I have heard that solar technology is progressing rapidly. Should I wait before installing a solar system?
Across all industries, technology is progressing quickly, which makes it tempting to hold off on installing solar to see what is around the corner. The problem with doing this is the potential savings you will get from a solar system far outweigh the benefit of getting slightly more efficient solar panels.
It is important to remember that no matter how efficient solar panels become in the future, the average 5kW solar system in Sydney, for example, is always going to output around 20kWh a day on an average day. A common mistake people make is to equate a panel’s efficiency with the system’s total output. A 5kW system with highly efficient 370W panels produces exactly the same power as a 5kW system with lower-efficiency 250W panels, it just does so using fewer panels.
As an example, if you buy a 5kW solar system today with 17 x 310W solar panels, it could save you $2000 by this time next year, where a system for the same price might use 15 x 340W panels. It normally wouldn’t make much sense to sacrifice $2000 a year in savings just so your panel array has 15 panels instead of 17.
The other important thing to note is that solar panels are not dropping in price like they once were as the market has now consolidated. Solar panels dropped significantly in price a few years ago, mainly due to the manufacturing boom in China where efficiencies of scale really helped drive down prices. A lot of the European manufactures also moved to China which also helped drive down prices.
This trend has now for the most part reversed. Solar panel prices have actually been going up due to regulations such as anti-dumping laws, geopolitics such as the trade war between the USA and China, and the fact that many of the cheaper Chinese manufacturers are no longer allowed to sell their panels in Australia or have gone into liquidation, something we have been predicting for a little while now.
Could the government rebate be completely scrapped?
There were rumours from the Coalition’s party room that the federal government was going to adopt the recommendation by the ACCC to completely scrap the SRES (commonly referred to as the government’s solar rebate).
In the end, the dispute over the National Energy Guarantee ultimately resulted in a change in Prime Minister, and a formal position on solar rebates was brushed to the side… for now.
But the recommendation by the ACCC to scrap the solar incentive is still the latest advice, and there is no indication of what will transpire over the coming months. On a 5kW solar system the current government incentive is around $3000. If this were to be scrapped, no improvement in panel efficiency or pricing would get us back to the current solar pricing.
Our advice remains unchanged
Our advice is simple: the sooner you install solar power, the sooner you will be generating your own electricity for a fraction of the price you would otherwise be buying it from the grid. The price of solar power can be as low as 5-10 cents per kWh so every day you don’t have solar is a day you are missing out on these potential savings (see below for more detailed info).
With regards to the government rebate, your government rebate and system price are locked in when you place an order. You get the full value of the government’s incentive upfront so once you have a system installed, it no longer matters what happens to the STC price or the scheme in general. If you choose to hold off, the STC price could drop, or the government may even scrap the scheme entirely.
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Why You Should Install Solar Now
1. Solar Power Significantly Reduces Your Power Bills
When you generate solar power it is fed directly into your home to help power everything that uses electricity. This means that every kW of solar power you use in the home is money you are not giving to your energy retailer. Every day you don’t have solar power is a day you are buying electricity from the grid at a significantly higher rate than what it costs to generate your own solar power.
With electricity prices sky-rocketing at a rate well above inflation, the benefit of a solar power system continues to increase to the point where you can now choose reliable products from the industry’s leading manufacturers and still see a return on your money in 3-5 years.
As an example, a 5kW solar system can make a serious dent in a $1000 quarterly power bill, even if you only use 70% of the solar power as it is generated:
*This example assumes a cost of electricity of 28 cents + GST, average solar system output in line with the guidelines from the Clean Energy Council, and a feed-in tariff of 12 cents per kWh.
2. Free Solar Power System (well, kind of).
Because the benefit of solar power continues to rise with ever-increasing electricity prices, you are now able to finance your solar system where you are cashflow positive from day one. This means the reduction in your power bill is actually larger than your monthly repayments*:
*Savings are based on 70% of solar power being used in the home, an average cost of electricity of $0.28, and a feed-in tariff of $0.12 per kWh. Prices assume a 3% rate of inflation. The system’s output is based on Clean Energy Council Guidelines for an unshaded north-facing roof. All figures are indicative only and are not specific to your system or household. Finance is provided by RateSetters. All applications for credit are subject to RateSetter’s credit approval criteria. RateSetter Australia RE Limited (ABN 571 466 35) holds Australian financial services licence number 449176 and Australian credit licence number 449176. Terms and conditions apply.
3. How Much Money Will A Solar System Make Me?
Assuming you are able to use around 70% of the solar power in the home as it is generated across the day, you will be able to save over $50,000 over the 25-year life of a 5kW solar system, which is about the average sized solar system for a home in Sydney.
Let’s dig into the numbers to see why it doesn’t make sense to hold off on buying a solar system, and why millions of Australian households have made the decision to install solar power:
Total Value of a 5kW solar system: $11,000
Government Incentive: Approx. $3000
Investment: $6,000 for a good quality system, up to around $9,000 for a top of the range system
Yearly Power Bill Savings: Around $2000
Payback Time: Around 3-5 years
Total Profit over 25 years: Up to $54,000!
Are You Ready To Do Something About Those Power Bills?
The sooner you install solar, the sooner you will see a benefit on your electricity bill, in fact you will be saving money from day 1.
To see just how much you can save, have a look at your power bill to see how much you pay for your electricity. If you have time-of-use billing, the average benefit of a solar system is normally around 35 cents per kWh. If you have a flat rate it tends to be around 28 cents per kWh + GST.
Using this number and multiplying the estimated system output with how much you pay for your power, you can see that with an investment of around $6,000-$8,000 for a 5kW solar system you can save up to & over $500 a quarter, and an impressive profit of $54,300 over 25 years on your power bills! This number can be even greater if you are using most of your solar power during the peak billing period of 2 pm to 8 pm.
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