Can solar panels still save money?

June, 2015 by

With the colder months set to create a power bill surge for many Australian families, the prospect of switching to solar power might be worth some consideration.

But will a shift to solar shave the costs of running heaters, air conditioners and clothes dryers? The answer is yes! However the savings won’t kick in immediately as there are installation costs. Therefore you need to be committed to solar energy for the long-haul to recoup the benefits.

Most homes or commercial buildings will need around 12 to 15 square metres of unshaded, north-facing roof space to mount panels for a 1.5kW solar system, according to electricity utility, Ausgrid. Cloud cover and shading can dramatically reduce a solar power systems output.

The cost of a solar system will depend on many variables, according to consumer watchdog, Choice, including the system size and the quality of the components and panels used. According to the Alternative Energy Association (ATA), the overall average cost of a fully installed 2.0kW system, before rebates and discounts, was roughly $4,400 in 2013.

To recoup this cost, there are 2 main incentives that can help – small-scale technology certificates (STCs) and feed-in tariffs (FiTs).

Under the Federal Government’s Solar Credits Scheme, you can cash in the potential certificates (credits) you could earn over the next 15 years immediately. To put this in context, a typical 2.0kW solar system installed in 2015 in Sydney will generate 41 STCs over 15 years, according to Choice. This represents a saving of $1,230 off the solar system, assuming a sale price of $30 per STC. To calculate how many STCs a system will generate, you can use the government’s calculator.

Alternatively, you can recoup some of solar power installation costs by using a feed-in tariff (FiT). This is the rate you’re paid for electricity that grid-connected panels contribute to the local network. Most homes around Australia use a net FiTs method, meaning they are only paid for surplus electricity fed into the grid after domestic use is subtracted. If your system produced 3000kWh daily, for example, and you used 2500kWh of electricity in your home (the time when your solar system is generating power), the rate is only paid for the 500kWh difference.

The rub is that FiT rates around the country have plummeted in recent years. Coming off a high of up to 60c per kWh in some parts of the country several years ago, Choice says that FiTs are currently sitting at close to 8c, depending on where you live, and which energy retailer you choose. In other words, it now takes much longer for a property to recoup the installation costs, so weigh this up before making a move.

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