What Is the 20% Rule for Solar Panels?

What Is the 20% Rule for Solar Panels?

If you’ve researched solar systems for your Sunshine Coast home, you may have come across the “20% rule” — but what does it actually mean?

The term can refer to a few different concepts in solar design and safety. At TMEC Services, we break it down so you can understand how it affects your solar installation, system performance, and compliance with Australian Standards.

1. The Electrical Safety Version: The 120% Rule (a.k.a. “20% Rule”)

In electrical design, the “20% rule” often refers to what’s technically known as the 120% rule.

This rule, widely used in North American and Australian contexts, ensures that the total current from your main breaker and your solar backfeed does not exceed 120% of your switchboard’s rating.

Example:

If your main switchboard is rated at 200 amps, your solar breaker can supply up to 40 amps, allowing a combined total of 240 amps (120%).

This rule prevents overheating or electrical faults by maintaining safe load limits across your system.

In Australia, certified solar electricians must follow the AS/NZS 3000 Wiring Rules and your local DNSP (Distribution Network Service Provider) connection requirements to comply with similar safety limits.

At TMEC, all solar and battery installations are completed by in-house Clean Energy Council (CEC)-accredited electricians, ensuring your system meets or exceeds local regulations.

2. The Design Version: Sizing Your System 20% Above Usage

In solar design, another meaning of the “20% rule” is to oversize your solar system by around 20% compared to your average electricity usage.

This rule of thumb ensures you have enough solar generation capacity to offset real-world variables like:

• Cloud cover or weather fluctuations
• Seasonal sunlight differences
• System losses through cabling, inverters, and dirt buildup
• Future energy needs (like an EV charger or new appliances)

Example:

If your home uses 6,000 kWh per year, a 20% buffer means designing for 7,200 kWh output — roughly a 5 kW–6 kW solar system, depending on your roof orientation and Sunshine Coast irradiance.

By planning ahead, you reduce grid reliance, maximise your ROI, and ensure consistent performance even in cloudy months.

3. The Efficiency or Degradation Version

Sometimes, the “20% rule” is used to describe solar panel efficiency or long-term degradation:

• Efficiency: Most modern solar panels convert around 20% of sunlight into electricity, which is standard for residential systems.
• Degradation: Panels generally lose about 0.5% of efficiency per year, and most manufacturers guarantee at least 80% capacity after 25 years — hence the “20%” figure again.

This rule reminds homeowners that quality installation, regular maintenance, and professional cleaning all contribute to maintaining high performance for decades.

4. What the 20% Rule Means for Sunshine Coast Homeowners

Here’s how to interpret it for your solar installation:

At TMEC Services, we design every solar and battery system using these principles — balancing safety, efficiency, and return on investment for every Sunshine Coast household.

5. TMEC’s Approach to Smart Solar Design

Our in-house team of licensed electricians and CEC-accredited designers use advanced design software and real-world data to:

• Analyse your energy usage patterns
• Model generation based on Sunshine Coast solar irradiance
• Size your inverter, battery, and cabling for optimal safety
• Ensure compliance with AS/NZS 5033 and Clean Energy Regulator standards

We don’t subcontract, so you can trust that every installation is done safely, efficiently, and to the highest quality.

Final Thoughts

The 20% rule for solar panels can mean safety, efficiency, or performance — but in every case, it’s about designing smarter systems that last longer and perform better.

By working with experienced, local professionals, you ensure your investment delivers consistent returns and long-term peace of mind.