Renewables and Energy Technology

Wind turbines, solar panels, home battery storage - if it's discussion about renewable energy you're after, you'll find it here.

Wind turbines, solar panels, home battery storage - if it's discussion about renewable energy you're after, you'll find it here.

The Significant Cost Benefits of Solar Panels




 A detailed case study based on actual data over 3.50 years in Adelaide from a 5.2 kW solar panel installation from 1st December 2013 to 21st May 2017 shows a saving in peak electricity costs of $1,712.55 per annum when compared to not having solar panels. 




As a retired electrical engineer, I have maintained a very detailed spreadsheet of all our monthly electricity costs and energy flows since November 17th 2013, with the earlier quarterly bills converted on a pro rata basis into monthly data.  The analyses in this document are based on two retired people living in a three bedroom home, and all prices include GST, unless otherwise specified.  All spreadsheet data has been reconciled to the cent.  I have omitted controlled load (also known as ancillary, off-peak or J-tariff) in this document because it is not pertinent to solar energy generation and storage.


We added a Sunverge DC coupled solar battery when we joined the AGL Virtual Power Plant (VPP) on 26th May 2017.  From 17th November 2013 to 21st May 2017 we had 20 REC 260 watt panels with a total theoretical output of 5.2 kW.  The panels face directly north, they are not shaded, and they are at a pitch of 22.5 degrees above the horizontal.  We also had an SMA 5000TL-21 solar inverter from which I downloaded daily solar production data via Bluetooth. 


The methodology used to estimate what the costs would have been if we hadn’t had solar panels, was to deduct the solar energy exported as feed-in from the solar energy produced, to arrive at the solar energy used in-house.  I then added the solar energy used in-house to the peak energy imported from the grid, this now being the total energy we used in-house, regardless of whether we had panels or not.  I then costed those energy flows at the monthly actual discounted energy tariffs we were charged for peak grid electricity.  The costs for the case where we had solar panels are simply taken directly from our actual bills.


The next step was to annualise both sets of results by deriving daily costs and consumptions (by dividing the totals by the number of days in the study) and then multiplying the daily costs by 365, to arrive at comparable annual numbers.


The final step was to determine the average tariffs used over the period for imported and exported energy, and measure the percentage changes relative to AGL’s current discounted tariffs.  The costs for both cases were then adjusted by the percentage changes to arrive at an annual comparison based on current tariffs.


Any solar energy installation can only be paid off by an increase in net revenue, where net revenue is the money earned from exported feed-in tariffs minus the cost of imported peak energy. 




Table 1 below shows energy flows, electricity costs, tariffs and electricity provider discounts, covering the period under consideration, but excluding state government pensioner discounts and other minor charges, such as payments for my participation in the AGL Peer to Peer Network.


There are some anomalies in the data due to converting quarterly bills to monthly bills, and also due to some estimated meter readings.  However, these anomalies do not affect the overall totals because at some point the meter was read, and all totals have been reconciled against overall meter readings and account billing.  One obvious anomaly in the monthly data occurs when it appears that the monthly solar energy exported exceeds the monthly solar energy produced.  I have shown this as a shortfall in Column 10 for the sake of completeness, although clearly this is not physically possible.  Again, this does not affect the total energy flows, or the costs.


The summary at the bottom of Table 1 is therefore an annualised cost based on the combined peak and solar monthly energy flows used in-house (Column 11), ignoring any exported solar energy, and using the actual monthly discounted tariffs (Column 16), to arrive at the equivalent monthly costs (Column 12).

Table 1.jpg 

Column 6 is the amount of solar energy generated each month, based on the output from the SMA inverter.  By subtracting the energy exported as feed-in (Column 8), we get the amount of solar energy that we actually used in-house (Column 9), and which we would have had to buy as peak energy if we didn’t have solar panels.  If we then add the peak energy that we actually imported (Column 7) to the solar energy that we used in-house, we get the total energy used in-house (Column 11).  Applying the monthly discounted peak tariff (Column 16) to this equivalent in-house energy consumption gives us a very accurate “no solar panels” cost in Column 12.


The PER ANNUM data at the bottom of Table 1 is derived by dividing the TOTAL values by 1278 to give a daily average, and then multiplying by 365 to give an annualised average.




Table 2 below shows the costs, exactly as they occurred, based on having solar panels installed.  The PER ANNUM data at the bottom of Table 2 is also derived by dividing the TOTAL values by 1278 to give a daily average, and then multiplying by 365 to give an annualised average.  In this case we have arrived at the actual annualised cost of peak grid energy, and the annualised benefit of the feed-in rebate, with solar panels installed. 

Table 2.jpg



Table 3 below is a summary of the annualised data from Tables 1 and 2.  The annual benefit, or change in net revenue, of $1,813.79 comes from the fact that, with solar panels included in the calculation, we needed to buy less peak energy, and we were able to sell a significant amount as feed-in.  While this is an accurate assessment based on actual data, and a sound methodology, it is also based on the monthly tariffs shown in Tables 1 and 2. 

Table 3.jpg 

Table 4 below includes current tariffs, and the percentage increase in tariffs relative to the average tariffs used in Table 3.  The peak import costs in Table 4 have been increased by 37.9% over Table 3, and feed-in export rebates have been decreased by 18.7% over Table 3. 

Table 4.jpg 

The financial benefit, or change in net revenue, at current tariffs, from installing 5.2 kW of solar panels is $1,712.55 per annum.




This case study is based on 5.2 kW of solar panels in Adelaide, and an annual average consumption of 3,934.1 kWh of total imported peak energy.  We paid $8,200 in September 2013 for our panels, and at the estimated annual return of $1,712.55, we will have paid them off by about September 2019.  Given that the cost per kilowatt of solar panels has decreased significantly since 2013, the payoff time will be much better these days.


I think it possible that some people may think of solar energy as free, but there is a strange paradox involved in solar photovoltaic (PV) energy.  There are two things that contribute to paying a solar panel installation off.  The first is a reduction in imported energy costs, currently at $0.35759 per kWh for AGL 14.0% discounted rates.  The second is the profit from the feed-in tariff, currently at $0.16300 per kWh for AGL.  Every kWh of solar energy used in-house means that we don’t have to spend $0.35759 on peak energy, but it also means we forego the $0.16300 on feed-in.


The net result is that the “cost” of each kWh of solar energy used in-house is actually $0.16300, at least until the installation is paid off.  Once paid off, the “cost” becomes a loss of credit on your electricity bill.


One of the obvious conclusions resulting from the disparity between import costs and export profits is that the more you use your solar energy in-house, the greater the benefits.  This tends to favour people, such as retirees, who are at home a lot during the day, and can run dishwashers, washing machines etc. while the sun is shining.  However, running electrical appliances during times of solar activity is always beneficial, whether you are at home or not.


Of course, any solar energy not used in-house always has a direct benefit of $0.16300 per kWh because it will be exported as feed-in.  Incidentally, there can be periods on days of high solar output that the grid voltage rises above a certain limit, and all inverters in that area can be shut down by the electricity authorities.  During those periods you will not earn any feed-in tariffs, but this is not a common occurrence.


Also, the joy of being part of the solution, instead of part of the problem, is something that can’t be quantified, and once the panels are paid off, the benefits feel even greater.


If you are contemplating installing solar panels, particularly in Adelaide, and you want to get an idea of how this case study might apply to you, I would suggest the following steps.


  • Use your past electricity bills to work out your current average annual consumption of peak electricity, and the costs. Remember that peak costs will probably be ex-GST, with the discount costed separately for both peak and controlled load, so you will need to apply the discount to the ex-GST cost first, and then multiply by 1.1 to arrive at a discounted GST inclusive price.
  • If you wish to adjust for current tariffs, calculate the discounted tariffs by dividing the discounted GST inclusive costs above by the total energy, and average them.
  • Find out the cost of solar panel installations per kilowatt from the web.
  • Refer to Monthly, seasonal and annual solar production data for Adelaide to determine, based on what you think you can afford, and the orientation and angle of your roof, how much solar energy you can expect to generate per annum, for various size installations.


Putting all this together, along with comparing it to the tables above, will hopefully give you some indication of whether you are likely to benefit from installing solar panels.  I would recommend, where possible, that you purchase more panels, rather than less, bearing in mind the SA Power Networks limitation of 5 kW.


I would also strongly recommend that you don’t wait for battery storage to become cheaper, because in VPP Solar Battery Costs Money To Run - An Engineer's Case Study I show that adding a battery actually reduces the annual savings you make from having panels only.


If you currently don’t have panels installed, and you use electricity to heat your water, I would suggest you read The Significant Cost Benefits of Solar Hot-Water to see if maybe an investment in solar hot water might be more beneficial than solar PV.


Please see my Profile if you’d like to learn more about other articles I have written on solar energy and my  participation in AGL’s Virtual Power Plant solar battery storage program.



Re: An Engineering Case Study Showing Significant Cost Benefits of Solar Panels

Community Manager

Hi @Richard


Thank you so much for your contribution, summary and tips based on your experience with solar panels. You've clearly done your homework and track your progress meticulously. 


Community, if you are looking for an expert in Solar Panels, Richard is your man!


Please give him a like or a reply if you found this helpful. 



Re: An Engineering Case Study Showing Significant Cost Benefits of Solar Panels



I love real data, thought I was the only one who was so meticulous. Great work, good info.

Re: An Engineering Case Study Showing Significant Cost Benefits of Solar Panels


Hi Lew,

Can I ask your background and whether you have joined the VPP?

I’ve just finished an analysis based on 14 months with the VPP and I now have a very different perspective on it.

 I haven’t published yet but will let you know when I do.



Re: An Engineering Case Study Showing Significant Cost Benefits of Solar Panels


Hi Lew,


My email is if you want to contact me directly.