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That big ol’ ball of gas in the sky is useful for more than just giving you some sweet tan lines – it’s also an excellent source of energy. Significantly better for the environment than traditional sources of electricity, solar power has steadily become a more feasible option for conscientious energy customers across Australia.

As solar panel prices continue to drop in line with uptake in demand and advances in technology, there are many things you should consider before deciding whether to make the switch to solar power.

Read on to discover how it all works and what you need to make the transition.

First of all: What is solar energy?

Solar energy is created by the heat and light emitted by the sun. We can harness this energy and convert it to electricity, use it to heat water or air and even create solar fuels (like hydrogen); doing any of these produces solar power.1

How does solar power work?

Solar power systems harness energy from the sun and convert it into electricity. There are two primary solar energy technologies used in Australia:2

  • Solar thermal. Takes sunlight and turns it into thermal energy to be used for heating or producing electricity via steam and turbines. This type of energy generation is typically reserved for large-scale
  • Solar photovoltaic (PV). Converts solar radiation into electricity through PV panels, which can be installed on a variety of different surface types. Solar PV systems can be augmented with mirrors and lenses in larger systems to boost generation.

solar thermal example

Solar thermal


Solar photovoltaic example

Solar photovoltaic

Naturally, the effectiveness of these technologies is entirely dependent on the weather. However, as you probably know all too well, this isn’t too much of an issue in Australia.

While climates do vary between regions, the country is a fairly sunny place. In fact, Australia receives enough solar radiation per year to power the entire country 10,000 times over, according to figures collated by Geoscience Australia.2

Types of solar power systems

There are three main types of solar power systems available in Australia:

  • On-grid. These systems draw on the electricity generated from your panels and switch to grid power once that energy is used up. They’ll also feed any excess electricity you generate back into the grid; this is where you can consider a solar feed-in tariff (FIT). On-grid systems don’t come with battery storage, and so don’t continue to power the household when the sun isn’t out.
  • Off-grid. Off-grid systems operate as their name suggests: completely disconnected from the grid. These systems come equipped with batteries, as they’re generally suited to properties that are too remote and too expensive to connect to the main grid. Because of this, off-grid systems need to have a bigger solar array (arrangement of panels) to both power the household and keep the batteries fully charged.
  • Hybrid. Hybrid systems are on-grid systems that also have battery storage; any electricity generated by the panels and not used by the household is then stored in the batteries for those times when the sun isn’t shining (e.g. at night). If the batteries run out, you can still draw electricity from the grid.

Components of a solar power system

It’s all well and good to understand how solar power works and how it becomes electricity, but you should also understand a system’s makeup. We’ve outlined some of the main components of a solar power system below.

ComponentWhat it does
PanelsArguably the most recognisable part of a solar power system, the solar panels are responsible for capturing the light emitted by the sun.3
Solar invertersInverters are the key element in a solar power system. They convert the direct current (DC) electricity captured by the solar panels into alternating current (AC) electricity, which is what our homes run on.3
MonitoringYour inverter may come with a monitoring system, or you can choose to add one to your solar power setup. A monitoring system allows you to track your system’s electricity generation, consumption and operations.3
BatteriesAny excess energy generated by your solar panels can be stored in batteries to be used when the system powers down during sun-less times (e.g. night or overcast days).3
Electricity MeterA necessary component to connect your household to the grid. It records excess solar energy exported to the grid, as well as imported energy consumed by your household. 15

How common is solar energy in Australia?

Regardless of the costs involved, it seems many Australians believe that solar power is the way of the future, since Australia currently has the highest uptake of solar power in the world.3

As of January 2022, there are over three million rooftop solar PV installations.3 All these PV systems have a combined capacity of more than 26.1 gigawatts (GW).4 To put that into perspective, it’s enough to power around 5.5 million Australian homes at once.

As renewable energy continues to play an important role in Australia’s electricity production, Australians are moving to take charge of their utility bills and save cash in the long run with solar. That means that many are happy to pay the (sometimes) significant upfront costs of solar installation in their home.

It appears as though the future may be powered by the sun, but what exactly are the benefits of solar energy, and how might they impact you as an electricity customer?

The benefits of solar energy

It goes without saying that solar energy is substantially better for the environment than conventional sources of electricity. Reducing greenhouse gas emissions and minimising fossil fuel dependency are critical targets for Australia and countries around the world, and solar and other renewable sources will likely play a key role in meeting these objectives.

A cleaner, greener environment is better for everyone, but perhaps more noticeable (at least in the short term) is the impact that moving to solar energy will have on your power bill. In fact, solar power customers could recoup the initial up-front costs of a 3-5kW PV system (without batteries) within four to eight years.3

Considering that solar panel systems have a 20-30-year life expectancy,5 generating your own electricity could mean you enjoy reduced electricity bills for 15-17 years. Of course, you’re still required to pay supply charges for being on the grid and will need to pay for panel servicing and maintenance. Regular maintenance can ensure your solar panels remain both efficient and operating correctly since they will suffer degradation over time. Before switching electricity retailers or moving to solar energy, be sure to weigh up the costs involved to identify which option is best suited to your specific household.

Frequently asked questions

Am I eligible for a solar energy rebate?

As well as potentials savings you could make on your power bill, you could be entitled to a government rebate for your solar system. The Small-scale Renewable Energy Scheme (SRES) can help you with the purchase price of your solar power system by awarding you with small-scale technology certificates (STCs). The number of STCs you may be eligible for is based on the amount of solar electricity your system produces (or how much energy consumption it reduces) and the climate in which you live. You can then redeem your STCs by selling or assigning them.6

Some state and territory governments also offer solar rebates or incentives. Information below is current as of May 2022. Read more about rebates and concessions in your state or territory.

  • Australian Capital Territory (ACT): The Next Generation Energy Storage Grants program enables ACT residents and businesses to purchase batteries for rooftop solar PV systems at a discounted price.7 Subsidies are also available to low-income households to help them invest in a solar power system for their home, provided that your property is eligible.8
  • New South Wales (NSW): The Solar for Low Income Households offers free three-kilowatt solar PV systems to eligible households.9 The NSW Government also offers interest-free loans in certain postcodes to homeowners to install solar battery systems.9
  • South Australia (SA): In SA, the Home Battery Scheme provides loans and subsidies to all households to help pay for battery storage systems.10
  • Victoria (VIC): Residents in VIC can apply for the state government’s PV panel, solar hot water system and solar battery rebates.11 The rental property solar rebate is also available to landlords who wish to install PV panels on their rental property.

What is a solar feed-in tariff?

A solar feed-in tariff (FIT) pays you for the electricity generated from your home solar system that you then feed back into the electricity grid. The main type of solar FIT is net, which pays you for the leftover unused electricity from your system that you then export to the grid.

The other type of solar FIT is gross, which pays for all the electricity generated by your system, as it’s intended to bypass your home entirely and feed straight back into the grid. Gross solar FITs aren’t generally offered to new customers anymore.

Solar FITs are also different between states and territories, and different again between energy retailers within those states. Ask your existing retailer for more information.

How do I choose a solar power system?

Solar power systems are large, intricate, expensive products. It’s therefore vital you choose the right system for your needs. Here are some things you should consider if you’re looking into solar energy for your home.

How much energy do you need?

When you search for the right solar energy system for your home, you should first decide how much electricity you need to generate. For example, your average 2kW panel would generate approximately 8kWh pre day; however, this will vary depending on the amount of sunlight and number of daylight hours you receive where you live.

Take a look at your current consumption and the periods during which you most use power; your energy bill would typically detail this. Such information will then influence the size and number of solar panels your property would likely need.

What can impact the cost of solar power systems?

As we mentioned earlier, the price of solar energy systems (particularly the panels) has come down over the years as demand and production has increased.3 An average 4kW solar PV system can cost approximately $3,400 – $7,900 for installation, although this price can vary based on many factors including:

  • The cost of equipment
  • Where your household is located
  • Any solar rebates or incentives you’re eligible for
  • The number and size of the solar panels installed
  • How accessible your roof is, as well as what it’s made of (e.g, tiles, metal, concrete) 14

How much could it potentially help you save?

Saving on electricity bills is one reason why people turn to solar energy to power their homes. Bear in mind, though, that it can still take a few years of having a solar power system before your energy savings exceed the purchase price.

Is your home suited to solar energy?

The ideal spot for solar panels is on a north-facing roof or a space that isn’t near shade.12 You’ll still generate electricity with east- or west-facing panels, but with each degree away from north they face, it’ll be that little bit less.

Do you own your home?

If you don’t own your home, you’ll need to get your landlord to install the solar power system. Even if your home is suited to solar energy, not all scenarios will be eligible.

How much roof space do you have?

The amount of space on your roof should also be considered when choosing a solar power system. For example, you may not be able to install a system if you live in an apartment.

Meredith O'Brien

Top solar energy tips by our Head of Energy, Meredith O’Brien

  • Consider investing in a battery to store excess energy you’ve generated to use later when
    the sun isn’t out. This lessens your reliance on using energy from the grid and paying
    associated costs.
  • If you have solar but don’t have a battery, consider how much electricity you use at night.
    Your electricity costs may be more than your solar feed-in tariff (FIT), so consider the
    balance between usage charges and your solar FIT.

How do I compare solar electricity plans?

If you’re in the market, you stand a good chance of finding the best solar-compatible electricity plan by doing your research, shopping around and, most importantly, comparing your options.

When comparing such electricity plans, keep an eye out for the following:

  • If / how much you’ll be paid through the solar feed-in tariff (FIT) by your retailer
  • How much your daily supply charge and general usage rates will be
  • Any discounts or special offers available (e.g. discounted rates for the first twelve months of your plan) for any usage you need from the grid
  • The fees that might be applied to your contract (e.g. connection fees)
  • Other plan features, like the billing options.

It sounds like a lot to remember, doesn’t it? Luckily, our energy comparison service can do this for you. Just enter in a few details about yourself and your property, and our service will present you with a range of energy plans to compare and choose from. Simples!


1 Australian Government: Australian Renewable Energy Agency – Solar energy. Last updated April 2022. Accessed May 2022.
2 Australian Government: Geoscience Australia – Solar energy. Accessed May 2022.
3 Australian Government: Your Home – Photovoltaic systems. Last updated 2020. Accessed May 2022.
4 Australian PV Institute – Australian PV market since April 2001. Funded by Australian Renewable Energy Agency. Accessed May 2022.
5 Sustainability Victoria – Solar power. Accessed May 2022.
6 Australian Government: Department of Industry, Science, Energy and Resources – Renewable power incentives. Last updated September 2020. Accessed May 2022.
7 ACT Government: Actsmart – Household battery storage. Accessed May 2022.
8 ACT Government: Actsmart – Solar for low income program. Accessed May 2022.
9 NSW Government | Energy Saver – Save with Solar  Accessed March 2022.
10 Australian Government: Department of Industry, Science, Energy and Resources – Solar home battery assistance. Accessed May 2022
11 Solar Victoria – Solar Homes Program. Last reviewed April 2022. Accessed May 2022.
12 Solar Victoria – Section 6: Planning your solar electricity system. Last reviewed March 2022. Accessed May 2022.
13 Department of Industry, Science, Energy and Resources – Solar PV and batteries. Accessed May 2022.
14 Clean Energy Council – Costs and Savings. Accessed May 2022.
15 Solar Victoria – Section 3: Grid-connected solar explained. Last reviewed March 2021. Accessed May 2022.

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