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How does solar energy work

More than two million Aussie households have solar panels installed in their home, making it quite a common way to source residential electricity. If you think your household might make the solar switch, there are a few things you’ll need to get your head around. 

In this guide, you’ll find information about how solar power is actually generated, how you can get solar panels installed and most importantly, how solar energy could make a difference to your energy bill. 

How can solar energy be generated in my home? 

Firstly, you’ll need to install solar panels on your roof. Your solar photovoltaic (PV) system works during the day to convert sunlight into direct current (DC) electricity. Once the DC electricity flows into an inverter, it is converted into regular electricity that can be used in your home. 

Solar panels need to be installed by an accredited technician, and you'll need to find solar panels suitable for your rooftop.

Will I still need an energy provider if I have solar power?

Yes, you will still need to be connected to an energy retailer who offers solar energy plans, just in case your panels don’t generate enough electricity for your home. However, you can nominate to have the excess power fed into the grid in exchange for a credit from your retailer. 

You can compare energy retailers that offer competitive solar plans by using our energy comparison tool

How do I get solar panels installed in my home?

Before you can make the leap toward solar power, you’ll need to establish whether your home is suitable for solar panels. This depends on the location, size and type of house you own, including the roof. 

For instance, if your home doesn’t get a sufficient supply of sunlight it could be difficult to generate electricity. In most cases, you need a roof that faces north or north-west without too many trees or buildings blocking the sunlight. 

If you find that your home is not suitable for solar power, you can still support renewable energy by opting for an energy retailer that sources electricity from renewables. 

Is it expensive to install solar panels?

The amount you’ll pay will depend on the type and size of system you have installed in your home. For example, according to Solar Choice, the cost of a 3kW system in Sydney totals $3,440, while a 10kW system could set you back $9,210. However, just keep in mind that solar panels are an investment that can last up to 25 years. 

There are also a number of incentives available to subsidize part of the cost of installing solar panels, to make the initial investment less stress on your wallet.

It’s also worth mentioning that your panels will need to be installed by an accredited installer. You can check out a range of accredited installers over at the Clean Energy Australia website.

Is there anything else I need when switching to solar power?

While solar panels can help get your home its daily electricity needs, it may only be one side of the coin. A home battery can store any excess electricity generated from solar panels during the day, so it can be used at night.  

If you’d like more information about home batteries storage, check out our comprehensive guide

Are there any government subsidies for installing solar panels?

Yes, you are able to claim a subsidy in the form of a small-scale technology certificate (STCs) from the government, which can help reduce the up-front cost of installing infrastructure. The rebate amount you receive will depend on things, like the size and location of your solar systems. 

In order to be eligible for STCs, your solar system needs to be installed by an accredited installer. 

What about my energy bills?

As you’ll be making your own power for your home, the electricity your home uses is ‘free’, which can help you save big on your energy bills. But as mentioned, your savings will depend on how much electricity your solar panels can generate (your retailer will look after any remaining electricity needs). 

What happens if I generate too much electricity?

If your solar panels generate more electricity than required, you have the option to feed it into the grid in exchange for either a credit to your bill or have the money deposited into your nominated bank account. The rate at which you are paid for pumping excess electricity into the grid is called a feed-in tariff, which varies between states as well as providers.

Ready to kickstart your solar journey? Find out how much you could be saving by using our free energy comparison tool


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Cooper Langby
Cooper Langby
Money writer

Cooper writes across all aspects of personal finance here at Mozo. With a double degree in Journalism and Communications & Media from the University of Wollongong, Cooper has previously written sports content for the Fansided network. He is now turning his focus to finances and is always looking for new ways to educate himself and our readers on the best ways to save money, and budget effectively.