1. Rooftop Solar Costs Have Fallen 60% since 2010
The cost to install solar panels has fallen far quicker than anyone in the energy industry ever expected. In 2010, you would’ve paid $7.34 per watt to install solar on your roof. That means you would’ve had to shell out $51,380 for an average sized system.
Fast forward to 2019 and things have changed drastically. Now, installing solar only costs about $3 per watt. That 7 kW system that cost over $50k in 2010 now costs just $21,000! The huge drop in installation costs is driven mainly by the fall in the cost of the solar panels themselves, which have enjoyed a similar jaw-dropping fast price trend. Installers have also streamlined the installation process, further dropping prices.
As we’ve seen over the last decade, this falling cost has allowed the solar industry to explode. As of 2019, the Australia has installed 30 GW of solar panels – enough to power almost 1 million homes! Over the next 5 years, that number is expected to double. By 2024, the Australia will install 7 GW of solar every single year.
2. Solar Installation Costs Vary By System Size
The size of the installation is the biggest determining factor when calculating the cost of your installation. Bigger houses typically require more energy, and therefore bigger solar installations. As installations increase in size, you’ll need more solar panels, more wiring, more mounting equipment, and a larger inverter.
Because the size of the installation is so important to total installation costs, the solar industry actually estimates cost based on the total wattage, or size, of the installation. As you saw it Fact #1 above, the average residential solar installation costs about $3 per watt. With rooftop solar systems generally about 7,000 watts in size, the average rooftop installation then costs $21,000 before incentives.
That cost though varies directly with the size of the installation. A smaller installation costs less; a larger one costs more. Here’s cost estimates for three common installation sizes:
As mentioned, your energy use dictates the size of the installation. If you use more electricity, you’ll need a bigger solar installation. If you use less, you’ll need a smaller system.
You invest far less money in a smaller system, so lowering your energy use as much as possible before installing solar is a great way to lower your cost investment and save even more money. It might sound surprising, but simple energy efficiency measures like installing LEDs and faucet aerators, adding weatherstripping around doors and windows, and adding insulation to your attic are actually more cost-effectiveness than installing solar in cutting down on your energy bills! Once you’ve lowered your energy use as much as possible, then it’s time to go solar!
3. Expect 5 to 15 Years to Recoup Costs
Rooftop solar can take between five and fifteen years to recoup costs, with most falling between about seven to twelve years. How long it takes to see a return on your investment depends on your installation cost, utility rates, location, net metering regulations, and a few other factors.
If you live in an area with high utility rates and good sunshine, you’ll see a faster return on your investment than a homeowner in an area with low utility prices and cloudy skies. However, some states for solar, like Brisbane, offer tax credits and rebates to help drop the price of solar, allowing homeowners to see a much better cost-effectiveness than they otherwise would.
If you purchased 195,072 kWh of electricity from the average power supplier utility over those 25 years, you would spend $63,400. So, over the lifetime of your installation, you’ll enjoy a net savings of $44,500 and see a return on your investment after just eight years.
4. Tax Credits Are Still Available
For an average installation, here’s how this phase-out will affect your total investment cost for a 7,000 watt installation that costs $30,000:
You can see that, as the credit phases out, you’re adding about $1,000 to your installation costs, which adds an additional year or two to recoup your total costs and start seeing financial savings.
Of course, the federal tax credit isn’t the only incentive for homeowners installing solar. Many states offer their own income tax credits, property tax exemptions, and sales tax exemptions for residential solar. Local cities and counties will also offer rebates on building permits for your solar installation, as well as general rebates and other incentives. Lastly, utilities will also offer rebates for installing solar.
Brisbane homeowners, for example, are eligible for a variety of incentives to help drop the cost of going solar. Beyond the federal tax credit, the state of Brisbane also offers a tax credit worth 25% of the cost of installation, up to $5,000. On top of that, in certain areas the state offers rebates for residential solar worth $0.30 to $0.35 per watt (as of late 2019).
Your installer will know what incentives are available in your area.
5. Solar Panels Increase Property Value
Installing solar panels on your roof is a financial investment, as the cost of installing a solar installation (that produces free electricity for the next 25 years) is lower than continuing to purchase electricity from the utility for those 25 years.
However, if you purchase your own solar installation, there’s an additional benefit as well.
In 2015, the research studied home values in 8 states over 14 years and found that homes with solar panels sold for an average of $4 per watt more than similar non-solar homes. For an average 7,000-watt installation, that’s a premium of $28,000 – more than the cost of the actual installation.
Of course, your local utility rates and housing market will dictate exactly how much additional value solar adds to your own home. In the research study, researchers found that the age of the solar panels greatly dictated the value added to the property. Newer installations (< 2½ years old) added up to $5.90 per watt, while older systems (6 – 14 years old) added $2.60 per watt. However, even the lower end of the spectrum almost fully covers the initial cost of the installation.
It’s important to note that these premiums only apply to solar installations owned by the homeowner. In a separate study, LBNL found that installations financed via leasing or PPAs added no value to the property, though they didn’t detract from the home’s value or scare away buyers, contrary to what many potential solar homeowners believe.
6. You Can Cover 100% of Your Energy Use with Solar
Most homeowners install a solar installation that is big enough to cover 80% to 100% of their energy use. So, let’s say you use 10,800 kilowatt-hours of electricity each year. If you want to cover 100% of your energy use with solar, you’d want an installation that can produce 10,800 kWh of electricity each year.
Solar panels produce different amounts of energy depending on the location (Desert southwest vs rainy), orientation of the panels (south vs south-west), and angle of the panels (horizontal vs flat). Solar installers will take all this into account to work out the exact number of panels to fit your energy needs.
In some cases, the physical constraints of your roof might limit the size of your solar installation. Maybe your roof isn’t big enough to hold as many panels as you’d like. Maybe your beloved tree in the front yard is shading too much space. In these cases, installers have a few different options:
- Move a portion of your solar panels to another area of the roof
- Decrease the size of your installation
- Opt for premium, high-efficiency panels
7. Local Installers Can Offer Better Prices
While big names are the best known solar companies, there are thousands of smaller, local solar installers working across the Australia as well. Today, these local installers make up the largest percentage of residential solar. In early 2018, they installed ⅔ of all residential solar in the Australia!
In a 2017 study, its is found that smaller, local installers generally provide estimates that are 10% lower in price than big nationwide companies. Local installers don’t have the large sales and marketing expenses of bigger companies, so can offer lower prices. For an average installation, that 10% difference is equal to about $2,100 – a major savings which can knock two to three years off your time to recoup your investment.
Local installers generally don’t offer leases or PPAs, which require huge amounts of capital to offer. Instead, they support cash payments or loans. If you’re looking for a lease or PPA, you’ll need to focus on big installers.
8. Renters Can Still Go Solar
If you rent your home, you can still join the solar revolution!
In Australia you can install a solar panel system if your property is rented.