10kW Solar System Costs in 2020

10kW Solar System Costs in 2020

Do you have big electricity bills? Do you have plenty of roof space?

Maybe you’re thinking about installing the biggest solar system you can. That will probably be a 10kW power system. In practical terms, a 10kW system for a home is as big as they come!

So what do you need to know before buying a 10kW system?

There are various questions you must consider before making your final buying decision.

  1. How much power does a 10kW solar system produce?
  2. How many solar panels are in a 10kW system?
  3. How big is a 10kW solar system?
  4. How much does a 10kW solar system cost in 2020?
  5. How much money can I get from exporting solar electricity to the grid?
  6. What is the payback period for a 10kW solar system?
  7. Is a 10kW solar system the best choice?

1. How much power does a 10kW solar system produce?

A regular residential 10kW solar system can generate an average of 40kWh per day. The average consumption of households in Australia is approximately 20kWh per day.

In practical terms, 40kWh per day is enough to run:

  • 2 × ducted HVAC systems on a cold or hot day
  • 4 × pool pumps (small) for 10 hours
  • 40 × 5-star energy fridges (with freezer located on top/bottom)

The true daily power output of a 10kW solar system depends on several variable factors. These are:

  • Location of the system (e.g. a system in Hobart generates less power than one in Darwin)
  • Solar array orientation and panel tilt angle
  • The amount of ‘shading’ the solar panels experience
  • Solar panel operating temperature

Here’s a guide to how much solar electricity you could expect to generate from a 10kW solar system.

LOCATION ESTIMATED DAILY OUTPUT (kWh)
Adelaide 36-41
Brisbane 39-41
Canberra 36-41
Darwin 44
Hobart 29-33
Melbourne 31-33
Perth 40-44
Sydney 34-8

Source: Bureau of Meteorology & PVWatts

Data based on simulated 10kW system, solar array orientation = North, panel tilt angle = 30°, system efficiency = 75%.

2. How many solar panels are in a 10kW system?

A typical 10kW solar system will have 34 (300-watt) solar panels. These will produce around 10-10.2 kW power output.

3. How big is a 10kW solar system?

A 300-watt solar panel measures 1.6m2. So 34 panels will occupy = 54.4m2 (34 × 1.6m2) of roof or other space on your property.

Lower wattage solar panels will require slightly more space and higher wattage panels slightly less space.

4. How much does a 10kW solar system cost in 2020?

You’ll benefit most from a 10kW solar system in Melbourne if you consume 35-40kWh of electricity during the day. A 10kW system is large and will give you substantial savings over a 25-year period. The quality of components is critical for trouble-free operation, optimal performance, and reliability.

To install a good quality10kW solar system in Melbourne, expect to pay about $13,000 or more (price includes SRES solar rebate). Expect to get a European manufactured solar inverter (e.g. Fronius) and high-efficiency Tier-1 solar panels (e.g. LG Solar) for this price.

The price includes the federal Small-Scale Renewable Energy Scheme (SRES) rebate. Melbourne residents can also apply for the state-level Victorian solar rebate in addition to the federal SRES rebate.

5. How much money can I get from exporting solar electricity to the grid?

How much ‘income’ your 10kW solar system produces depends on two factors:

  • Your electricity consumption
  • The (FiT) Feed-in-Tariff you receive for exporting electricity to the grid

The single rate FiT for 2020-21 = 10.2 cents/kWh, and the time-varying minimum FiT for 2020-21 varies between 9.1 cents/kWh and 12.5 cents/kWh.

The average cost of buying electricity is 30 cents/kWh. Let’s use the single rate FiT price of 10.2 cents/kWh to calculate how much you could potentially make.

Case 1. 

You consume 100% of the solar-generated electricity in your home and export no electricity to the grid. Your first-year savings will be around $4500. Over 20 years, those savings will grow to approximately $150,000. This assumes a 5% annual increase in the cost of buying electricity.

Case 2.

You consume only 50% of the solar-generated electricity and export the remaining 50% to the grid. Your potential savings in the first year will be around $2700.

Case 3.

You consume 0% and export 100% of the solar-generated electricity to the grid. In the first year, you will save approximately $1000.

TIP:Your best bet is to use as much of the solar electricity you self-generate as possible for maximum savings and fast payback.

6. What is the payback period on a 10kW solar system?

Use 100% of the solar electricity you generate and you can expect to recover the cost of the system in less than 5 years. It’s impossible to predict electricity costs and export tariffs for the next 20+ years. But based on an annual increase of 5%, after 5 years you’ll be enjoying free electricity.

You’ll need to pay something for the maintenance of your solar system. Typically, every 5 years or so, and costs between $500 and $700. Also, expect to replace the solar inverter in your system after15-20 years.

Let’s look at three examples for Melbourne in more detail.

Electricity rate ($/kWh)  $0.30
Feed-in tariff rate ($/kWh)  $0.10
Average daily electricity (kWh) 35
System size (kW)  10
Solar System Cost  $12,000
% use of electricity during day  30% 50% 75%
1D 3M 1D 3M 1D 3M
Solar power produced (kWh)  31.4  2,861 31.4 2,861 31.4 2,861
Energy bill reduction  $3.47 $316 $5.78 $527 $8.66 $790
Value of solar exported to grid  $2.09 $190 $1.39 $126 $0.51 $47
Total savings from solar  $5.55 $506 $7.16 $653 $9.17 $837
Number of years to pay off  6.4 4.9 3.8
Internal rate of return (IRR)  15% 21% 27%
Annual savings (Year 1)  $1,996 $2,586 $3,324
Net present value (NPV)  $16,438 $27,283 $40,840

1D=daily, 3M=quarterly. Includes estimated cost of inverter replacement ($3000) year 15. Annual inflation rate @ 2,5%.

The IRR (Internal Rate of Return) is the true comparison rate. It’s much better than simply thinking about the payback period which is simply how long it takes to recover the initial investment for installation.

Using the IRR makes it possible to compare your solar system as an investment. So rather than receiving $X back after X years, the table shows that at 30% self-consumption, a 10kW system produces an IRR of 15%. That’s a 15% annual return on your investment of $13,000.

The NPV (Net Present Value) takes into account the true time value of money, inflation, and many other factors. What does it mean? Simply, $100 today will not be worth the same as $100 in 10, 15, or 20 years from now. Expressing the NPV shows the value of future cash flow in today’s terms, which is much more meaningful.

TIP: The table shows the clear advantages of consuming as much of your solar-generated electricity as possible. It maximises your returns, and it pays back quicker! Imagine depositing $13,000 in the bank and receiving 15-27% interest annually on your deposit!

7. Is a 10kW solar system the best choice?

Most Australians install a 5kW home solar system. This has been the norm in recent years. But in the past, 3kW solar systems were considered the norm.

Solar technology is continually advancing. And the costs associated with installation are decreasing. We could be looking at 10kW systems becoming the norm for large family homes soon.

As we mentioned earlier, the average electricity consumption for Australian households is around 20 kWh per day. And a good quality 10kW home solar system will output around 40kWh per day.

That’s double the average domestic consumption!

TIP: If you can’t use a good portion of that self-generated electricity, there’s little point in investing in such a large system for your home.

The optimal case is you use most of the electricity you generate during daytime hours. This gives you the most bang for your buck in terms of savings and the payback period for the solar system.

10kW solar energy systems are ideal for large households with high daytime electricity consumption. They’re also a good option for small businesses with low commercial (40kWh) electricity consumption. And a 10kW system can be a good choice for people who want a fully off-grid solar system.

But, these are not the majority of Australian households. Many homeowners can get the maximum benefit from smaller 6kW solar systems that are well-designed and optimally run.

If you will consume less than 30% of the solar-generated electricity from a 10kW system, it probably won’t be very cost-effective in the long run.

TIP: Do you think a 10kW solar system is for you? Before you start getting quotes, check with your local electricity company regarding any size restrictions. Most 5kW solar inverters are pre-approved for grid connection in Australia. Larger capacity inverters (e.g. 10kW) may need special approval, paperwork, and even inspection before being allowed to connect to the local power grid.