How much does a 20kW solar system cost?

In Australia, investing in a 20kW solar power system proves to be an excellent option for small to medium enterprises or residences with substantial energy demands. Such systems typically offer payback periods ranging between three to five years across various regions. This guide will discuss the price variations, expected energy outputs (in kWh), and the financial gains that can be anticipated from a standard 20kW solar PV installation.

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What is the cost of a 20kW solar system?

As per the latest data from Solar Choice's installer network, the overall cost for a fully installed 20kW solar system falls within the range of $15,000 to $22,000 as of August. This price bracket considers initiatives such as the federal government’s Renewable Energy Target benefits available for systems with less than 100kW output capacity, including GST.

Given this price range, affordable and clean energy becomes accessible to small and medium enterprises grappling with escalating electricity prices from the grid.

Solar Choice has provided ongoing tracking of pricing trends for commercial solar systems since May. While we do not specifically follow 20kW systems, pricing patterns for 10kW and 30kW installations can significantly inform potential buyers.

Average pricing for 30kW solar systems from May to August (From Solar Choice's Commercial PV Price Index).

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How much energy can a 20kW solar system generate?

The actual output from a 20kW solar power system can fluctuate based on various factors, including weather, location, and system orientation.

The table below provides an approximate evaluation of daily energy production from a 20kW solar system averaged throughout the year across Australia’s major cities.

20kW Solar System Energy Output

• Adelaide: 72-82 kWh
• Brisbane: 78-82 kWh
• Canberra: 72-82 kWh
• Darwin: ~88 kWh
• Hobart: 58-66 kWh
• Melbourne: 62-72 kWh
• Perth: 80-88 kWh
• Sydney: 68-76 kWh

*Assumes north-facing with no shading and 75% system efficiency. Source: PVWatts & Bureau of Meteorology

Bear in mind that the figures mentioned are based on annual averages—daily outputs will typically be higher during summer months and lower in winter. In colder months, energy production can drop by 20-40%, while summer may yield a 20-40% increase.

Is a 20kW solar system suitable for your business?

Identifying the right solar system size for your operations typically involves three critical considerations:

• Available Roof Space: A 20kW system necessitates approximately 100-136 m² of space, potentially more contingent on panel wattage and any required tilt frames.
• Energy Consumption Patterns: In many Australian regions, energy feed-in credits are not available for solar production exceeding a 10kW capacity, rendering surplus generation non-beneficial. Therefore, selecting an appropriately sized system to match your energy usage is crucial. Consult Solar Choice experts to determine your optimal system size.
• Your Financial Plan: If ample roof space permits the installation of the maximum recommended solar system size, budget considerations will dictate your choices.

What is the expected ROI and payback timeframe for a 20kW solar setup?

Based on data from nearly 300 business scenarios, payback periods for well-sized commercial solar systems in Australia average around two years when accounting for government STC rebates and tax incentives available for solar initiatives.

Outcomes will vary by business based on specific conditions and decisions made by owners. Influential factors to ROI include:

1. The total system costs—both initial and ongoing
2. The cost of electricity from the grid
3. Payment method for the system—cash, financing, solar PPA, etc.
4. Feasibility of obtaining a feed-in tariff to sell excess solar energy back to the grid

These factors are explored below:

1) Overall Cost of the System

The estimated cost of a 20kW solar system falls within $15,000-$20,000 (inclusive of GST in Sydney as of the end of the prior assessment). This estimate covers installations without significant additional complexities. Through our tender management service, we collect quotes from installers for necessary extras, such as switchboard upgrades, crane operations, ground-mounted installations, tilt frames, or micro-inverters. To secure the most competitive pricing and value, we recommend soliciting multiple quotes from qualified contractors.

2) Electricity Costs

A standalone shop may not wield the same purchasing power compared to a chain, which can negotiate collective agreements for rates. Our firm reviews numerous commercial electricity bills daily, revealing significant variations in rates influenced by purchasing power, geographic location, and market competitiveness. Generally, elevated grid electricity rates enhance the appeal of solar investments; conversely, lower rates may extend the payback period for solar installations.

3) Financing the System

Solar systems can be funded upfront with a payback period of two to five years. However, many businesses find they can operate on a cash flow-positive basis under financing agreements, where loan repayments are lower than the savings generated by the solar system. This creates moderate savings throughout the duration of the loan, with a significant drop in operating costs following the conclusion of a five to ten-year financing arrangement. Solar financing rates usually hover around 4-6%, contingent on project scale and creditworthiness.

For a thorough analysis of the pros and cons across various commercial solar financing options, refer to our comprehensive guide.

4) Solar Feed-in Tariffs

It is often possible to negotiate a feed-in tariff for a 20kW solar system. Properties operating on a 3-phase system generally experience fewer restrictions when exporting energy back to the grid, unlike installations with larger capacities. The rates available are negotiable with various retailers; additional publishing rates can be found here. While solar feed-in tariffs provide supplementary benefits for solar installations, they should be viewed as a bonus. The overarching financial justification should derive primarily from reducing the amount of power purchased from the grid.

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Solar Choice has effectively consulted with over 3,000 businesses throughout Australia and played a role in constructing more than 800MW of solar commercial and solar farm projects.

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