I have solar but my energy bills are still high, what should I do?

Published: 5 October 2021

If you’ve recently installed solar panels but are still getting a high energy bill – there are a few reasons why this may be…

If you recently installed solar panels but your energy bills are still high, there are 3 likely reasons:

  1. Your electricity plan is not suitable for solar power.
  2. Your energy consumption habits have changed after going solar.
  3. There is a problem with the solar installation itself: low-quality components, system malfunctions, the capacity is too small for your home, etc.

Solar panels are now used in 25% of Australian households, and there are many reasons why this investment makes sense:

  • Local electricity prices are very high, but there is plenty of sunshine you can use to generate your own power.
  • Home solar systems are very affordable in Australia, if you consider their typical prices in places like North America and Europe.
  • You get an excellent financial incentive from the federal government, in the form of Small-scale Technology Certificates (STC).

However, there may be cases where a home still gets high energy bills after going solar – here we will discuss how that can happen.

Keep in mind there are many companies claiming to be solar providers, but many of them are only sales offices. They offer low-quality solar products, while hiring unqualified contractors for their installations. These solar systems are much more likely to give you trouble, and they also represent a fire risk for your home.

Some companies also exaggerate the benefits of home solar systems, and they are often advertised as an endless source of energy that is available 24/7. Solar panels are durable and reliable, but they have limitations like any technology – if your consumption is much higher than their production, your energy bill can still be high.

1) Your electricity plan is not suitable for solar power

Solar panels are more productive around noon, especially in the summer months. However, homes tend to use more energy near the end of the afternoon, when there is less sunshine, and at night when solar output drops to zero. This is normally solved with a feed-in tariff:

  • Your electricity provider measures and purchases the surplus energy production from your solar panels.
  • This amount is multiplied by a feed-in tariff, and subtracted from your next electricity bill.

Unfortunately, some electricity plans have very low feed-in tariffs, and in some cases they are missing completely. According to a study by Sustainability Victoria, homes only consume 30-50% of their solar generation directly, and the other 50-70% is exported to the grid. If you go solar but your energy plan has a low tariff, you’re probably getting a very small credit for most of  your electricity production.

Assume you have a 6.6kW home solar system that generates 9,000 kilowatt-hours per year, but you have an electricity plan that charges 22 cents/kWh while paying 2 cents/kWh. For the purposes of this example, you’re consuming 30% of the energy produced (2,700 kWh), while exporting the other 70% (6,300 kWh).

  • At 22 cents/kWh, the 2,700 kWh of self-consumption are saving $594 per year.
  • However,  at 2 cents/kWh, the 6,300 kWh exported are only saving $126.

You save $720 per year in this example, which may not seem great if you paid nearly $6,000 for this system. The payback period is 8.3 years, which is long for a home solar system in Australia.

If you switch to an electricity plan that pays 12 cents/kWh for solar export, while still charging you 22 cents/kWh for consumption, the outlook improves considerably:

  • Your savings for the 2,700 kWh of solar generation consumed are still $594.
  • However, 6,300 kWh have a value of $756 with a feed-in tariff of 12 cents/kWh.
  • The total savings are increased to $1350 per year, and the payback period is 4.4 years.

Note how the right electricity plan can make your solar power much more valuable, even with the same kWh output. If you’re getting low savings after going solar, you could be selling a large portion of your electricity at a very low price!

2) Your energy consumption habits have changed

Energy consultants often warn building owners about the “rebound effect” after installing energy efficiency measures or renewable generation systems. When occupants are aware that a building has efficient devices and solar panels, they may believe that saving energy is no longer important. As a result, consumption increases and energy bills are high again.

The rebound effect can also happen in homes after installing solar panels, wasting part of their electricity output. If power-hungry appliances like air conditioners and electric water heaters are used for more hours, they can easily consume the savings achieved by solar panels.

As mentioned above, you save the full price of each kWh when consuming solar energy, but only get a reduced tariff when exporting to the grid. Devices like dishwashers, pool pumps and laundry equipment can be equipped with timers and set to operate around noon – they will use solar power instead of grid electricity, increasing your savings.

3) Your home solar system is malfunctioning, too small, or covered by shade

If your electricity bills are still high after going solar, even with a decent feed-in tariff and energy saving habits, you should get the installation inspected. The following are some likely scenarios:

  • The solar system is operating properly, but too small for your home.
  • Solar panels were installed in an area that is often covered by shadows, and this results in minimal production.
  • There is a major malfunction affecting your home solar system.

An undersized solar system can offer a favourable ROI when you compare costs and savings. However, if the electricity output is small with respect to your energy bills, you will not see a major reduction. For example, a large home using 15,000 kWh/year will not see a significant drop in energy bills with a 2kW system generating 3,000 kWh/year – especially if most of this electricity is sent to the grid.

Shading doesn’t damage solar panels, but their productivity is severely affected. A single panel covered by a shadow is enough to decrease the energy output of all others in the same circuit. This often happens when homeowners accept generic solar quotes, without a professional assessment and a customised design. Even high-quality solar panels are unproductive when placed under the shade.

Solar components can also malfunction before the end of their service life, but this is rare when you purchase quality brands with solid warranties, and you get a free replacement if it happens. A CEC Approved Retailer like Instyle Solar will also give you an installation warranty, which means your issue will be solved at no extra cost. On the other hand, when dealing with low-quality solar systems without warranty coverage, a major malfunction will normally mean you have lost your investment.

Solar inverters from quality brands normally come with a built-in monitoring app, which you can use to keep track of electricity production. If you notice a sudden drop in the daily kilowatt-hour output, even when the weather is not cloudy, you can ask for technical support.

Want to learn more? Contact us today!

Interested in Solar?

Find out if you’re eligible for solar and how much you could save by switching.

Start Now

Get in touch with one of our experts

Contact Us