How Much Can I Save With A Solar Energy System?

Find out about the financial benefits of having a solar energy system installed here with Savvy

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, updated on July 27th, 2023       

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Balancing family budget

One of the most common questions people have when considering solar electricity is: “How much can I save with a solar energy system?” In today's world, where environmental consciousness is on the rise, solar electricity generation systems have gained significant popularity. By harnessing the power of the sun, solar energy systems generate clean and renewable electricity, reducing reliance on traditional energy sources. Not only do they help reduce our carbon footprint, but they also offer considerable savings on our energy bills. Find out how much you could possibly save on your electricity bills right here through Savvy’s useful guide to solar electricity systems.

How much can I save with a solar electricity system?

The amount you can save with a solar electricity system will depend on how much electricity you currently use, and what proportion of your current energy use will be covered by your proposed solar system (as well as other factors.) Naturally, it will also depend on what size solar system you choose to install. Therefore, it makes sense that the more electricity you use, and the higher your current electricity bills, the more potential savings there are to be made. 

A solar electricity system can potentially save you between 50% and 100% on your energy bills. It could even put you in credit at times of the year when the sun shines for many hours a day. If you do have a credit on your energy plan, some retailers allow you to transfer this credit to your gas bill. This is an additional benefit to having a solar energy system, as it results in even lower energy bills for both your electricity and gas usage. 

What factors determine the savings from a solar panel system?

The factors that determine your potential savings by installing a solar electricity system include your energy consumption, the size of the solar system you choose, its efficiency and location, and the sunlight available in your area. Here’s more information about how these different factors will affect your savings:

Energy consumption:

The first factor to consider is your current energy usage. The average electricity consumption of an Australian home is around a maximum of 24kWh per day. The more electricity you consume, the greater the potential savings with a solar electricity system. A higher energy consumption means a larger portion of your electricity needs can be met by solar power, resulting in greater cost savings. Therefore, if you have a large family and your power bills are usually very high, the potential for you to save money is also increased.

System size:

The size of the solar electricity system you install plays a significant role in determining your savings. Larger systems can generate more electricity, offsetting a greater portion of your energy needs and potentially leading to higher savings. A 5kW solar system consisting of around 15-20 solar panels can theoretically generate around 20kWh of power a day at maximum efficiency, which may be sufficient to offset 100% of the consumption of an average household. The average solar system in Australia is now a 6.5kW system, consisting of roughly 15-20 solar panels. However, systems can range up to 10kW or more, with the trend in Australia being for larger systems.

Solar panel efficiency:

The efficiency of your solar panels affects the amount of electricity they can generate. Higher efficiency panels can produce more electricity from the same amount of sunlight. However, such solar panels tend to cost more. Most solar panels range from 15-20% efficiency, which means that 15-20% of the sunlight that hits a solar panel will be converted into electricity

Sunlight availability:

The amount of sunlight your location receives is another crucial factor. Regions with ample sunshine throughout the year have higher solar energy potential, which can result in greater savings. If your location experiences limited sunlight, the savings may be comparatively lower.

Electricity feed-in tariffs:

The prevailing feed-in tariff offered by your solar electricity plan will also impact your savings. If you live in an area with high electricity feed-in rates, the savings from solar energy can be more substantial. Conversely, areas with lower energy tariffs may yield comparatively lower savings.

Financial incentives and rebates:

Take into account the available financial incentives and rebates available to assist with the initial cost of your solar installation. These incentives can significantly reduce the upfront cost of installing a solar electricity system, increasing your savings.

The actual savings you may be able to achieve will vary from household to household, and will depend on your specific circumstances. To determine the precise savings potential for your particular situation, consult a reputable solar energy professional who can assess your energy needs, evaluate your location, and provide an accurate estimate.

What is the average payback period for a solar energy system?

The payback period for a solar energy system refers to the time it takes to recover the initial cost of installing the system through savings on electricity bills. On average, residential solar electricity systems in Australia have a payback period of between four to eight years. This means that once the payback period is reached, your solar investment has paid for itself in terms of reduced or eliminated electricity bills. You can then continue to enjoy significant savings on your electricity bills for the remaining lifespan of your solar energy system, which typically ranges from 20 to 25 years.  

The payback period for a solar energy system is influenced by several factors, such as: 

  • the number of solar panels installed
  • the size of the inverter chosen
  • the system installation costs (labour costs etc)
  • any government incentives you may be eligible for
  • where you are located (in terms of sunlight hours received)
  • the solar electricity feed-in tariff structure of your electricity provider
  • how much electricity your household usually consumes

Are there any government incentives or rebates available for solar installation?

In Australia, there are several government incentives and rebates available to encourage the installation of solar systems. These incentives aim to make solar energy more accessible and affordable for homeowners. Here are some of the key programs: 

  • Small-scale Renewable Energy Scheme (SRES): The SRES is a Federal Government program that provides financial incentives in the form of Small-scale Technology Certificates (STCs) for eligible solar systems. The number of STCs awarded depends on the system size, location, and the amount of clean energy it generates. These certificates can be sold or traded, helping to offset the upfront cost of the solar system.
  • Feed-in tariffs (FiTs): Feed-in tariffs are state-based incentive programs that allow solar system owners to receive credits for excess electricity they generate and feed back into the grid. The rates and eligibility criteria for feed-in tariffs vary by state, providing homeowners with additional savings on their electricity bills.
  • Additional state and territory incentives: Some Australian states and territories offer additional incentives and rebates to promote solar energy These programs provide grants, interest-free loans, or rebates on the cost of purchasing and installing solar systems. The availability and details of these incentives vary depending on where you live.

It's important to note that quotes you receive for the installation of a solar system will often take any state rebates or government incentives into account, and will include these in your quote.  

Are there any ongoing maintenance costs associated with a solar energy system?

While solar panels generally require minimal maintenance, it is recommended to clean them annually to ensure optimal electricity production. Regular cleaning helps prevent any build-up of dirt, dust, or debris that can hinder the panel's efficiency. This is particularly important in areas where there is atmospheric pollution or low rainfall. It is best to get a solar cleaning professional to do the cleaning for you, as it is necessary to turn off the solar system in order to clean it thoroughly and safely. 

The cost of solar panel cleaning typically falls within the range of $150 to $300. This estimate is based on a 5kW solar system comprising of 15 solar panels. By investing in periodic cleaning, solar system owners can ensure their solar panels continue to generate electricity at their maximum potential, increasing energy savings in the long run.

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Any advice presented above is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an energy plan. For further information on the variety of energy plans compared by Econnex, or how their business works, you can visit their website.