Understanding solar power for your home

Solar thermal systems turn sunlight into thermal energy to be used for hot water systems in homes or businesses. On a large scale, solar thermal is used for producing electricity via steam and turbines, but this is typically unavailable for households.³

Solar PV (sometimes referred to as rooftop solar) converts solar radiation into electricity through PV panels or modules, which can be installed on a variety of different surfaces but are typically installed on rooftops for households.³

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

• On-grid. These systems draw on the electricity generated from your panels and switch to drawing on grid power once the solar 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 house 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 house 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 house 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.

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.

Solar energy can be more beneficial to the environment than traditional sources of electricity such as energy generated from the burning of fossil fuels. A solar power system can also benefit you and your household, and here’s how:

• It’s a renewable source of energy. As Australia and the rest of the world transitions to clean energy sources, solar power is playing a key role in moving towards these objectives.
• You may lower your carbon footprint. Solar power helps reduce greenhouse gas emissions and minimise fossil fuel dependency.
• It can help reduce your electricity bill. Solar power customers could recoup the initial upfront costs of a three to five kilowatt (kW) PV system without batteries within four to eight years.³ Considering that solar panel systems have a 20-30-year life expectancy,⁶ generating your own electricity could mean you benefit from reduced electricity bills for years.

Keep in mind you’ll still be required to pay supply charges for being connected to the grid, as well as pay for panel servicing and maintenance. Regular maintenance can ensure your solar panels remain efficient, operate correctly and lessen degradation over time.

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 solar customers anymore.

Solar FITs are also different between states and territories, and different again between energy retailers within those states. Before switching electricity retailers, be sure to weigh up the tariffs involved (including supply and usage charges) to identify which option is best suited to your specific household.

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 these electricity plans, keep an eye out for the following:

• How much your daily supply charge and general usage rates will be
• Usage charges during demand periods (if applicable)
• How much you’ll be paid through the solar feed-in tariff (FIT) by your retailer
• Any discounts or special offers available (e.g. discounted rates for the first 12 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 (e.g. billing options).

Our energy comparison service can be a great place to get started in your search. 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!

As well as potentials savings you could make on your power bill, you could be entitled to a government rebate for your solar system, depending on the state or territory you live in.

• Australian Capital Territory (ACT): For eligible homeowners, the Home Energy Support Program offers a rebate to cover half of your solar installation costs (up to $2,500), as well as an additional rebate to cover half the cost of installing other energy-efficient products such as heat pumps, ceiling insulation, heating and cooling and more (up to $2,500).⁷

• New South Wales (NSW): The NSW Government offers residential solar battery incentives, where eligible residents can access discounted installation costs of a battery.⁸ A second incentive offers a discount for connecting your home battery to a Virtual Power Plant (VPP).

• Victoria (VIC): Residents in VIC can apply for the state government’s PV panel and solar hot water system rebate.⁹ The rental property solar rebate is also available to landlords who wish to install PV panels on their rental property.

Information is current as of November 2024. Read more about rebates and concessions in your state or territory.

Another way to recoup some of the cost of installing solar power is through the Small-scale Renewable Energy Scheme (SRES). By installing an eligible renewable energy system, you earn small-scale technology certificates (STCs). The amount of STCs you’re eligible for will vary depending on factors such as the type of system installed, your location, when you installed your system and more.¹⁰

Your solar installer or retailer can typically sell these STCs on your behalf, either through the open market or the STC Clearing House.

When you search for the right solar power system for your home, you should first determine how much electricity you’ll likely need to generate.

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

When it comes to purchasing a solar system, the price can vary based on many factors including:

• The cost of equipment and installation
• Where your house is located
• If you’re eligible for solar rebates or incentives
• The number and size of the solar panels installed
• How accessible your roof is, as well as what it’s made of.

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.

The ideal spot for solar panels is on a north-facing roof or a space that isn’t near shade.¹¹ 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.

You should also keep in mind the amount of sunlight and number of daylight hours you receive where you live so you can be sure installing solar is a worthwhile expense.

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.

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.