Solar ‘101’ – New South Wales Edition

The good – and bad – of solar in New South Wales.

New South Wales is a great place for solar energy, especially if installing a system in or around Sydney.

The good

• Single-phase homes in the Ausgrid network area (most of NSW, population-wise) can install a large 13.3 kW solar system with no export limitation. Many other DNSPs limit system sizes to 6.6 kW on a single-phase with a 5 kW export limit.
• Ausgrid does a lot of random audits of systems – especially battery installs. This is extra peace of mind for consumers, as it keeps installers on their toes.
• Essential Energy and Endeavour Energy don’t count AC coupled batteries towards your inverter phase limit, which means it’s much more straightforward to install a battery on your home if you have a larger solar system.
• There are many installers operating in New South Wales. This means there’s a lot of competition – and very competitive prices for consumers.

The bad

• The downside to New South Wales being a competitive market for installing solar power means there can be a race to the bottom for solar pricing in many areas. The problem in joining the race to the bottom is that you might just win. If you buy the cheapest solar system advertised, don’t expect decades of low bills and high performance. Look for a fair price from an excellent, local installer.
• If you’re located in the Essential network area (rural NSW) and live on a shared (strata) property, your export limit is divided by the number of properties in the strata. If you are in a group of 5 homes, each home may only be allowed 1kW export.

Solar rebates in New South Wales

The real name of the ‘solar rebate‘ is the “Small-Scale Renewable Energy Scheme (SRES)”. It’s a mouthful – you can see why everyone calls it ‘the rebate’.

The scheme is designed so that when you install solar panels, ‘STCs’ – pieces of virtual paper – are generated. The larger the solar system, the more STCs you generate. You sign over the right to these STCs to your installer, who bundles them up and trades them for cash. They pass on the value of the STCs to you as a point of sale discount. It’s already included in the advertised or quoted price.

The value of STCs depends on the zone in which they’re generated. Zone 1 has the highest value, and zone 4 has the lowest:

Pro-tip: Most of Australia lives in zone 3

Most of the state lives on or near the coast, which is zone 3. Inner-regional areas of New South Wales are a part of zone 2.

To demonstrate the difference in rebate between the two zones – if someone located in Newcastle (zone 3) were to buy a 6.6 kW solar power system, it would attract about $3,000 worth of rebate.

If someone in Bourke (zone 2) were to buy the same 6.6 kW system, their rebate would be worth around $3,300.

Winter generation and energy use habits

Most cities in New South Wales generate about half the amount of energy in the depths of winter as they do at the height of summer. But the overall pleasant climate of most of the state means that you’ll need less heating to keep things comfortable, especially compared to a place with colder winters like Hobart.

The further north you go, the smaller the difference between summer and winter solar energy generation. Compare the annual generation of a 6.6 kW solar system in Sydney to one in Tweed Heads:

So the further north you are in New South Wales, the less careful you need to be about your electricity usage in the winter, as your solar panels will be able to offset a good amount of it.

If you’re in Sydney or surrounds, you’ll want to install as much solar capacity as you can reasonably fit and afford to ensure ample generation to run energy-hungry appliances such as heaters in winter.

The generous system size allowances from Ausgrid (10 kW inverter capacity per phase with no export limit) mean there is a strong financial incentive to go as large as possible.

How solar panel direction affects energy production in NSW

My main Solar 101 guide mentioned that north is the optimal direction to face your panels for the highest solar generation possible.

Unfortunately, not everyone has an unshaded north-facing roof ripe for solar panels. So, just how much generation will you lose if you face your panels west or east?

This graph shows the annual production of east or west-facing panels, compared to north-facing, in major New South Wales towns/cities.

Even south-facing panels can generate a respectable amount of energy: generating around 29% less energy overall than ‘ideal’ north-facing panels:

The typical north-facing $5,500 6.6 kW system in New South Wales has a payback of just over four years. For a south-facing 6.6 kW system, this payback stretches out to 6 years – which is still well worth it for most people.

Pro-tip: If you want to squeeze every last drop of energy out of your panels, face them slightly north-north-east.

Costs for solar power in New South Wales – and brands to trust

Here’s what you can expect to pay for a 6.6 kW solar system in a major metro area in NSW:

If your roof is quite hard to work with – multiple roof angles/directions, scissor lift access required, etc. – anticipate paying more than these price ranges.

For those of you living in a more regional area – expect to pay around a 20% premium over these prices. 

Pro-tip: You’ll find some companies offering jaw-droppingly low prices – below what I’ve mentioned here. Avoid these systems – when you buy cheap, you buy twice.

Brands to trust

Taken from my main solar 101 guide, I’d be happy to have any of these brands on my own home:

Recommended Solar Panels

Recommended Solar Inverters

I wouldn’t expect any particular brand to perform better than another in ‘New South Wales conditions’ – so don’t listen to any salesman’s hype.

Solar systems (and exports) can be large

There are three major Distributed Network Service Providers (DNSPs) servicing New South Wales: Ausgrid, Endeavour Energy and Essential Energy.

Here are the solar system sizing rules for each:

Ausgrid

• Single-phase: 10 kW inverter limit, 10 kW export limit.
• Three-phase: 30 kW inverter limit, 30 kW export limit.
• Ausgrid “may” count battery inverters towards phase inverter limit.

Endeavour Energy

• Single-phase: 10 kW inverter limit, 5 kW export limit.
• Three-phase: 30 kW inverter limit, 30 kW export limit.
• Battery inverters do not count towards phase inverter limit.

Essential Energy

• Single-phase: 5 kW inverter limit, 5 kW export limit.
• Three-phase: 15 kW inverter limit, 15 kW export limit.
• Rural areas: 3 kW inverter/export limit per phase.
• Battery inverters do not count towards phase inverter limit.

A note on Essential Energy – we’ve heard feedback from our clients operating in the Essential network area that they’re starting to crack down hard on export limits, even for three-phase properties.

On paper, they allow a 15kW inverter/export limit for a three-phase property. Installers have told me that it’s becoming more common for Essential to restrict systems to a 5 kW export limit total.

We’ve also heard of a new rule classifying strata properties as ‘one’ for export limitation reasons – so if you’re in a group of 5 homes, each home will only be allowed a 1 kW export limit.

Note that you’re allowed to ‘oversize’ the wattage of panels on your roof by 133% of your inverter capacity. So, you can have up to 13.3 kW (10 kW inverter limit x 133%) of panels on a single-phase home. 

‘Battery inverters counting towards the inverter limit’ means if you want to ‘AC Couple‘ a battery, your solar system can’t be too big. For example, if you have a single-phase home with an 8 kW inverter and 10 kW of panels, Ausgrid may not allow you to add a Tesla Powerwall with a 5 kW battery inverter inside it. This is because 8 + 5 = 13 kW total.

Many of our clients have told us they’ve had minimal problems getting Ausgrid to approve scenarios like the one just described – but it’s important to be aware that they can potentially knock back your application.

Pro-tip: Export limits affect your savings less than you might expect.

Who’s the best electricity retailer in New South Wales?

New South Wales is a competitive market for solar installers, which means it’s a competitive market for energy retailers.

At the time of writing, more than 20 retailers are servicing New South Wales – so consumers are spoilt for choice and shouldn’t find it hard to shop around for a better deal on their electricity.

Our nifty Electricity Retailer Comparison Tool will tell you what each retailer is offering in your postcode.

As an example – the difference in annual bill for a typical 8 kW system owner near Newcastle between the best and the worst plans available is about $1,000 per year. So it pays to shop around.

Not all retailers service all parts of NSW, so check your postcode in the tool.

My recommendation is to check my tool annually for the best deal. Then contact your existing retailer and ask them to match it. Often they will. If they won’t then just switch.

What’s the best electricity tariff for a solar home?

There are two main types of tariffs – time of use tariffs and ‘flat’ tariffs.

A flat tariff is straightforward – you have one price for your electricity, no matter what.

A time of use tariff charges you different per-kWh prices for electricity depending on the time of day and they’re increasingly common. You have a “peak”, “off-peak”, and “shoulder” period:

Is the time right for battery storage?

Well,

Are you keen on new technology, want to protect yourself from blackouts, or support a new sustainable industry? Then go for it and buy a battery.

Is it imperative that the battery saves you money over its warranted life? Then for most households, a home battery is not a great investment. 

To help make batteries more affordable, many state governments are offering rebates and subsidies that can substantially reduce the price of a system. Sadly, New South Wales isn’t one of them – at the moment. As a result, the savings from an unsubsidised battery leave a lot to be desired.

The one exception to this advice is if you’re in a rural area. Your DNSP may quote you $30,000 or more to have your property connected to the grid. In this situation, an off-grid solar and battery system can hold its own, price-wise, against having the grid built out.

Pro-tip: Virtual Power Plants promise that they can increase the savings generated by a battery – but always check the fine print!

How long will solar (and batteries) take to pay for itself in NSW?

My  solar calculator will answer this question:

Solar-only payback

Assuming:

• A 6.6 kW solar power system in Sydney, facing north, costing $5,500
• An unshaded roof
• An electricity usage tariff of 29 cents per kWh
• Feed-in tariff of 10 cents per kWh
• Daily supply charge of 81c
• Solar energy self-consumption is 30%
• UPDATE June 15, 2022: Electricity prices will be increasing in NSW in July 2022, as should feed-in tariffs. This will make going solar an even better deal; but for the purposes of this exercise figures are based on 2021/22.

My calculator shows you’ll save $1,530 per year – so a simple payback period of 3 years, 7 months:

Pretty compelling.

Solar + battery payback

Assuming:

• A 6.6 kW solar power system in Sydney, facing north, costing $5,500
• An unshaded roof
• An electricity usage tariff of 29 cents per kWh
• Feed-in tariff of 10 cents per kWh
• Daily supply charge of 81c
• 60% solar electricity self-consumption (thanks to the battery absorbing surplus solar energy generation)
• A Tesla Powerwall battery, costing $19,000

My calculator shows you’ll save $2,095 per year – a simple payback of 10 years, 5 months.

What’s important to note is that the 3 year, 7 month payback of the solar panels remains the same. When you add in the 27-year payback of the battery, this is what stretches out the simple payback to almost 11 years:

Adding a battery blows out the payback!

I’m often accused of being ‘anti-battery’ when I point out the real-world economics. I’m not anti-battery – I’m just pro-truth.