Solar Installation Costs Explained

Unless you’re living in the last century, you have all by now heard about the benefits of installing solar. In fact, if you don’t already have solar installed, there’s probably only one thing stopping you – the cost.

While the price of solar has come down considerably in recent years, it remains a hefty investment for the average household. So how much exactly will your solar system set you back? Canstar Blue takes a look.

What does it cost to install solar?

The cost of installing a standard rooftop solar PV system varies between $3,000 and $14,000. The price mostly depends on your location, as well as the size of system you’re looking to install – the larger the system, the more expensive it will be.

These prices factor in discounts from the Federal Government’s Small-scale Technology Certificate (STC) incentive which you can read more about here. STC’s essentially provide a substantial discount (up to several thousand dollars) off a renewable energy generator such as solar panels. Again, this depends on your location and solar PV system size.

As a very general rule, the average price you should expect to pay for solar installation is $1.60 per watt (or $1,600/kW). That said, the price per watt decreases with larger solar systems.

The table below shows average prices for purchasing and installing a solar PV system across the states and territories:

Nationwide average price for solar

Solar system size National average price* NSW VIC QLD SA TAS WA
1.5kW $3,737

$3,078

$3,380 $2,981 $3,465 $3,804

$2,283

2kW $4,300

$3,545

$3,994 $3,583 $4,014 $4,410

$2,784

3kW $5,368

$4,729

$4,827 $4,263 $5,176 $5,904

$3,385

4kW $6,369

$5,233

$5,628 $5,191 $5,861 $7,185

$4,202

5kW $6,973

$6,041

$6,501 $6,031 $6,870 $8,141

$4,769

10kW $14,859

$13,218

$13,626 $12,759 $13,468 $15,908

$14,155

*Estimated price for product and installation after Government STC rebate. NT and ACT prices excluded from table.

As you can see, prices vary considerably depending on where you live. Western Australia is the cheapest place to install solar (except for 10kW systems), while installing solar in Northern Territory is 2 to 3 times more expensive. To illustrate, the average price of installing a 2kW system in WA in November 2016 was $2,684, while in NT it was $7,293, according to Solar Choice.

What else might affect the cost of solar?

System size and location are undoubtedly the largest contributors to the price of your solar system, but there may be some other contributors to price, particularly pertaining to installation costs.

  • A flat roof: Solar panels must be optimally angled toward the sun. If you have a flat roof, then you need mount installed to correctly tilt the panels. These mounts will cost you an additional $20 to $80 per panel.
  • Roof condition: Nearly all types of rooves can have solar panels attached, however the harder your roof is to work on, the more installers will charge. Old rooves which require more delicate work will be the most expensive. The installer will let you know about this when you receive your quote.
  • Installer demand: Installation costs are largely dependent on supply and demand. In areas, or at times, where installers have a lot of work to get through, they will tend to charge a higher price. Generally speaking, solar technicians are in lower demand (and therefore cheaper) in the early parts of autumn and spring.
  • Solar panel quality: Not all solar panels are the same. Some have a superior crystalline structure which makes them more efficient at transforming sunlight in to useable electricity. Efficient panels are more expensive in the short term, but may save you more in the long term.

How much will solar save me?

While a solar system is undoubtedly expensive, it can still work out to be a profitable long-term investment. In most situations, your solar system can eventually pay for itself with the savings it generates. How long this will take depends on a myriad of factors, including household energy consumption, solar system size, cost and… the weather.

Another important consideration is if you receive a feed-in tariff (FiT), which is a small subsidy for each kWh of electricity your solar system exports to the energy grid. This FiT is usually around 4c-10c, although some who live in rural areas, or installed solar before 2013, may still benefit from ‘premium tariffs’ of 20c or more for a while longer.

Most solar systems have a warranty of 10 to 15 years, and you can usually expect your solar system will pay for itself during this time (as illustrated in the below case example). After that, any electricity your solar panels produce is pure profit.

Case Example:

How long to pay off solar?
 
Let’s use a fictional Sydney home for this example. It has the following details:new-rooftop-solar-case-example

  • It has a 4kW solar system (price: $5,233)
  • No solar battery
  • 20kWh daily energy usage. 14kWh from the grid, 6kWh from the solar system.
  • Feed-in Tariff of 6c/kWh
  • Electricity rate of 28c/kWh

A 4kW solar system can produce about 16kWh of electricity per day in optimum conditions. Without a solar battery, this energy must be immediately consumed, or exported to the grid. Assuming 6kWh of solar is consumed through the day, this means that 10kWh of solar electricity is being exported. This house will receive a daily FiT subsidy of 60c (6c x 10kWh).
 
This household consumes 20kWh of electricity each day. At a rate of 28c/kWh, that equals $5.60/day. However, 6kWh is now produced by solar, meaning only 14kWh needs to be drawn from the grid. Now grid electricity costs this house $3.92/day. That’s a saving of $1.68/day.
 
When you combine the savings on electricity with the feed-in tariff subsidy, this house is saving $2.28 on electricity each day.
 
This solar system cost $5,233, so it will take 6.3 years for this solar investment to pay off.

The above example is very generic and the amount of time it takes for your solar system to pay for itself will depend on your own situation. It is much easier to save with solar if your energy retailer has your back, and that’s why Canstar Blue has researched consumer satisfaction with leading solar companies.

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