Solar panels: the cost-effective energy option

With each passing year, solar panels are becoming an increasingly tempting option for homeowners and businesses looking to save money and maybe even profit overall. Solar energy technology isn't just marching forward, but sprinting ever faster. Solar panel costs have dropped by 70 percent since 1998, yet 85 percent of that decrease came in the last five years. As far as cost-effectiveness goes, this market is leading the charge.

How much can solar panels save me?

The amount you can save varies depending on where you live and what your region's policies are. To illustrate the importance of how many hours of sunlight your region gets every day, here's a study on America's 50 biggest cities. Government intervention and geographical proximity can play a big part in how cost-effective panels can be.

However, given that Australia has the highest solar radiation per square metre of any continent, there's a lot of potential to save money anywhere in the country. Even a 3kW system could save you as much as $866 per year if you live in Victoria or Tasmania, and they're at the bottom of the table.

Of course, the size and structure of your property both make a difference too, not to mention your energy usage. To give you an idea of what you might need, as a general rule of thumb a large property requires something in the 5kw range.

So how could they make me money?

For starters, all that energy from the sun is yours for free. Although the amount you can save will depend on weather patterns, your regional location and the number of panels you purchase, overall there's a guaranteed saving one way or another. Invest on a large enough scale and you could reduce your bill to nothing.

On top of that, any energy that you don't use gets fed back into the grid, earning you money to offset those bills even further. For most this won't be an enormous income — for instance, the current feed-in-tariff for Victoria is $0.062/kWh — but it all adds up over time.

Finally, like all good investments, solar panels will add value to your house, both from the savings new buyers can make on energy usage and added interest from eco-conscious buyers. The former benefit can be particularly huge as adding solar panels to a home can increase its value by thousands of dollars, allowing you to sell your house for even more.