How can solar generation reduce my electricity bills?

A typical residential household consumes about 6,500 kilowatt hours of electricity per year. Instead of purchasing all this electricity from your retailer, you can use the energy you generate from your own solar system and only purchase any extra electricity required from your retailer. Implementing this arrangement requires 'net' metering (see below).

According to estimates from the Clean Energy Council, an average 2 kilowatt system installed in Sydney will generate around 7.8 kilowatt hours per day, which is around 2,847 kilowatt hours per annum. This is close to 40 per cent of the average household consumption, and could represent a substantial saving on your electricity bill.

How much will a solar PV system reduce my bill by?

How much of a saving you receive depends on many different aspects, including the size, quality and site of your system, your electricity usage patterns, the weather, and any feed-in tariff paid by your retailer.

Your installer can advise you on the expected output of a particular model and size of system installed at your house or business. Having a typical electricity account on hand and knowing the time of day you typically use your electricity will help your installer match the system to your needs.

What is a net meter?

Net meters record the amount of energy drawn from the grid and the amount of energy exported to the grid. In some instances you may be required to have time of use pricing. All distributors support net metering.

Under net metering arrangements, the electricity you generate is used to supply your own energy requirements and any excess generation that is not used in the premises is exported to the grid. By reducing the need for grid electricity, customers can reduce their electricity bills as they avoid purchasing electricity from the network. Bill savings will increase as electricity prices increase.

It is important to be sure which metering arrangement will suit your needs. Changing from gross metering to net metering, or visa versa from net metering to gross metering, may not be straightforward and may incur charges.

You can check metering arrangements with your distributor.

What is a gross meter?

Under gross metering arrangements, all electricity you generate is exported to the grid. A 'gross' meter measures the total amount of electricity generated by a renewable energy generator.

It is important to be sure which metering arrangement will suit your needs. Changing from gross metering to net metering or vice versa from net metering to gross metering, may not be straightforward and you may incur charges.

You can check metering arrangements with your distributor.

Should I choose a net meter or a gross meter?

It is up to individual customers to decide what metering arrangement will best suit their property, system and budget. You may wish to refer to the fact sheet Small Scale Solar PV Generators.

Generally if you do not receive a feed-in tariff, or if your feed-in tariff is lower than the price you pay for electricity, you are likely to be better off with a net meter. Under net metering, electricity from a solar PV system is first used to meet any consumption that takes place at the time of the generation. This means that for each kilowatt hour you consume of your own generation, you save the retail price that would otherwise be paid for that consumption.

Customers are encouraged to contact their distributor or accredited service provider to discuss their metering options before making a final decision.

How much does a solar PV system cost?

You should seek independent advice on the actual costs of a system.

Why is the feed-in tariff lower than the price I pay for electricity?

There are a number of costs associated with generating, transporting and selling electricity.

In many instances, feed-in tariffs reflect the benefit to the retailer from onselling the generation component of the electricity price. Retailers continue to incur additional costs on top of this when they onsell a customer's solar generation. These costs include:

  • network costs – these must be paid even when the electricity is only sent short distances
  • retail costs – including marketing, maintaining billing systems and customer support
  • costs of complying with environmental schemes.