You are forgiven for being confused about solar rebates. Understanding a new technology can take significant effort, even for those of us that feel tech savvy.
In the case of domestic solar power, it’s not just the new technology we’re dealing with. We’re not just buying and installing the latest washing machine.
This technology comes with rules and pages of fine print, and yes, it has our Government’s paw prints all over it.
So, a concept that may have been easy enough for your average Joe or Josephine to get a grip on initially (free and clean power from the sun) has been Government gift-wrapped in weapons-grade cellophane and iron sticky tape, replete with ever changing political speak, intrigue, moving goalposts and, dare I say, market forces.
It’s embellished with fancy acronyms like STCs, LSCs and many more. Nice! Thanks, Canberra, we appreciate that you are only trying to help.
For many of us, ultimately, getting our head around all of this is something akin to digesting concrete.
However, when all the jargon is translated into real English, you will come to understand that installing a solar electricity system in your home can have significant financial payoffs, not to mention elevating your green credentials and lowering your carbon footprint.
Introduction to Solar Rebates
This article will focus primarily on the Government Rebate and Renewable Energy Certificates, or RECs.
This is the money side of installing domestic solar power, or how it impacts your wallet.
We’ll also have a lighthearted look at the history of the solar industry here in Australia to provide a little perspective.
Of course, there is a tremendous amount to know and learn about domestic solar power technology, the industry in Australia, the government's involvement and what it all means for us as electricity consumers.
However, there is only a relatively small amount you need to know to get in the game successfully, save some hard-earned cash, and save the planet.
The main thrust here is to remove all the language that otherwise requires degrees in electrical engineering and/or political science and economics.
This will leave you, hopefully, with a clearer understanding of the core information required to make informed choices toward solar bliss and guide you on your exit from the ever-increasing, outrageous costs of power from our coal-driven electrical grid.
Glossary of Solar Rebate Terms
Firstly, let’s define some key words and terms. We’ll do this in the simplest way possible, so it will be easier when used here later or during your solar investigations.
The ‘grid’, or power grid, is the network of power lines and the power station to which they connect. This is how electrical power is distributed to us, the electricity consumers. The vast majority of us are connected to the ‘grid’.
Apart from a small number of renewable energy plants, such as wind farms, the electricity we consume via the grid is generated by coal-driven power stations. Not so happy days!
Kilowatt is the term used for measuring electrical power. In practical terms, it means the amount of power required to run your household electrical needs at any moment. For example, let’s say your modest home has only two light bulbs and nothing else.
And let’s say, for example, that each light bulb requires one kilowatt to turn it on. That means, to turn on the two light bulb, your house would require two kilowatts of power.
This can get complicated, but it needn’t. The kWh is the measure of energy consumption over a period of time.
This is how your electricity company charges you. They measure how long you have had your two, two-kW light bulbs actually running.
PV Cells or photovoltaic cells are the magic devices that change sunlight to power.
The fancy shiny panels that sit gloriously on your roof are full of these cells. This is the technology that gives you electricity from the sun.
A rebate is money that is returned to you from a purchase. That is a percentage, portion or agreed amount that is refunded or deducted from a total purchase price.
Usually, it pertains to government schemes such as taxes or utilities. To put it simply, it’s a discount, usually from the government. Happy days!
Renewable Energy Certificates, or Small-scale Technology Certificates as they are now more widely known now, is the platform from which the value of your ‘rebate’ is calculated. It bounces around like a share price and has a set value of anything from $0 to $40.
The rebate value within this range is determined by market forces, i.e. supply and demand. More on this later.
Again, while there is certainly a whole lot more to know and learn about solar, these little bits of jargon will be enough to allow you to get jiggy with the basics.
A Little History on the Solar Rebates
Australia has a pretty poor reputation as far as green credentials go. We dig a lot of holes, and the spoils we extract from these holes, we burn. Yes, coal.
We use coal to power all of our modern appliances, but it's now seen as dirty and it’s become a little bit of a swear word.
To improve this ‘dirty power’ image problem, or at least to be seen as if they were improving it, the Australian government began to invest in renewable energy to propel us ever closer (however slowly) to the Australian Renewable Energy Target.
Wind turbines started popping up, as did the odd solar farm. We also had other exciting schemes like former Prime Minister Kevin Rudd’s housing insulation bonanza. That one went well for him, didn’t it?
As part of a broader approach to renewable energy, the Aussie Government began to invest in the solar industry, or more accurately, that part of the industry that focuses on domestic solar.
Ten years ago, the domestic solar power systems we see on everyone’s roof now were very expensive, with few providers.
To encourage growth our leaders began to provide incentives or rebates so that installing solar power at our homes became attractive and affordable for the average Australian.
It’s 10 years on, and Aussies have taken to solar-like ducks to water and the industry is moving forward at a steady pace.
Domestic solar products and the companies that sell and install them are now well-established, healthy competition exists, and prices are becoming more and more reasonable.
For the government, this is a success, so in their book, it’s time to reduce the incentive, or, more accurately, pit us against market forces and let us and the domestic solar industry fend for ourselves.
It’s now 2018 and the government rebates for installing solar have been reduced, sort of. This reduction commenced in January 2017 and they will continue to drop the rebate by 1/15 every year until phased out entirely by 2032.
Don’t panic boys and girls, if you haven’t joined the solar frenzy now, you still have plenty of time to enjoy a discount from Canberra. Let’s look at solar rebates for 2018.
How Much Will Rebates Save Me?
Here’s a very general approximation. As of now, a 3kW system costs from $4500 to $7500. Let’s assume you’ve chosen the one that costs $6500. The government ‘rebate’ as of January 2018 is about $665 per kW.
So, your rebate equation is: $6500 – (3 x $665).
After the rebate, you will pay only $4505 for your new solar power plant. Pretty generous really.
Some important notes on this…
- Don’t worry about knowing what size system you need. Your solar retailer will advise you on an appropriately sized system for your household power demands.
- You don’t have to do anything to claim your rebate—this is taken care of by the retailer. In fact, the advertised or quoted price will nearly always be provided inclusive of the rebate. So, as in the example above, the retailer will quote you $4505 up front.
- The rebate will vary slightly to significantly depending on where you live. Rebate values are broken up into four geographical zones. The very hot sunny zones such as Central and Northern Australia get the most rebate. The further East and South you get, the more the rebate is reduced.
For example, Alice Springs is in Zone 1, so they get the highest rebate. Hobart, and all of Tasmania for that matter, is in Zone 4 and gets the lowest rebate. Most of us live in Zone 3.
If I Don’t Act Now, Will I Have to Pay More Later?
The short answer is… maybe. Remember in the glossary we defined STCs? Ok, jump back and have a look. Got it?
The value of the STC is how the Government boffins arrive at the total rebate value. Currently, the top STC value is $37.
This value is influenced by supply and demand. If the demand for solar increases, the value of the STC, and therefore the rebate, drops. If the demand drops, the STC, and therefore the rebate, increases.
So, although the government is actively dropping the value of the rebate to zero over the next 15 years, solar demand or lack thereof will have a significant impact on the amount of rebate you get within this period.
Four Things to Think About
- A quality solar power plant in your home, correctly installed by a reputable dealer, will save you a heap of money over a reasonably short time.
- Next year, demand for solar may increase and this would likely decrease the rebate available to you. Conversely, demand could flop, and the rebate could remain as high as it is currently. (Predicting demand, by the way, is probably nigh on impossible.)
- The government may change, or the acting government may rewrite the solar rulebook.
- Currently, the rebate level is still very generous. You can save plenty of cash by acting now.
Now, before you get bored and return to burning fossil fuels, let's wrap this up.
Hopefully, you now have your head around the key solar terms and understand why the government is involved and providing incentive for you to install solar at your house.
You should now have an idea as to why the rebate varies from place to place and is a fluid figure.
Now that you are armed and dangerous with a little information, we hope you will continue your investigations and begin the process of assessing the benefits of renewable energy for your home.
While your wallet, accountant, and bank balance will stand and applaud you, mother earth will provide a quiet nod of approval.
Here Are Some Valuable Tips to Send You Off
- Don’t be put off by a lack of understanding of the terminology or the technology. There’s plenty of help and advice, and now, having read this, solar language won’t sound so completely alien to you.
- Get three quotes from suppliers and find out as much as you can about your chosen bidders, and the brands they recommend. Read reviews and get the feedback. Importantly, don’t be in a hurry.
- The Government Solar Rebate is currently strong, putting money in your back pocket. Consider your budget. If you’re ready to make the outlay and invest in solar, now is a very good time while STCs are at a high level.
If you want to see how much solar or battery storage could save you over the next 5 years, then take our solar saving calculator quiz below!
Or talk to an Instyle Solar expert about the best solutions for home energy storage or PV-panels.
Otherwise, head back to the solar blog to find even more great educational content.
Photo credit: Depositphotos