Solar Panels in Singapore: Costs, Savings, and Is It Right For You?

The initial solar panel cost for a typical residential installation in Singapore can range from S$15,000 to S$38,000, depending on the system size and specifications. However, Singapore's commitment to sustainability means there are various initiatives and potential long-term savings to consider.

You can determine whether solar panels are a worthwhile investment for your home by considering various factors, such as your household's electricity consumption and potential savings, the suitability of your roof for solar panel installation, available incentives and grid-tied schemes in Singapore, and the payback period and return on investment.

» More: Which electricity retailer offers the cheapest electricity price plans in Singapore?

The solar panel cost in Singapore varies significantly between residential and industrial properties, primarily driven by scale, energy demands, and system design. Here's how they differ:

1. Panel efficiency and output

The type of solar panel you choose plays a role in the overall cost. Factors to consider include:

• Output rating (wattage): Higher wattage panels generate more electricity, allowing you to produce more energy with fewer panels. While they often cost more per panel, they can be cost-effective in the long run if you have limited roof space.

• Panel efficiency: Solar panels vary in efficiency (the percentage of sunlight they convert into electricity). Higher-efficiency panels (around 20-22%) require less roof space to produce the same amount of energy as standard-efficiency panels (around 15-19%). In Singapore, where roof space can be a premium, especially in landed properties, these space-efficient options are important.

• Technology: The technology used in solar panels (e.g., monocrystalline, polycrystalline) also affects cost and efficiency. Monocrystalline panels are generally more efficient and durable but come at a higher price.

2. Size of system

System size is a significant cost driver. A more extensive system generates more electricity, leading to more significant long-term savings on your electricity bills, but it also requires a higher upfront investment. 

In Singapore, available roof space is a crucial constraint, especially for landed homes with limited roof areas. The size of your roof dictates the maximum system size you can install. Carefully assess your household's electricity consumption to determine the optimal system size. A more extensive system may not always be necessary if your energy needs are relatively low.

3. Additional hardware

Beyond the solar panels themselves, the cost of a solar energy system includes other essential hardware. Inverters, which convert solar energy into usable electricity, are a significant component. Monitoring systems, which track energy production, and mounting systems, which secure the panels to your roof, also contribute to the overall price. Battery storage options, while increasing the system's cost, provide energy independence and backup power.

4. Buying method

How you purchase or acquire a solar panel system also affects the cost. A full purchase with a one-time payment requires the largest upfront investment but typically yields the greatest long-term savings. Solar financing payment plans, offered by some installers or banks, spread out the cost but include interest charges. Solar leasing or rental involves paying a monthly fee for using a solar system, often with lower upfront costs but potentially less long-term financial benefit.

5. Choice of installer

Choosing the right installer is crucial. Factors to consider include the warranty and after-sales service offerings, which can impact long-term maintenance costs. Installation complexity, influenced by roof type and accessibility, also affects the installation cost. For instance, complex roof structures or difficult access can drive up costs.

Deciding whether solar panels are a worthwhile investment for your home in Singapore depends on a few key considerations.

1. Grid-tied solar schemes

In Singapore, the financial viability of solar panel systems is closely linked to how you can interact with the electricity grid. The ability to export excess solar energy back to the grid significantly impacts potential savings and payback periods.

There are several schemes that facilitate this process:

• Simplified Credit Treatment (SCT): This scheme is primarily for residential installations, allowing homeowners to offset their electricity consumption by selling excess solar energy back to the grid.

• Enhanced Central Intermediary Scheme (ECIS): This scheme is designed for both residential and commercial solar installations, providing a framework for selling surplus solar energy to the grid.

• Market Participant (MP): This scheme is geared towards large-scale commercial solar projects and involves participation in the wholesale electricity market.

These schemes enable solar owners to receive credits or payments for the electricity they export, reducing their reliance on the grid and potentially generating income.

It's important to remember that the specific regulations and tariff structures for these schemes are subject to change by the Energy Market Authority (EMA). Always consult the latest EMA guidelines for the most current information.

2. Regulatory enhancements and potential future incentives

Unlike some countries, Singapore doesn’t offer direct tax incentives for solar panel installations. However, the Singaporean government actively promotes solar energy through various regulatory enhancements and initiatives.

• Grid connection policies: The Simplified Credit Treatment (SCT) and Enhanced Central Intermediary Scheme (ECIS) encourage solar adoption by allowing homeowners and businesses to sell excess energy back to the grid.

• Research and development: Government funding and support for solar energy research and development aim to drive down costs and improve the efficiency of solar technology.

It's important to note that the long-term financial benefits of solar panels in Singapore come primarily from reduced electricity bills and potential earnings from exporting excess energy rather than direct tax rebates.

3. The size of your current electricity bill

Another factor in determining the financial viability of solar panels in Singapore is the size of your current electricity bill. The potential savings from solar energy are directly linked to how much electricity you typically consume. If your household or business has consistently high electricity consumption, solar panels can offset a larger portion of your energy needs, leading to more substantial cost reductions.

However, it's not just about the overall amount of electricity you use but also when you use it. Consider your electricity usage patterns. If your consumption aligns with solar production hours, primarily during the daytime, you'll maximise the amount of solar energy you use directly and, therefore, your savings.

Solar energy can also help you mitigate the impact of electricity tariff fluctuations in Singapore. The regulated electricity tariff consists of various components, and by generating your own electricity, you can reduce your reliance on the grid, thus avoiding some of these costs. These components include non-fuel costs (which cover transmission and distribution), the Market Support Services Fee, and Market Administration and Power System Operation Fees.

4. Roof suitability

When considering solar panels, the characteristics of your roof are a key factor. Roof size directly impacts the size of the solar system you can install. Roof orientation and angle determine how much sunlight the panels receive. Shading from nearby buildings or trees can also reduce energy production. Roof type and material influence the installation's complexity and cost. Finally, the roof's structural integrity must be adequate to support the weight of the solar panels.

5. The length of your payment period

The payback period is a crucial metric for assessing the financial viability of a solar panel investment. It represents the time it takes for the savings from reduced electricity bills to offset the system's initial cost. Here's how to calculate the payback period:

1. Calculate the total upfront cost of the system (including installation).

2. Estimate your annual electricity bill savings from solar energy generation.

3. Divide the total upfront cost by the savings on the annual electricity bill.

For instance, if a landed property owner in Singapore installs a system for S$20,000 and saves S$400 monthly on electricity, the payback period would be 50 months (approximately 4.2 years).

The future attractiveness of solar panels in Singapore is also tied to the increasing adoption of electric vehicles (EVs). As Singapore phases out petrol (internal combustion engine – ICE) cars, the potential to supplement EV charging with solar energy further enhances the long-term cost-effectiveness of solar installations.

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