Solar photovoltaic (PV) systems (commonly referred to as solar panels) are a way of capturing sunlight and converting it into electricity.
The main financial benefit to consumers from solar PV is through avoiding paying for electricity from the grid.
When you install a solar PV system with a net meter, your home uses the electricity produced by the panels at the time the electricity is generated. Any additional electricity you generate but don't use is fed back into the main electricity grid.
In NSW, customers can connect a solar PV system of less than 10 kilowatts to the electricity grid. Over 200,000 households in NSW have installed solar PV systems.
There are a number of benefits and costs associated with installing solar PV. It's best to consider all of these costs and benefits and do as much research as you can before you make a decision about installing a solar PV system.
Benefits from installing solar PV
Aside from the environmental benefits, there are a number of financial benefits from installing a solar PV system. These include reductions in electricity bills and possible financial incentives offered by your retailer.
Overall, it is generally more financially beneficial to size your solar PV system to your needs rather than maximising it for the space available on your rooftop.
Reductions in electricity bills
Solar PV can help reduce the consumption component of your electricity bill if you install a net meter.
Net meters allow customers to consume any energy they generate at the time it is generated and then draw the remaining energy from the grid. If you generate more electricity than you need, it is exported to the grid. Some retailers may offer a payment for this energy.
This main benefit of solar is not visible on electricity bills. Bill savings do not appear as a line item on a customer's account, but as reduced electricity consumption and reduced electricity bills.
It is important to note that in many cases you are unlikely to offset your entire bill with solar generation. A number of factors will influence how much of a saving you will receive. This includes:
- the size, quality and site of your system
- how much electricity you use, and when you use that electricity
- the weather
- the incentive paid by your retailer.
If you have a solar photovoltaic (PV) system with a net meter you can consume your system's generation at the time that generation is taking place.
The main financial benefit from a net metered solar system is from using the electricity your system generates rather than from feed-in tariffs. This is because when you use this generation you avoid the full usage charge for that energy. Any excess generation is exported to the electricity network. Some electricity retailers will credit you via a feed-in tariff for this generation.
Check this fact sheet to see a worked example showing the relative importance of 'own use' of generation and feed-in tariffs.
Feed-in tariffs are a payment for generation. They are neither a rebate nor a payment for the full supply of electricity. In addition to generation, the retail price of electricity includes network and retailer costs. For this reason IPART's benchmark rates are not equal the retail price of electricity supply.
To ensure that you have information about fair offers, the NSW Government asks the Independent Pricing and Regulatory Tribunal (IPART) to determine a benchmark tariff range each year for electricity exported from small scale solar generators.
For 2015/16 the range is 4.7 – 6.1 cents per kilowatt hour (c/kWh). This is lower than the 2014/15 benchmark range, reflecting a reduction in forecast wholesale electricity generation prices.
Check IPART's final report and website for more detail on how the benchmark range was determined.
|2011/12||5.2 to 10.3 c/kWh|
|2012/13||7.7 to 12.9 c/kWh|
|2013/14||6.6 to 11.2 c/kWh|
|2014/15||4.9 to 9.3 c/kWh|
|2015/16||4.7 to 6.1 c/kWh|
To view current feed-in tariff offers, and details of all energy offers available in your area, visit the Australian Energy Regulator's price comparison website.
When shopping around, you should consider all aspects of a retailer's offer, including:
- usage charges
- feed-in tariffs
- any other terms and conditions including 'paid-on-time' discounts, late payment fees, or early exit fees.
Retailer contribution to costs of the Solar Bonus Scheme
IPART is also required to set a retailer contribution rate towards the costs of the Solar Bonus Scheme. For 2015/16 IPART has determined that retailers should contribute 5.2 c/kWh. If you are a Solar Bonus Scheme customer you will continue to receive your Scheme feed-in tariff rate of 60 or 20 cents per kilowatt hour. Your Scheme rate is not changed by the retailer contribution.
The retailer contribution ensures retailers make a contribution towards the costs of the Solar Bonus Scheme helping to reduce future NSW electricity price increases by reducing the amount of the Scheme costs that have to be recovered from electricity customers.
Fair Price Review – Background
The NSW Government asked the Independent Pricing and Regulatory Tribunal (IPART) to determine a "fair and reasonable" value for household generated solar energy. IPART's report was published in 2012 and is available from IPART's website.
Costs associated with solar
Installing a solar PV system may require an up front investment. Generally, larger systems will require larger financial investments. The Commonwealth Government's Small-scale Renewable Energy Scheme can go some way to help reduce the up front cost of purchasing and installing solar panels or other small scale PV systems.
Some commercial businesses also provide customers with the option to lease solar PV systems or to purchase them on finance.
It is best to do your research and find out what you can afford before you make a decision on whether any of these options are right for you.
As part of your research on whether to install a solar PV system, you should also read:
There are a number of steps you need to take when installing solar PV systems. For more information, visit our installing solar PV systems page.
Need more help?
Disputes and complaints
For disputes and complaints about energy retailers or distributors, contact the Energy and Water Ombudsman NSW (EWON). EWON is a Government approved body that provides a free dispute resolution service for complaints about energy and gas suppliers.
To contact EWON call 1800 246 545 or send an email to firstname.lastname@example.org.
Electricity distributors can provide you with information about connecting your solar PV system to the grid.
There are three distributors in NSW, servicing different parts of the State. You will be serviced by Ausgrid, Endeavour Energy or Essential Energy. The distributors can be contacted on:
- Ausgrid: 13 13 65 or visit the Ausgrid solar web page
- Endeavour Energy: 13 37 18 or visit the Endeavour Energy solar web page
- Essential Energy: 13 23 91 or visit the Essential Energy solar web page
NSW Fair Trading
To find out more about consumer protections or to make enquiries or complaints about workmanship, contact NSW Fair Trading by calling 13 32 20 and selecting "home building enquiries".
Contact Service NSW on 13 77 88 for more information about Solar Bonus Scheme eligibility or any other service or program offered by the NSW Government.