HOW IS SOLAR ENERGY USED IN YOUR HOME?
(and how do you get paid for it?)
When buying solar power systems, it is super important to understand how your solar energy is used in your home. i.e how much electricity you currently use and at what times throughout the day you use it.
This is because your energy usage habits will drastically affect:
How much your electricity bill is reduced by every month and
How big a solar system you should buy
The reason for this is that your usage habits will determine how much solar energy you export.
Exported electricity is generally a lot less valuable to you than using it in your home. Expect to get paid 6-8c per kWh for exported electricity and pay out 25-35c per kWh to buy electricity from the grid.
To minimise your losses from this horribly unfair situation you need to size your system to minimise exports, if you want to get the best return on your investment.
HOW SOLAR ENERGY IS USED
Contrary to popular belief you can't just look at how much electricity you use every quarter and then size a solar system from that number. If a solar salesman tries that one - run a mile. The solar sales person needs to have much deeper understanding of your usage than the size of your last bill. And so should you!
So sit down, take a deep breath, and enjoy getting stuck into this short, explanation of how solar energy is used in your home. Trust me this stuff is important if you want to understand what you are getting yourself into!
You use your solar energy in one of two ways depending on whether, at any moment in time, you are:
1. consuming all your solar electricity in your home (using more then you generate)
2. exporting your solar electricity out to the grid (generating more than your house can use).
This is an important distinction because how you use your solar energy will determine how much you get paid for it and also what system size you should buy.
To get an idea of how solar power is used in a typical Aussie home with solar, have a look at this graph:
The blue line is the electricity use over 24 hours for an average home.
The yellow line is the typical output of a 1.5kW system.
By looking at where the 2 lines cross we can see the 2 modes of electricity generation quite nicely:
1. CONSUMING THE SOLAR ELECTRICITY IN YOUR HOME
The yellow area shows you the solar energy that is used up by your home's appliances. At these times of the day your home will use any solar electricity that is coming out of your panels before it draws any electricity from the grid, so you save money by using less grid electricity.
The financial value per unit of electricity (or kWh) is simply what you pay per kWh for grid electricity. Typically 35c per kWh at time of writing (Jan 2015).
But what about the solar electricity that we don't use in the home?
2. EXPORTING YOUR ELECTRICITY INTO THE GRID, BUILDING A CREDIT.
The orange area in the graph above is the solar power that is exported out to the grid.
At these times of the day your solar panels produce more electricity than your household is currently using. That electricity flows backwards through your electricity meter and into the electricity grid.
If your meter is configured to export energy (which it should be!), then as your meter "spins backwards", your bill is credited. By how much? Well that depends on the laws in your particular state and when you get to exporting electricity the rules change in most states. If you are getting a pittance for the electricity you export, then you want to try and export as little as possible!
So it's really important to understand the details of the local electricity deals that you can get, which often vary from utility to utility. It’s also vital to get a written quote from your installer on how much energy they expect you will offset and export, at what rates, compared to what you consume.
HOW MUCH DO SOLAR PANELS COST?
The price of your new solar system will, of course, depend on how big the installation is. Or to put it another way - how many kiloWatts (kW) of solar panels you choose to install will affect the cost.
You'll be pleased to know that prices in Australia have dropped significantly since I started SolarQuotes back in 2009 (when a piddly installation with 1kW of solar panels cost $10,000!) - particularly for larger systems. You'll get far more for the same money.
And despite what you may have heard, the price you pay in 2018 is still heavily subsidised by the Australian government-run solar rebate scheme.
The rebate fluctuates based on the value of things called STCs. With the current price of STC's (April 2018) you are looking at up-front savings of about $650 per kW installed.
Here's how the pricing works out for a typical 3kW system:
(Note: these solar panel prices are very approximate and assume quality components are used in the installation. To get an accurate pricing for your particular situation, I would advise getting 3 quotes from local installers I've pre-vetted.)
Typical cost of an installed 3kW solar system: $6,500
Government Rebate: $1,950
Cost to you for 3kW of solar power: Approx $4,550
Whether a 3kW system is an appropriate size installation for you or not is a good, and difficult, question to answer. It is not as simple as buying a solar system that generates the same amount of electricity that your household uses.
The carefully-screened Australian solar power system installers we match your request with can advise you exactly what you will need based on your energy consumption habits and location.
APPROXIMATE COSTS OF BIGGER SOLAR SYSTEMS
AFTER THE REBATE
The range of prices in Australia below is mainly down to the quality of the hardware used. To use a car analogy (as most people are more familiar with car brands than solar power brands!) expect the lower price range to be "Hyundai/Kia" level brand and the upper cost to be a "BMW" level brand. I'll leave you to decide if BMWs are worth paying more for than Hyundais!
Approximate cost of a good quality solar system installation with Tier 1 solar panels (fully installed) as of April 2018 in Australia:
If you want a good quality microinverter system installed, expect to add around 20% in cost to these price ranges.
If you want to downgrade to a reputable budget inverter (e.g Sungrow or Zeversolar), you may be able to save about $700 on these prices.
FINDING THE MONEY
You may be looking at those prices and thinking: "Wow, that's a lot of money to find!". I agree. Which is why it is important for Australians to understand the payback and cashflows involved with solar panels, so you can assess if the cost of an installation is going to be a worthwhile investment for you.
I should also point out that you can buy solar systems at prices much lower than the ones above. But I would be wary of the quality of the components and installation that you will get if the price seems too good to be true.
Whether you finance your system via savings or by adding it to your mortgage, at current interest rates, you may even find that your solar power system pays for itself immediately. By that I mean that the savings from your reduced bills may outweigh either the extra repayments or the lost interest on your savings. Again this depends on lots of variables - so do your research.