Solar Power: Is it Worth it?

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While sunshine is free, solar power comes at a cost. Canstar explores the true cost of solar power and your possible power bill savings.

In recent years, solar power systems have become a popular option for households seeking to drive down their power bills. However, there is no one-size-fits-all approach. It’s important to weigh up a range of factors when assessing solar’s suitability for your home and budget.

Government figures highlight the growing popularity of solar. A recent government report shows that solar photovoltaic (PV) capacity grew 36% from 2014 to 2019, largely driven by residential uptake.

The report reveals that residential connections account for 80% of existing solar PV capacity. As systems have become cheaper, uptake has increased. So, should your household seek out solar? And how can you determine if the numbers stack up?

Surging solar: Solar installations on the rise

How does household solar work?

As a starting point, it’s important to have an understanding of the basic principles of how solar systems work. This will help establish whether solar is a suitable option for your household, and what value a system may provide over the years.

Solar systems convert sunlight into electricity, which can then be used for household purposes. Typical systems are made up of the following components:

  • PV panels – convert sunlight into DC electricity. Panel efficiency depends on the type of technology used (kW is the commonly used measure of system capacity).
  • Inverter – converts the DC electricity produced by the panels into AC electricity for household use.
  • Racking – used to mount solar system panels. Typically positioned on a roof.
  • Import/export meter – measures both the electricity a household is using from the grid, and excess solar-generated electricity that is fed into the grid.

Solar systems are usually grid-tied, meaning that households draw on both grid and solar electricity. Grid electricity supplements solar electricity as required. This is when usage exceeds solar capacity during the day, and at night when panels do not generate electricity.

Of course, systems are available in a range of kW capacities. The capacity of a system is determined by a specific household’s requirements.


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The underlying economics of solar

A range of variables impacts the economics of solar systems. And given the long-term nature of the investment, it’s necessary to look to the future when weighing up possible savings.

As noted in a Sustainable Energy Association New Zealand study, the key factors affecting financial results include:

  • The upfront cost – if you shop around for the best value solar systems, you’ll save more!
  • Self-consumption rate – the more electricity your household uses, the bigger your potential savings.
  • Electricity prices – households paying more for their power saved more with solar.

These are the underlying numbers that determine how long it will take you to recover the costs of a solar system, and the savings you’ll achieve over the lifespan of your solar system.

As the study notes, in making future savings estimates a number of assumptions need to be made. These include the expected lifespan of a system (25 years). Along with its performance capabilities over time, the movement of electricity prices and whether your power consumption rates hold steady.

Your solar profile: How much can your household save?

It is, of course, important that your property has as much direct access to sunlight as possible. No trees or tall neighbouring buildings to cast shadows. The more sunlight hours your solar panels get, the bigger your potential savings.

While solar works across the country, and still works on cloudy days, it performs best in regions with high sunshine hours. This includes Nelson and Marlborough.

Other factors influencing how much a household can save include:

The positioning and size of a system

A north-facing roof is optimal. The size of the system needs to be configured to ensure a household consumes as much as possible of the power generated.

Complementary usage patterns

Being able to use as much as possible of the power your system generates is critical in delivering power bill savings. Will your household be able to change usage patterns to accommodate solar in both the short and long term?

Dedicated usage

A system can be harnessed to power specific items, such as an electric vehicle or a swimming pool.

Interest rates

If borrowing to purchase a system, interest rates on repayments will need to be taken into account when calculating savings.

Future expansion

If you expand your system, adding more panels, or incorporating residential battery technology (see below), this will impact your savings.

Additional costs

It’s worthwhile considering other potential costs of solar system ownership. These include maintenance and the replacement of different system components. Always check what is covered by warranty.

Solar feed-in tariffs provide additional potential to recoup on a household’s investment. However, given that feed-in tariff rates are generally significantly lower than regular retailer rates, it makes more financial sense for households to consume the electricity they generate.

Ultimately, whether solar is financially worth it for you, comes down to two things:

  1. Your ability to commit for the long haul.
  2. Adjusting your patterns of usage so you consume as much of the power that you generate as possible, instead of buying it from a power company.

Gen Less’ solar tool is a good starting point. It helps users assess the estimated financial return of solar electricity for their household. It’s also worthwhile consulting with solar experts (and shopping around) in determining the suitability of solar for your home.

Solar Panels on roof tops

Do battery storage systems make solar more economic?

Battery storage technologies have also been attracting increasing attention in recent years. Batteries, such as Tesla’s Powerwall, allow households to store solar-generated energy for use when needed.

Pairing solar with storage can provide a pathway for households to become increasingly energy independent. However, given the significant upfront costs involved, the economic benefits of solar and storage need to be assessed on a case-by-case basis.

However as the cost of solar systems and batteries continue to fall, while power prices continue to rise, even if solar isn’t economic for you today, it could well be tomorrow.


If all this talk of electricity has left you wondering if you’re paying too much for your power, Canstar compares electricity providers in NZ. To check you’re with the best provider, just click the button below:

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