The generation game: investing in solar energy

Friday, April 15, 2011

Illustration by Antonia Pesenti

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With Federal and state governments slashing rebates on solar-power installation, is it still worth investing in solar energy? Harvey Grennan does the maths.

Solar power for households has become a victim of its own success. Government rebates and cheaper solar panels have encouraged so many householders to install a solar-electricity system that federal and state treasuries have blown their incentive budgets. The Federal Government will decrease its Solar Credits Rebate for new systems and the NSW Government has already slashed by two-thirds the ‘tariff’ it pays to households for supplying solar power to the electricity grid.

The question now facing consumers is whether it’s still worth installing solar power. With fewer incentives, how much longer will it take for a solar-powered system to pay for itself?

The Federal and state solar power incentives operate differently. The Federal Solar Credits Rebate helps with the initial cost of solar power while the states and territories pay households a ‘feed-in tariff’ each year for the electricity they produce. The Solar Credits Rebate will be reduced by about $1200 for a 1.5kW system in Sydney, Brisbane, Perth and Adelaide from July 1, adding about two years to the time it will take to pay for itself, and will be reduced further every year. The rebate is based on a complex structure of renewable energy certificates and varies according to the zone you live in.

There is a further complication. Some states pay a gross feed-in tariff for energy supplied to the grid and some pay a net feed-in tariff. This can be as high as $800 a year for an energy-efficient household. With a gross tariff all the power you produce is fed directly into the electricity grid. It is not connected to your house wiring; you receive and pay for your electricity in the normal way but get paid for all the energy generated by your solar-powered system. A net tariff applies if the system powers your house and you are only supplying surplus electricity to the grid.

According to solar-power system supplier, Energy Matters, a standard 1.4kW system costs about $3000 to install after the Federal Solar Credits Rebate depending on the zone. “Shop around for solar-friendly electricity retailers as some offer higher feed-in tariff rates while others charge lower electricity rates to solar-powered households,” says Energy Matters CEO Jeremy Rich.

The bottom line is that under the new rules, solar power still pays for itself over time and can make you money. As electricity costs continue to rise, so will the savings.

Savings by state
NSW
Feed-in tariff: 20c/kWh (gross). Federal rebate on a 1.5 kW system until July 1: $5425-$5950 (depends on zone). Payback: about 7 years.

VICTORIA
Feed-in tariff: 60c/kWh (net). Federal rebate: $4550. Payback: 4-8 years.

QUEENSLAND & SOUTH AUSTRALIA
Feed-in tariff: 44c/kWh (net). Federal rebate: $5425-$6300. Payback: 3-6 years (Qld), 4-7 years (SA).

TASMANIA
Feed-in tariff: 20c/kWh (net). Federal rebate: $4550. Payback: 9 years.

WESTERN AUSTRALIA
Feed-in tariff: 40c/kWh (net). Federal rebate: $4550-$6300. Payback: 3-6 years.

ACT
Feed-in tariff: 45c/kWh (gross). Federal rebate: $5950. Payback: 4 years.

NT
Feed-in tariff: 45c/kWh (net, capped). Federal rebate: $5950-$6300. Payback: 3-6 years.

User comments

We had the solar panels installed on our new home. We moved in early Dec 2010 and have just received our first bill 4 Months later and we have been given a credit of $12. I phoned Origin to see if ther was a problem and was informed that it takes 2 to 3 months for the paper work to go through and our credit was for the last 2 weeks of their billing period.A bit poor for an ivestment of $2000. Great technolodgy spoilt by bad service.

The article is misleading consumers by using the term 'rebate' for solar electricity systems, as there are currently NO government funded rebates available for solar electricity. As a consequence, the Federal government has not run out of funds for such rebates, as none have been available since the cancellation of the Howard era $8000.00 rebate scheme. The current 'Solar Credit Scheme', is funded by Electricity retailers and other large users of energy, through the Small Scale Technology Certificates Scheme (formerly known as Renewable Energy Certificates) and the current '5 times multiplier' of these certificates. The current scheme will be reduced to a '4 times multiplier' from June 30, which will reduce the amount of incentive payment to consumers. It is very important for consumers to understand that the 'Solar Credit Scheme' is paid for by Electricity Retailers - not Tax Payers. The Retailers of course recover their outlay through increased electricity bills

I have already installed the Solar Panels for Solar Electrical production. The installtion company fiinshed abou,t now 2 months ago now, just waiting for the Nett Solar Electrical Metre to be installed. What I find is the merry goaround and I hate it with extremme yuck I am fighting with AGL to not pay anything until the meter is installed. The job not finished then no more to pay until completed. Enough is enough