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What Are the Basics of Solar Energy Systems? 

Are you thinking about installing a solar energy system in Australia? You probably have lots of questions and need some answers before making your decision.

Here we explain the basics of solar energy systems in Australia. Discover everything you need to know about solar energy before investing your hard-earned cash in a system for your home.

  • How do you set up a solar system?
  • What to know before installing solar panels?
  • Can I install solar panels myself in Australia?
  • What are the 3 types of solar panels?
  • Can a house run on solar power alone?
  • How long do solar panels last?
  • How many solar panels would it take to power a house?
  • Do you save money with solar panels?

Read this guide and you’ll discover what you need to know to make sure you get the best solar energy system for your home.

Learn what to discuss with a solar energy contractor before installation, and how to know if you’re being overcharged for your solar system.

The topic of solar energy systems covers a lot of information. Too much for the average person to digest instantly. We’ve put together a guide to the basics of solar energy systems. So you can learn what you need to know before buying a system for your home.

You can read it in 10 minutes or less.

Let’s get started!

What to Know Before Installing Solar Panels:

  1. What are the three main components of a solar energy system?
  2. What is the most important thing to measure before installing a solar energy system?
  3. How many solar panels do I need?
  4. What is the solar rebate?
  5. What’s the difference between the solar rebate and the FiT (feed-in tariff)​?
  6. What is the optimal solar panel tilt angle and direction to generate the maximum electricity?
  7. How long is the payback time on a solar energy system?
  8. How much does a solar energy system cost? And why do quotes vary so much?
  9. Do I need a battery for my solar energy system?

TIP: kWh = kilowatt-hour. This is the unit of measurement for the electricity you use. The average Australian home consumes 20 kWh of electricity per day.

  1. What are the basic components of a solar power system installation?

A typical solar energy system consists of:

Solar Panels

Modern solar panels are either polycrystalline or monocrystalline silicon. These are the two most common types. There are also hybrid solar panels made from cast-mono or quasi-mono crystalline silicon.

What’s the difference?

Polysilicon solar cells consist of many silicon crystals = lower efficiency.

Monosilicon solar cells consist of a single large silicon crystal = higher efficiency.

Cast-mono solar cells currently offer less than ideal efficiency but suffer less degradation due to exposure to natural light. They may become a big thing in the future once the technology has improved and the price comes down. But for now, they can’t contend with poly and monosilicon solar panels already on the market.

The difference between poly and mono solar panels in the real world is almost negligible. Think of comparing tread patterns on tyres. Which is more effective? Sure, there’s a lot of technology behind the argument, but out on the road, do you feel the difference?

So don’t worry about which type of solar panel to choose. Both types are used in Australia currently, and give a good performance.

When installing solar panels, the important thing is to choose a good brand. One that is established in the market, and offers after-sales technical support, and a decent warranty. You should expect a good quality or premium solar panel to last at least 25 years. Don’t settle for anything less.

Yes, there are cheaper alternatives, but on an Australian roof, they’ll be fried in around 3 to 5 years! A complete waste of your hard-earned cash.

Go for quality and you won’t regret it in the long run!

How can you tell the difference between a high-quality solar panel and a poor-quality one? Unless you’re an expert you probably can’t just by looking at it. There are plenty of brands of solar panels to choose from.

They range from cheaper brands like Jinko Solar and Suntech to the top-of-the-range LG NeOn 2/R Series and SUNPOWER® Maxeon 2/3 Series.

Solar Inverter(s)

Another essential component is the inverter. What does an inverter do? It converts the DC electricity generated by solar panels into AC electricity, so you can use it in your home.

There are two types of inverter: a string inverter or a micro-inverter. What’s the difference between the two?

String Inverter 

A string inverter collects all the DC electricity generated by the solar panels in the array and converts the electricity from DC to AC. Normally, there is only one inverter in the system if it is a string inverter.


A micro-inverter is much smaller and normally fitted onto the rear of the solar panel. So, each panel has its own converter. The DC electricity generated by each solar panel is converted to AC electricity at the panel. The electricity is then fed to the switchboard in the home.

Which Type of Inverter is Best?

Micro-inverters allow each solar panel to be optimised in terms of output. So the system will be more efficient. Although a solar energy system with micro-inverters is more costly than a system with a single string inverter.

TIP: A string inverter should always be installed in a location out of direct sunlight. The intensity of the Australian sun is enough to fry it if out in the open!

TIP: The inverter is the component most likely to fail in the first 10 years of operation. It is in constant operation and eventually suffers from wear and tear. So check the quality and warranty of any inverter before you buy!

There are plenty of different brands of inverters to choose from. Examples of cheaper brands include Solis, Goodwe, and Sungrow. More expensive and higher quality brands include SMA, solaredge, and ENPHASE.

Rack/Mounting System

This is the third component in a solar energy system. The rack or mounting system is installed on your roof. The solar panels are mounted on the rack.

Rack or mounting systems vary in price and quality too. How much does the cost vary? A high-quality system is about $100 more expensive for each additional kilowatt of solar energy capacity in the system.

Popular affordable brands in the Australian market include Clenergy, Hopergy and Titan Solar. Top-of-the-line brands include SUNLOCK and Radiant.

What’s the difference between them, apart from the price? The ease of installation, especially for certain types of roofs.

  1. What is the most important thing to measure before installing a solar energy system?

Before you decide to buy a solar energy system, there are two things you need to know:

(a) how much electricity you normally use.

(b) when you use it.

Your solar energy system will generate electricity. You can use this in your home to power lighting, appliances and other things. You can export any surplus electricity generated to the main power grid. Your local electricity retailer will pay you for the electricity you export; typically about 7-20 cents per kWh exported.

Is It Better to Use Solar-Generated Electricity or Export It?

You should use the solar-generated electricity in your home. It will save you around 30 cents per kWh compared to using electricity from the grid. Only export excess electricity that you can’t use or store in the battery of your solar system (if installed).

TIP: Compare the FiT values for local electricity suppliers before you decide how to export your electricity. Tariffs can vary between 0 and 20 cents per kWh, so it makes a difference.

Homeowners who use a lot of electricity during the day will benefit the most from installing a solar energy system. Including battery storage in your system will allow you to charge the battery using the solar electricity generated during the day. And then you can use the electricity at night. As a rough guide, you should expect your solar energy system to pay for itself within 3-5 years.

If you spend most of the day at home and run your pool pump on solar electricity, you’ll only consume about 65% of the electricity you generate. You can still export the remaining 35% to the power grid and earn from it. So a solar energy system is a good investment.

If you spend most of the day away from home, you might only consume around 20% of the electricity your solar energy system generates. You can export the excess to the grid. But it means that the payback period will be much longer, typically between 6 and 8 years. It’s still a good long-term investment.

TIP: You can see from your electricity bill how much electricity you use each month, or in 3 months. Some electricity retailers can also provide you with data on your electricity consumption per half-hour period. Ask your local electrician to install an electricity monitor to record consumption data for a month. The data collected will help the installer design the optimal system for your home, in terms of electricity usage and potential savings.

  1. How many solar panels do I need?

It depends on your budget, roof space, and the capacity (in kW) that your local  Distributed Network Service Provider (DNSP) permits.

In recent years, the cost of installing a solar energy system has fallen. The price of electricity has risen and the tariffs for exporting excess electricity to the grid have risen. So it makes sense to optimise the size of your system.

So what size of system should I install?

We mentioned before that the average household uses around 20kWh of electricity per day. So you should consider installing a system with a 5 kW inverter and 6.6 kW of solar panel capacity (typically about 22 solar panels).

TIP: It’s easier and much cheaper to install greater capacity at the beginning rather than try to add more panels later. Having more solar panels will improve the efficiency of the system during winter, and on overcast days.

4. What is the solar rebate?

The solar rebate falls under the Australian government’s Small-scale Renewable Energy Scheme (SRES). It provides a benefit to homeowners who install a solar energy system. The government issues a Small-scale Technology Certificate (STC) which the homeowner can sell, or assign, for example, to the installer of the system. This reduces the overall costs of installation. The total value of the ‘rebate’ for new installations varies depending on:

  • Solar panel capacity
  • Location of installation

For example, you live in Melbourne and install a new 6.6kW system in 2020. The value of the rebate will be $3,440. This is based on 86 STCs x $40 (maximum value).

The following restrictions apply:

  • Maximum capacity of the system is less than 100kW.
  • System installer is accredited by the Clean Energy Council (CEC).
  • All system components are Clean Energy Council approved.

TIP: The current SRES benefits will end in 2031, so it’s best to install sooner rather than later to get the maximum benefit.

TIP: The SRES rebate is calculated using the capacity of the solar panels in the installation, not the size of the inverter installed.

Why is this important?

It can be worth your while to install extra solar panel capacity. You should discuss this with your installer. Tell them you would like to ‘oversize’ your system for optimum efficiency and rebate. They will do the analysis and calculation for you.

  1. What’s the difference between the solar rebate and the FiT (feed-in tariff)​?

The rebate or SRES benefit is what you receive from the government when you install a solar energy system. It is an incentive to adopt renewable forms of energy.

The FiT (feed-in-tariff) is the payment you receive when you export your solar-generated electricity to the power grid.

The tariffs were at their highest point (20-66 cents per kWh) back around 2010, to encourage people to install solar energy systems. Since then, they have been reduced gradually and are now typically between 7 and 20 cents per kWh.

But, the cost of installing a system has dropped dramatically (80%) in recent years, and the SRES rebate is still generous. Even with lower tariffs, installing a well-designed solar energy system in your home is worth it in the long run.

So don’t believe people who protest that the solar energy system rebate isn’t worth it anymore. It’s the FiT values which have been reduced over time – not the value of the rebate.

TIP: If you are out most of the day, you can install timers to control your water heater, washing machine, and pool pump. You can optimise the electricity generated during the day by your solar energy system to power these appliances. Doing this will help you maximise the return on your investment.

  1. What is the optimal solar panel tilt angle and direction to generate the maximum electricity?

Panel Orientation

Because the sun rises in the east, and sets in the west:

  • Solar panels facing east generate maximum electricity in the mornings.
  • Solar panels facing west generate maximum electricity in the late afternoons.
  • Solar panels facing north generate maximum electricity around midday, and more than panels facing east or west.

Although a north-facing roof is the optimal condition, installing panels on east-facing and west-facing roofs is still a good investment. Historically, a north-facing roof was an important factor because the cost of installation was so much higher than it is now. But now, it’s not so important.

Panel Angle

The angle or tilt of the solar panels is a factor to consider so you can optimise the amount of electricity the system generates.

Don’t worry if you can’t install the panels at the ideal angle. If the angle of your roof means that panels are 10% from the ideal, the reduction in annual yield in electricity generated will be less than 5%.

Canberra 35°
Hobart 42°
Darwin 12°
Adelaide 35°
Perth 31°
Brisbane 27°
Melbourne 37°
Sydney 34°

TIP: If you have a home with a flat roof, there’s a potential problem. Over time the solar panels will suffer from water pooling and a build-up of dirt. This can eventually damage the frame of the panel. A good solution is to install frameless solar panels so that any water and debris will flow freely off the panels and not gather. In most cases, it’s cheaper to install frameless solar panels than mount framed panels on a tilted rack.

  1. How long is the payback time on a solar energy system?

In Australia, the average payback time for a well-designed system is between 4 and 7 years.

Why does it vary? How much electricity you use, when you use it, and the size of the system will affect how long it takes you to recover your investment.

Before you install a solar energy system, your installer should carry out an analysis to calculate the payback period. Be sure to know this before making a final decision.

TIP: Ask your installer to give you best-case and worst-case estimates for the payback period for the proposed system. To get the most accurate payback estimate, monitor your electricity use in half-hour periods and use the resulting data for the payback analysis.

  1. How much does a solar energy system cost? And why do quotes vary so much?

Here are the average costs to install a full solar energy system consisting of high-quality solar panels and a string inverter. Prices include the average cost of installation.



3 $3,500 $5,000
5 $4,500 $8,000
6 $5,000 $9,000
10 $8,000 $12,000

*Prices shown include SRES rebate.

What accounts for the difference between the minimum and maximum prices for a system of the same capacity (size)?

The most expensive systems include the latest high-efficiency solar panels and best quality inverters available on the market. Lower priced systems still have good quality components, but not the latest and best.

For example, a 6kW solar energy system costing around $9,000 will typically include higher quality components. It will be more efficient and include an element of custom design to optimise it for your home.

The same size system for $5,000 will be an off-the-shelf system using good quality components, but not the leading brands on the market.

Installation costs can increase quickly if you need to do extra work to your home to make it compatible with a solar energy system. This might include a new switchboard or rewiring work.

Anything that makes the installation process more difficult will add to the overall cost.

Choosing to install micro-inverters instead of a string inverter is another factor that will increase the cost of the system, by approximately 20%.

Installing a fully off-grid or hybrid system including battery storage can easily double the total price of the system.

TIP: When investing in a solar energy system, think long term. Cheap systems will cost you more in repairs, maintenance, and other issues over the years. Always choose quality first over price!

  1. Do I need a battery for my solar energy system?

Most homeowners still find the cost of battery storage too expensive.

For example, currently, in Australia, it costs approximately $10,000 to get adequate battery storage capacity (10 kWh).

Another important consideration is the payback period for such a system. It typically takes around 15 years to recover the cost.

But most solar energy batteries on the market at the moment only offer a 10-year warranty. So it’s likely you’ll have to replace the battery before you recover your investment.

Compare that with a regular non-battery solar energy system with a payback period between 4 and 7 years. It can be quite a daunting prospect opting for battery storage.

A non-battery system will pay you back and still provide about 20 years of free electricity and warranty cover.

Don’t buy a system with battery storage to save more money. Better to wait until prices for battery storage become cheaper, and then add it to your existing system.

Instead of waiting, installing a non-battery solar energy system now will immediately give you cheaper electricity, and save you money.

TIP: All on-grid solar energy systems currently on the Australian market are compatible with battery storage if you choose to add it later.

Not all battery storage is designed to work when there are blackouts or power grid failures. If you want full off-grid capability, you must specify this to your installer, so they can include it in the system design. It may also need extra work to your switchboard to make it compatible with battery storage use.

What’s the Best Way to Finance My Solar Energy System?

Here’s a final thought on financing your purchase of a system. It’s best to use cash.

Your solar energy system will immediately begin generating a steady tax-free return on your cash investment. Typically, in percentage terms, it’s higher than anything you’ll get from a bank for cash on deposit, or similar secure investment.

Beware of enticing no interest finance deals offered by solar companies. All finance has a cost, and it’s normally you who has to pay it; even if the cost is not immediately apparent. There’s no such thing as a free lunch!

You might be better off looking around for a low-interest loan to finance the purchase if you don’t have enough spare cash.

Even using a loan with a low-interest rate to purchase your solar energy system still makes good financial sense in the long run.