Solar power

Last updated: 6 September 2022

What is a solar photovoltaic (PV) system?

A solar photovoltaic (PV) system, often referred to as solar panels or solar power, generates renewable electricity by converting energy from the sun. The solar panels generally sit on a house or shed roof facing north so that they get good access to the sun, though sometimes panels are installed to face in other directions, if there is limited roof-space facing north or limited northerly solar access. Some west-facing PV panels can also be useful, as they generate more electricity on a summer afternoon, when you might be using an air conditioner.

A solar PV system is different from a solar hot water system, which uses the sun's energy to heat water rather than generate electricity.

Types of solar photovoltaic (PV) systems

In Australia the solar photovoltaic panels are usually connected to the electricity grid and generate DC (direct current) electricity. A device called an inverter is used to convert this DC electricity into the 240-volt AC (alternating current) electricity which is required to run the electrical appliances in your home.

The electricity generated by the PV system is delivered directly to your home for consumption and any excess electricity is exported to the electricity grid. Your house will draw electricity from the grid when it is night or when your PV solar system cannot generate enough electricity to meet your consumption.

It is also possible to install solar PV systems with battery systems but these are currently much less common than grid-connected systems. Solar PV systems with batteries allow for storage of PV-generated electricity to use at night or at times of low sunshine, and in some cases allow electrical appliances to operate during power outages. If the battery installed is large enough it is possible for a house to completely disconnect from the electricity grid, although these systems usually also rely on a diesel generator back-up and are costly to install.

Benefits of solar PV systems

Installing a solar PV system will allow you to generate renewable energy and reduce your electricity bills. Some of the electricity you generate will be used in your home to power electrical appliances and some will be exported back to the electricity grid.

In Victoria a typical house consumes an average of around 12 kilowatt hours of electricity per day. Over one year, a 1.5 to 3 kilowatt solar PV system can generate around 45–90% of this, though the amount generated by the system varies throughout the year as the amount of daily sunshine changes.

The amount of the PV generated electricity used in your home will depend on the size of your PV system, how much electricity you use, and how much of this you consume during the day. The higher your daytime consumption, the higher amount of PV generated electricity you will use. Typically around 30 to 50% of the electricity generated by a PV system is consumed in the home and 70 to 50% is exported to the grid.

This reduces your annual electricity bill:

  • by reducing the amount of mains electricity you draw from the grid (and how much you are therefore billed for this by your retailer)
  • because you are paid for the electricity you export to the grid (see feed-in tariff below).

How much will you save?

The annual output of a solar PV system depends on a range of factors including its size (or rated output in kilowatts), orientation, and your location – there is more sunshine in northern Victoria, so the annual output of the PV system is larger. The typical annual output for common system sizes in Melbourne and Mildura are shown below:


Direction 1.5kW 3kW
North 2,015 4,029
West 1,916 3,831
South 1,536 3,072
East 1,685 3,369


Direction 1.5kW 3kW
North 2,514 5,028
West 2,337 4,674
South 1,815 3,630
East 2,093 4,185

A typical Victorian house consumes an average of around 4,400kWh per year, or around 12 kilowatt hours per day, although there is considerable variation across households.

When you install a PV system, the amount of mains electricity you save will depend on how much of the PV generated electricity you use in your home. Typically, this will be around 30 to 50% of the PV system’s output. This will directly reduce your energy bill by the amount of mains electricity saved.

The excess PV generation will be exported to the electricity grid, and your retailer will pay you a feed-in tariff for this. The feed-in tariff is generally much lower than your mains electricity tariff, so to achieve the largest energy bill saving you need to use as much of the PV generated electricity in your home as you can. Choosing an appropriate size and orientation of for your PV system, and using electrical appliances during the day where possible, will mean that you maximise the use of PV generated electricity in your home.

The solar PV panels (or modules) should last for 20 to 30 years, and the inverters should last for up to 10 years.

Feed-in tariffs

A feed-in tariff is a payment you receive from your electricity retailer (i.e. the company you receive your electricity bill from) for each unit of electricity your PV solar system exports to the grid. It is generally much lower than the electricity tariff you pay for the mains electricity you use.

How to install solar power

There are several factors to consider when installing solar power, such as the size of the system to install, the positioning of panels and which system to choose.

Solar Homes Program

The Solar Homes Program is helping eligible Victorian households take charge of their power bills by providing rebates for solar panel (PV), solar hot water and solar battery systems.

Visit the Solar Homes website