A beginners guide to solar power system

#1 The three main components of a solar power system installation
Solar power systems are comprised of:

The panels, which can either be polycrystalline or monocrystalline.
The two main types of solar panel technology in use for residential homes – there’s also a third type, cast mono, that’s a hybrid of the two.
It doesn’t matter if you get a mono or a poly panel. What is important is you buy a good brand that will last 25+ years installed on your roof.
There are good budget brands and good premium brands. But there are also ‘no-name’ panels that are re-badged junk, and are unlikely to last more than 3-5 years on an Australian roof. Avoid installing those modules at all costs.

Pro-tip: Don’t stress over solar panel technology. Mono- and polycrystalline are both as good in Australian climates.
You can choose to install a budget (think Kia), regular (think Toyota) or premium (think BMW) solar panel brand. You generally get what you pay for.

You probably don’t know a good panel brand from a lemon, and why should you? Here’s a handy cheat sheet of most of the popular solar panel brands in Australia, so you can see where they sit in the market.
The list is not exhaustive – if you’re not sure about a brand, ask me – but the following chart represents over 90% of what’s being quoted in 2019 in Australia (and is more or less a safe bet):
The second main component of a solar power system installation is the inverter, which can be either a string inverter (around the size of a briefcase) or microinverters, which are approximately the size of a paperback book.

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A string inverter is installed on a wall and all the solar panels connect to it. A microinverter goes on the back of each solar panel.
There is also a third option, power optimisers, that are kind of a hybrid between the two. You can read about the pros and cons of each inverter choice in a detailed article here.

Pro-tip: Never mount a string inverter where it will be in full sun. Choose a shaded spot, a cool garage, or ask the installer to build a simple shade over the inverter. Direct intense sunlight kills inverters, because it cooks them – and Australia’s sun is particularly harsh.
The job of the inverter is to convert the DC electricity solar panels produce into 230V AC electricity, which is what everything in your home uses.

The inverter is the component most likely to fail in a solar power system installation in the first 10-15 years. This is because they work hard all day, and they do wear out.

So even if you are on a limited budget, I’d recommend considering a premium-end inverter.

Here’s a run-down of the popular inverter brands in Australia right now, and where they sit on in terms of price and quality (again – this list is not exhaustive, but any reputable installer has a 95% chance of quoting you one of the following brands):

Pro Tip: You can, and should, install up to 33% more panels than the inverter is rated at. For example, I would recommend installing 4kW of panels with a 3kW inverter. You’ll get 33% more solar rebate and lots more power in winter, mornings and evenings. It’s a very efficient use of the inverter. Also, in many areas, the smaller the inverter, the easier it is to get permission to connect to the mains electricity grid.
The third main component of a solar power system installation is the racking/mounting. This is what is securely attached to your roof supports, and what your solar panels are mounted on.

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There are a wide variety of racking brands out there. The difference between a budget end brand and a premium end brand is around $100 per kilowatt of solar power installed.

The chart below shows brands we’re familiar with, and where they sit in a spectrum of price:

#2 The most important thing to measure before you get solar power: how much electricity you use in your home, and when you use it.
When solar electricity is generated by your panels, it will first be used by appliances in your home, with any surplus solar energy exported to the grid. Your electricity retailer will pay you a small amount (around 7-20c) for each kWh your installation exports to the grid.

It is better to use the solar power generated by your system than export it. Self-consumed electricity saves about 30c per kWh as you don’t have to buy that energy from the grid. Exported electricity earns a ‘feed in tariff’ of about 7-20c per kWh.

So self-consumed solar energy is about 2-3x more valuable than exported solar electricity.

Pro Tip: Shop around for feed-in tariffs. They can vary from 0c to 20c depending on the retailer.

This means Australian households using a lot of electricity during the day, or can set their appliances to run on timers, are a natural fit for solar panels and can see very short paybacks of 3-5 years (20-25% returns).
If you are at home during the day or have pool pumps that run all day, your self-consumption can be up to 65% (with exports only 35%) and a solar power system installation is likely to be a very good investment.
If you are not at home during the day, you will typically self-consume about 20% of the output of an appropriately sized solar power system installation, pushing the simple payback out to 6-8 years.

Bear in mind that this is still a 12-15% return on your investment.
Avoid any solar energy company that calculates your payback based on 100% self-consumption. Practically no-one has 100% self-consumption. The company is being dishonest in order to get your sale.
Pro Tip: Your electricity bill only tells you how much energy you use every month, or 3 months. If you live in Victoria, you can ask your retailer to give you a spreadsheet of your electricity use every half hour. If you live elsewhere, you can buy (and get an electrician to install) an energy monitor to collect this data for a few weeks before you get a quote. A good installer can use this data to more accurately size your solar system for optimum savings.

#3 How many solar panels should you buy?

My answer to this question has changed considerably compared to just a few years ago.

This is because prices for solar installation have fallen considerably, electricity prices have risen, and feed-in tariffs (what you’re paid for exporting excess electricity generation) have also risen.

The only limitations now are your budget, what your roof can properly fit, and the amount your DNSP (Distributed Network Service Provider) allows you to install.

For most homes, the minimum you should consider is buying 6.6 kW of panels (approx. 22 in total) with a 5 kW inverter.

The biggest regret I’ve heard from solar power owners is they didn’t factor in how winter and overcast days limit their savings. They wish they’d installed more panels when they had the chance.
It’s expensive and complicated to add panels after the install, while adding solar panels to the initial quote can be surprisingly cheap.
I’ve written about this topic in more detail here.

#4 The solar rebate: still very much alive and kicking – and generous.
The famous Australian federal ‘solar rebate’ (technically known as the ‘STC scheme’) acts as a point-of-sale discount off the final cost of a solar power system installation. The subsidy is worth about $600 per kW of solar panels installed, but this will vary depending on where you live.

As an example, a 6kW system attracts around $3,600 in rebates.
Anyone can claim the rebate, even if you’ve already bought solar power systems in the past and want to buy a new system.

The only restrictions on claiming the rebate are:
• Your system installation must be less than 100kW in size.
• You get it installed and designed by a Clean Energy Council (CEC) accredited professional (you can ask the installer on the day to provide proof of accreditation!)
• You use panels and solar inverters approved for use in Australia by the Clean Energy Council (such as the ones I mentioned in #1).

The federal solar rebate is slowly being phased out.  It reduced by one tenth of today’s value every January until it goes to zero in 2031.
For Victorians, the Labor government introduced a state-level rebate that currently offers eligible recipients (up to) an extra $1,888 off the cost of a solar system.

Pro Tip: The federal rebate is based on the number of solar panels, not the size of the inverter in the installation. This often makes adding panels over and above the inverter rating very worthwhile. Don’t worry – it is safe and approved by the regulators (up to 133% of inverter capacity). Ask your installer about ‘oversizing’ your panel array. Any good installer will know exactly what you mean. Untrained commission-only sales people won’t.

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#5 Don’t get the ‘rebate’ and the ‘feed in tariff’ confused
We’ve already learned the ‘feed-in tariff’ is the rate you are paid for solar electricity you export into the grid.

Between 2009 and 2012, people signed up to generous feed-in tariffs that paid them anywhere between 20c per kWh and 66c per kWh of electricity exported. These generous tariffs were designed to kick-start the solar energy industry when solar power systems were much more expensive.

Solar energy systems have reduced in price by 80% in Australia since 2008, and the feed-in tariffs have reduced to 7c – 20c, depending on your retailer.

This reduction is why you see so many people screaming ‘solar power isn’t worth it anymore! The rebate has been massively reduced!’
They’re actually confusing the rebate with the feed-in tariff. The federal rebate is still alive and kicking and isn’t being reduced significantly anytime soon.

We’ve run the numbers, and even with these low feed in tariffs it’s not difficult to get a 5 year payback on your solar energy system.