Over the years, solar panels have become an increasingly popular way to save money on energy costs. But, let’s address the hard question: Are solar panels worth it?
To get straight to the point, yes, solar panels are worth it! It’s a great investment as it’s a reliable source of renewable energy, can minimize your electricity bills, and reduce your carbon footprint.
There are many more reasons to use solar panels but that’s a topic for a different discussion. For right now, I’m going to use numbers to prove to you that investing in solar power is well worth your money. Here’s what you’ll find below:
- The return on investment (ROI) for solar systems
- Solar payback periods
- The total cost of solar panels
- Your potential savings
- 3 tips to maximize your savings
- Other things you should consider
Are solar panels still worth it in 2023? The ROI says yes!
First of all, the higher your return on investment (ROI), the better. Most businesses would consider 50% a good number but solar panels blow that out of the water.
Having said that, your ROI for installing solar panels depends on a couple of things:
- The total cost of your installation, and
- Your total savings over your system’s lifetime
To calculate your ROI, you divide your net total savings by the total cost of your solar system. And, since ROIs are generally expressed as percentages, you then multiply that value by 100. In other words:
For example, let’s say you invested $10,000 on a 10kW solar system.
A system of that size can save the average Australian household about $2000 per year. Furthermore, modern solar panels can last a minimum of 25 years. So, you should be able to save roughly $50,000 in total.
Other factors affect your savings, of course, but we’ll get to that later. For now, let’s put the equation to use:
- (50,000/10,000) x 100
- 5 x 100
- Your ROI = 500%
Ask businessmen if a 500% ROI is good and I promise you they’ll say yes. Personally, this alone should be enough proof to say that solar panels are well worth it.
If you need even more proof, though, the solar payback period in Australia is massively better than in other places.
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Solar payback period? What’s that?
Your solar payback period is the length of time it takes for your savings to equal the cost of installing your solar panel system. Simply put, it’s how many years it takes to break even.
As an example, let’s use the same values we used in the ROI calculation:
- Cost of installation: $10,000
- Annual savings: $2000
This gives you a payback period of 5 years. Anywhere else and it could take roughly 12 years just to break even. Not to mention, the Australian government offers incentives for green energy that make both using and installing solar panel systems more practical.
That being said, let’s dive deeper into both cost and savings. Let’s start with the former.
How much do solar panels cost?
The cost to install solar panels in Australia depends on the size of the system, the type of solar panels used, and your location. But, as a rule of thumb, it costs $1000 per kW.
In that sense, a 5kW solar system can cost $5,000; a 6kW solar system can cost $6,000, and a 10kW solar system can cost $10,000.
For your reference, the table below shows the average watt, dollar/watt, and price range of the top 5 solar panel brands in Australia including their most popular model per brand.
How much money can you save on your power bills?
How much money you save with your solar power system will depend on many factors, including the size of your system, your electricity usage habits, whether or not you have a solar battery, and other things.
On that note, the most popular system size in Australia is 6.6 kW. With that system, the average household would be able to shave roughly $1200-1400 from its annual energy bill.
Here are 3 quick tips to boost your savings:
1. Make money from your excess solar power via Feed-in Tariff (FiT)
Feed-in tariffs are government-mandated payments to renewable energy producers for the electricity they send to the grid. That, of course, will include you.
In other words, you get paid for all the excess energy your system generates as long as you send it back to the grid.
These payments, which are often expressed as a fixed price per kilowatt hour (kWh) of electricity produced, provide an incentive for the installation of renewable energy systems.
Feed-in tariffs can also help to ensure that renewable energy is used most cost-effectively and that it is accessible to all consumers.
2. Maximize self-consumption
Truth be told, the value of feed-in tariffs has been dwindling over the years. It’s become so low that using ALL of the energy you produce has become much more practical.
But, to do so, you would also need to add a solar battery to your system. This allows you to store the excess energy your system produced during the day so you have the power to use it at night.
This makes you less reliant on the grid which, naturally, lowers your power bill and makes your home more sustainable.
3. Make sure your system is well-maintained
Different systems have different maintenance requirements but they all need to be cared for to perform optimally. The more efficiently your system is working, the more money you save.
Having said that, modern installations now have monitors that you can check to see if your entire solar power system is functioning optimally. Make it a habit to check. And, if anything goes awry, contact your retailer or installer immediately.
Additionally, keeping your solar panels clean from dirt, debris, and bird droppings goes a long way.
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Other things you should consider when switching to solar power
The orientation of your solar panels
Like many things, the direction your panels should face depends on many things.
For one, Australia is in the southern hemisphere. So, north-facing panels will enable you to generate the most amount of solar energy. South-facing panels will have the opposite effect.
However, east-facing panels will harness more electricity in the early morning whereas west-facing panels produce more in the afternoon.
So, consider your energy needs and usage patterns then communicate them with your installer to determine the best orientation for you.
Your energy usage
To determine if solar power is right for you, it’s important to look at your current energy consumption.
I recommend analyzing your energy bills for the past 12 months so you can get an accurate picture of your energy usage. Additionally, you should consider any changes you may have made to your home or lifestyle that could affect your energy consumption.
Once you have an idea of your energy needs, you can look into solar options and calculate the savings you could potentially make.
Your system’s size
Generally, the larger the system, the more energy it will be able to produce.
It’s important to get the sizing right so that you can maximize the efficiency and output of the system while still keeping the cost in a manageable range.
Of course, you can estimate the size you need on your own. But, honestly, you don’t have to. Professional installers can do that for free. You just need an installer that you can trust and you’re set.
That being said, we can get you 3 – yes, THREE – free quotes from our network of pre-vetted installers if you need them.
Solar panels are a major investment but they can pay for themselves in as short as 3 years. The numbers back it up, after all.
I won’t lie to you though. The numbers I presented here are only rough estimates. They can be larger or smaller depending on many factors.
But, overall, solar panels will still be worth it for this year, and many years after. If you need anything else, feel free to contact us here.