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Solar Panel Prices – Why Install a Solar Power System?

Is it worthwhile installing solar? With the reduction in government rebates and incentives for solar some consumers remain sceptical whether it is worthwhile to install a solar power system. This blog looks at the changes in the incentives and solar power costs since 2008 and current solar panel prices to answer this question.

The solar industry in Australia has gone through an extraordinary journey during the past 11 years and has always been driven by factors such as rebates, environmental considerations, affordability, available technology and the cost of electricity.

Back in 2008, the industry was mainly driven by generous federal and state rebates. These rebates were gradually withdrawn because the take-up of rooftop solar had exceeded all expectations as Australians embraced the new technology.

Families in Western Sydney lead the charge to solar

Above: Families in Western Sydney lead the charge to solar

Government rebates and incentives played an important role in introducing the technology to the market and encouraged households to install rooftop solar panels despite the high costs involved in the early days.

After the rebates and incentives were wound back by the state and federal government, the actual cost of solar panel systems kept falling instead of increasing as expected. In fact, today the prices of solar panel systems are at their lowest record while the incentives are also at a record low compared to the early days.

Historically there have been two types of incentives for solar in NSW:

  1. Feed-in tariffs (FIT) for power exported back to the grid from the solar system. This started with the huge 60 cents per kWh tariff back in 2009 then reduced to 20 cents. The state government realised it was too generous and unaffordable, so the FIT was abolished and replaced by net metering. This enables the energy retailers to provide credit for the energy exported to the grid – normally around 9c per kWh.
  2. Small Scale Technology Certificates (STCs) managed by the federal Clean Energy Regulator. Households and businesses can trade-in their STCs when purchasing solar systems up to 100KW and receive a point of sales discount from their solar retailer. The STCs’ incentives are reduced every year by 7% until they run out in 2030.

Below is an example comparing a typical price of 5kw solar system from 2010 to 2019 and it also shows the incentives for purchasing solar power systems (NSW):

SolarBright Historical Price 2010 2019
Price of 5KW solar system

Premium range

(out of pocket expense)

$19,558

(Silex panels)

$6,400

(LG Panels)

Price of 5KW solar system

Budget range

(out of pocket expense)

$16,148

Entry level

$4,000

Entry level

State incentives Generous Feed-in-tariff NIL
Federal incentives $9,320

RECs (233 X $40)

$3,034

STCs (82 X $37)

 

 

The graph below show the prices of solar power systems are drastically lower today compared to 2010 despite the reduction in the incentives. This graph is based on the SolarBright historical price:

Solar Panel Historical Price

 

The other interesting fact is that today there are more Australian families and businesses installing panels on their roofs than ever. There are more than 2 million households with solar panels and this number increases every day.

Below is a graph showing the KWs of solar installed per calendar year since January 2010 in Australia:

AUS PV INSTALLS

So, how could the cost of installing solar panels have gone so low despite the removal of most of the subsidies?

  • The reduction in cost of components mainly out of China; for example, cost of panels has fallen by over 60%.
  • The massive increase in competition; it is healthy to have good competition in the market although this is a two-edged sword, having attracted opportunistic and dodgy operators.

The low cost of installing solar panels has helped more households to go solar in recent years. If the rebates in the early days were the main driver for installing solar power systems, the motive has shifted, and the main driver now is the high cost of electricity. Customers are using solar panels as a tool to reduce the cost of energy in their homes and businesses.

The graph below shows electricity prices are at record highs:

ELECTRICITY PRICES

Installing solar panels and solar batteries have proven to be the most effective way to keep the cost of electricity under control. It is important to remember that the main purpose of installing solar and solar batteries is not to wipe out electricity bills all together but rather to reduce them.

Electricity prices are at record highs while solar power systems prices are at record lows, so why not install solar panels on your roof and take back control of your power bill?

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