Solar panel energy systems, in addition to immediately reducing your impact on the environment in a sustainable manner, serve as financially-viable, long-term investments. Though expensive to install, the system will ultimately ‘pay itself off’, saving you on energy bills every month as well as minimizing your carbon footprint. Once the system is set up and running, you’ll begin to recoup a number of the costs from the initial outlay. How much you save depends on energy prices, as well as how much power your system is capable of generating annually, compared to your total power consumption for that year.
Some Incentives to go Solar
Up until the last few years, a solar photovoltaic (PV) panel system paid for itself in more than half a decade across a number of Australian states. These days, most new panel installations now take less time to pay off, due to the fall in prices of inverters and panels. Government grant and rebate systems of the past have been replaced by two main financial incentives – feed-in tariffs (FiTs) and small-scale technology certificates (STCs), which pay for around third of the total cost – with no means to test for eligibility.
Feed-in Tariffs refer to the rates paid for electricity sent to the local power network through grid-connected solar panel systems. FITs are a state-based incentive for individuals with solar panels to feed electricity back to their local power grid. In Perth, if you generate more power than you use, you’ll be eligible to sell that surplus power and distribute it to the main electricity grid. Feed-in tariffs will have a sizeable influence on just how soon you’ll pay your solar energy system off.
• Net feed-in tariffs apply in Western Australia. Net FITs result in residences only being paid a higher rate when there is a surplus of electricity fed into the local energy grid, once domestic use is subtracted. If your system produced 3000 kWh of electricity yet your home only used 2500 kWh while your PV system was generating power, the higher rate is only paid for the excess power – that is, the 500 kWh difference.
Small-scale Technology Certificates (STCs)
Households and businesses covered by the Government’s Solar Credits Scheme are eligible to receive payment for small-scale technology certificates produced by their solar PV panel systems. The government utilises these certificates – formerly known as Renewable Energy Certificates (RECs) – as progress indicators of our nation’s contribution to meeting renewable energy targets. The typical selling price of STCs is estimated at $35-$38 per certificate – however, that rate is also contingent upon how you choose to sell your certificate. The most common method is to allow someone else (typically the retailer) to sell your STCs. This rate may then be subtracted from your installation cost as a discount. All the paperwork is taken care of and the process is hassle-free. A second option would be to sell the STCs yourself, involving considerable paperwork and applications, not to mention some fees. Considering the number of buyers and the time it takes to complete the transaction, you may be waiting for months after installation until you receive your payment. Though you could earn a better price for those STCs, there is no way of knowing how long you’d be left waiting. Currently, the Solar Credits Scheme enables you to claim potential certificates 15 years in advance today, even if you decide to later sell the property, or in the event of damages.
Working out how long it will take your solar panel system to repay its own purchase price through savings can be complicated, with many different factors coming into play when calculating the final figure. Billing costs can vary considerably (and often unpredictably) over time, altering your expected calculations, so any formula devised for figuring out the time it takes to repay your solar energy system should take the following into consideration.
Your initial outlay is the total sum you have spent on purchasing the necessary components and setting up the system, including the panels, framing, wiring, inverter, meter, battery bank, charge controller and installation prices. As such, this represents the figure you will attempt to make back with the energy saved and generated. In purchasing a complete kit, this is an all-encompassing figure, varying from anywhere between $4,000 and $30,000.
Payback Time Estimates
Payback times (in years) by export percentage (energy your solar setup produces which is ‘exported’ back into the electricity grid), calculated for Western Australia – Alternative Energy Association.
Payback times calculated for Western Australia – 3.0 kW system (Alternative Technology Association, 2013)
FIT rate (net) 7.13 c/kWh
In investment terms, this represents between 12% – 30% return on investment!