This may sound strange coming from a company that provides solar quote comparisons. But hear me out — it’s possible to buy solar that’s too cheap. It’s not good for you, the solar industry, or the environment.
Australia is the world’s most competitive market for rooftop solar
Given we cop the Australia Tax on everything from computers to sneakers, it might surprise you to learn the residential solar in Australia is about the least expensive anywhere in the world. Installations in the US, for instance, are typically double the cost.
This comes down to incredible cut-throat competition from installers and wholesalers, driven by subsidies, high electricity prices, and a pretty ace solar resource (even Melbourne gets 30% more energy than London for the same solar system).
This isn’t always a good thing
Such intensity has helped drive the installation of some 12 GW of solar capacity in Australia as of 2019. For those not across their GWs, that’s very much significant, and something to be proud of.
But there is a downside, and that is prices at one end of the market have been pushed down so far that quality has suffered. This means sub-par gear, installers who are underpaid and overworked, and companies running on razor thin margins who are one downturn away from bankruptcy. This is terrible for consumers — they’ll get lousy equipment, and little support if their installer goes bust. It’s terrible for the industry — a few bad eggs and the whole sector gets painted as reckless. And the environment — a dead solar system ain’t stopping CO2 emissions, and is a terrible waste if it ends up in landfill short of a 25+ year lifespan.
So what’s a fair price then?
Try our calculator and see! We keep our pricing estimates updated, and generally err on the conservative (high) side for good quality equipment from a reputable installer.
Here’s how it roughly breaks down for a $7,500 5kW solar system:
5kW of panels at 55c/W: $2,750
Fronius Primo Inverter: $1,500
Racking, switches, cabling and sundry: $500
Electrical Inspection: $200
Two electricians for a day of labour: $1,500
So, say $6,500 in costs. The federal government small-scale renewables subsidy applies, bringing this down to $4,000, leaving $2,500 in margin. That’s not pure profit, it has to cover things like administration costs, logistics, support staff, after-sales maintenance and so on.
Where do corners get cut?
When someone buys cheap solar, they get squeezed in a few ways.
First off, cheap gear. Sometimes it’s okay, sometimes disastrous junk. We argue it’s false economy. An ‘entry-level’ inverter might be half the cost of a Fronius, but in absolute terms it’s a minor premium and amazing value. By way of comparison, try buying a luxury European sedan for $800 more that what an entry-level hatchback would set you back!
Second, workmanship. The vast majority of sparkies out there want to build things to last. But when they are paid by the panel, and forced to rush from job-to-job to make a living, it’s inevitable that corners will be cut. Sometimes these shortcuts are cosmetic, other times they risk the longevity of the system and even safety. Give skilled tradespeople the opportunity to do things right.
Finally, the financial viability of the solar retailer itself. If they don’t leave enough operating margin, they can’t keep enough staff around to answer questions and help you if things go wrong. They might go belly up, in which case you’ll get no support at all if your system fails. It’s not unheard of for dodgy retailers to sell a bunch of cheap systems, wind up, and phoenix into a new enterprise so they can avoid their ongoing consumer obligations.
In our experience, solar prices break down into three bands:
You may see the words ‘Bill Buster’, ‘Tier 1’, ‘Limited Time Only’ and ‘Free WiFi’. Run away!
Too Damn High!
Some prices on the high end are using top-spec gear (e.g. Sunpower or LG panels) with a tricky installation site. Those are fair enough. But then there are the cheap systems, being sold at 3x the going rate! Often seen in high-pressure less-than-reputable door-to-door sales, where a bargain is promised but certainly not delivered. These ones really elevate my blood pressure! Basically a scam, keep an eye out, both for yourself, and for friends and family who might be taken in.
Quality gear, a fair margin, a retailer that looks after you, and a skilled installer who can take the time to do things right. You might still see variation around 20%, but this is the Goldilocks range we champion here at BOOM!