Is home solar power in Australia still worth it in 2023?
This article covers the costs and payback period of putting solar panels on a residential rooftop. Solar energy has several financial and environmental advantages. But you may wonder, are the residential solar systems in Australia still worth it in 2023?
What is the average cost of solar in Australia?
For individuals interested in knowing how much solar energy costs in Australia, the solar price index given below includes the most recent costs, broken down by state and system size. The federal government’s upfront STC rebate is included in the cost in the table below, but any additional state incentives are not included.
| 3kW | 4kW | 5kW | 6kW | 7kW | 10kW | |
| 10Adelaide, SA | $3,350 | $3,870 | $4,540 | $4,890 | $5,870 | $8,990 |
| Brisbane, QLD | $4,220 | $4,800 | $5,680 | $6,120 | $7,320 | $10,320 |
| Canberra, ACT | $4,530 | $4,930 | $5,700 | $6,450 | $7,590 | $10,310 |
| Darwin, NT | $5,800 | $7,710 | $8,920 | $10,170 | $11,250 | $14,420 |
| Hobart, TAS | $5,020 | $5,650 | $6,620 | $7,560 | $8,570 | $12,390 |
| Melbourne, VIC | $4,470 | $4,820 | $5,390 | $5,880 | $6,830 | $9,330 |
| Sydney, NSW | $3,900 | $4,300 | $4,930 | $5,360 | $6,490 | $8,990 |
| Perth, WA | $3,270 | $3,690 | $4,700 | $5,610 | $6,240 | $10,170 |
| All | $4,320 | $4,970 | $5,810 | $6,510 | $7,520 | $10,620 |
History of Solar Panel Prices
Prior to 2010, solar energy cost was between $5 and $10 per watt, making it a really exclusive option for early adopters with more resources. The popularity of solar energy has been aided by falling prices as well as the federal STC program, which provides incentives worth up to 40% of the system’s cost. Solar prices have continued to fall sharply over the past five years as installation techniques have become more efficient and product manufacturers have achieved economies of scale in production.
Since 2021, prices have risen in part as a result of COVID-19’s effects, with a demand deficit brought on by the forced closure of numerous industrial facilities. Even if most of that has passed, the rising cost of coal and gas on the global market has led to higher electricity and industrial expenses. Locally, in the Australian market, STC rebates have been decreasing annually as planned, along with rises in labor expenses.
Future Solar System Prices
In the solar business, many people anticipate further price increases for solar systems. The federal STC rebate is expected to decrease annually until 2030, which will likely put higher pressure on solar costs that will be impossible to overcome by efficiency improvements. You can find top solar companies offering their services at affordable costs.
Payback Periods for Solar in 2022
Using some cautious assumptions for a typical residential situation for a residence with an average daily demand of 25kWh and a 6.6kW solar PV system, we have quickly constructed the table below.
Average price for 6.6kW solar system | Price of electricity ($/kWh) | Solar feed-in tariff ($/kWh) | Payback period (years) | Internal rate of return | |
| Adelaide | $4,850 | $0.31 | $0.08 | 2.6 | 40% |
| Brisbane | $6,190 | $0.23 | $0.05 | 4.4 | 23% |
| Canberra | $5,840 | $0.23 | $0.06 | 4.1 | 24% |
| Darwin | $10,170 | $0.274 | $0.09 | 5.2 | 19% |
| Hobart | $7,560 | $0.27 | $0.09 | 4.7 | 21% |
| Melbourne | $5,500 | $0.22 | $0.052 | 4.3 | 23% |
| Perth | $5,920 | $0.30 | $0.05 | 3.3 | 31% |
| Sydney | $5,410 | $0.28 | $0.05 | 3.4 | 30% |
Assumptions:
- Feed-in tariffs and electricity rates are predicated on a middle ground of what is available.
- Assuming that the home uses 50% of the solar energy generated (self-consumption rate)
- The pitch of the panels is 30% northward.
- 5% annual inflation and a 5% discount rate
Conclusion: Solar is worth it financially
As you can see, the majority of Australians can install solar and get a return on their investment in 2 to 5 years. Solar can also generate positive cash flow through a finance agreement or a drawdown on the mortgage thanks to the money it saves on energy costs.
Installing a high-quality solar energy system can also boost the home’s worth and potential rental income because new owners or tenants will be able to take advantage of the free energy on the roof.
Installing solar energy is significant since it lowers a household’s carbon footprint and aids Australia in its transition to 100% renewable energy sources. There is a fantastic chance for a favorable economic and environmental result.
Tags: australian solar systems, home solar, solar in australia, solar power australia