongoing savings—you can put the power back in your hands, reduce your carbon footprint, increase your property value, and put more dollars back in your pocket, just by going off-grid with solar panels.
Contact Renew Energy today for your solar system
With thousands of solar panel installations happening across Australia, Renew Energy is a name you can trust. Not sure what the best solar panels for your home are? Contact us and we’ll help you find the perfect solar system for your needs.