How Does Solar Power Save You Money?

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Introduction :How Does Solar Power Save You Money:

Australia is one country that experiences extreme heat in the summers. These soaring temperatures often mean increased power consumption and electricity from the grid can be expensive. So, you need to find multiple methods that can help you save on your electricity costs.

But there is only one efficient way that not only helps you save money, it also helps satisfy your energy needs in the long-term viz., solar power.

How do solar power systems work?

Solar power systems work by converting sunlight into electricity for your home or business. This process of conversion starts when sunlight, comprising photons, hits the solar panel.

A solar panel contains solar modules made up of many connected solar cells. Photons hitting the top layer of a solar cell cause the electrons to flow through the bottom layer. This flow generates direct current (DC) electricity, which is carried to the inverter. The inverter converts the electricity from DC to AC (alternating current), which can power your commercial or residential building.

Now, you may wonder what happens when you’re not using all the electricity your solar panels generate on all sunny days. Here are some benefits of installing solar panels:

Solar power systems enable you to benefit from a system called ‘feed-in tariffs’ depending on your state and energy retailer.

During peak daylight hours, a typical grid-tied PV system generates more energy than the customer needs. So, the excess energy is then fed back to the power grid for using it somewhere else. The customer gets credit for this excess energy, which can be drawn from the grid during the months with cloudy weather.

Two ways solar power will save you money

To determine whether solar power is worth the investment, you need to know how exactly having solar panels will help you avoid the energy costs. Following are the two ways solar power systems can save you money:

1.   Offsetting your energy consumption

Primarily, solar power can help you tackle your energy costs by reducing the amount of electricity you need to buy from the electricity retailer. A typical grid-connected solar system prioritizes solar energy and harmoniously supplies the remaining electricity you need from the power grid. The amount of energy consumption that you expect to offset will depend on the size of your solar system and your power consumption.

2.   Feed-in tariff excess energy

Since solar energy is generated from the heat generated by the sun, there will be times when surplus energy is produced. This excess energy can be sold back to the power grid at a rate known as ‘feed-in tariff’.

These rates may vary according to the state and electricity retailer (e.g. AGL, Origin, etc). Usually, you can find feed-in tariff rates between 6-13c per kWh. So, when you receive your electricity bill after solar system installation, you will notice an additional line item mentioning the feed-in credit.

Cost of solar power systems

The price of solar panels is dropping owing to the Australian government’s solar rebate program and the rise of solar panel manufacturers in the market. Thus, solar panels are now more affordable than ever.

The average cost for installing a 6.6 kW solar system is roughly $2799. However, the prices depend on your unique energy demands and the solar panel brand. Also, these prices significantly vary from state to state. This variation in rates is because the zone ratings for each part of Australia are different. They are also decided by the Small-scale Renewable Energy Scheme (SRES).

The payback period for the 6.6 kW system is usually around 4-5 years assuming an ideal solar system installation.

Electricity bills after solar system installation

If you have a fully functional solar system running at your home or commercial building, you will notice a considerable decline in your monthly electricity bills. You can expect a decrease between 30-80% depending on the size of your solar system and your power consumption.

It’s difficult to offset 100% of your energy usage because of factors affecting daily energy production. However, you can expect some net-zero months when you won’t need to pay electric bills. Also, there may be months when your input to the grid is remarkably high, so you may receive negative bills, meaning you’re a net energy seller for the particular month.

How much will you save?

Assuming your average monthly energy usage is 500kWh at 25cents/kWh, so your monthly bill will be around $125. Now, if you are investing in a solar system, say a 5kW system producing 600kWh at 20cents/kWh, you will save $100 on your bills. You will feed an extra 100 kWh to the power grid at 8 cents, earning you $8 more. That way, you will save $108 every month.


The lifespan of solar panels is about 30 years. So, they can help you save electricity costs for a long time. It not only cuts down your energy bills but also generates clean and environment-friendly, renewable energy. So simply put, the solar power system is a significant investment that benefits everyone, i.e., the humans and the environment.

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