Is solar power really going to save me money?
Australia has some of the highest electricity prices worldwide, so installing a solar power system is a great way to save you money.
Australia has some of the highest electricity prices worldwide, and many homeowners pay more than $2,500 per year on power bills. For this reason, installing a solar power system is an excellent financial decision: you achieve a payback period of less than five years, and high-quality solar panels last for more than 25 years. But does solar power really going to save you money?
A 6-kW solar power system in Queensland can cost you around $9,600 before subtracting incentives. However, you will get 82 STCs (Small-Scale Technology Certificates) at a price of around $38 each, reducing the cost of solar installation to around $6,400. It is important to note that the STC incentive is decreased gradually each year, and a 6-kW system that earns 82 STCs in 2021 will earn less in 2022.
With favorable site conditions and adequate sunshine, this system can generate over 9,000 kWh per year. If you consume half of this energy (4,500 kWh) and your tariff is 25 cents/kWh, you save $1,125 per year. Assuming the other 4,500 kWh are exported to the grid at 10 cents/kWh, you get an additional $450, and you save $1,575 in total. With an upfront cost of $6,400, the payback period is only 4 years in this example. If you live in a state with local incentive programs for solar power (like Victoria), they are added to the STCs and your payback period is even shorter.
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Solar power protects your from rising electricity prices
Electricity prices in Australia have been increasing during the past 10 years. A study by Creative Analytics found that wholesale electricity prices doubled between 2010 and 2019 in New South Wales, South Australia and Queensland. The increase was even higher in Tasmania and Victoria, where wholesale prices tripled. Creative Analytics is part of the Energy One Group, a developer of energy trading software with international clients.
Wholesale electricity prices in Australia could decrease slightly during the next three years, according to a study by RepuTex Energy, but they are expected to continue rising in the long term, including the 2030s.
Many homeowners suffered a drastic increase in power bills in 2020, since the COVID-19 lockdowns forced them to stay at home using electricity, especially when working remotely. According to ABC News, residential debt to energy retailers increased by 32% within a year.
Installing solar panels is one of the most effective solutions to keep your power bills under control, since their electricity production is unaffected by the volatile prices of the Australian energy sector. A home solar system has a service life of over two decades, which means you get a source of clean and free electricity that will last beyond 2040.
- Australian homeowners who get 100% of their electricity from the grid have no way to avoid the impact of rising prices, and this trend will likely continue.
- On the other hand, higher kWh prices increase your savings when using solar panels, since the electricity produced is worth more each passing year.
Installing solar panels at zero upfront cost
The five-year payback period applies when you pay for a solar power system in cash. However, when a solar installation is financed with a low-interest loan, the payback period can be reduced to zero. Since Australia has expensive electricity and abundant sunshine, the power bill savings achieved by solar panels are normally much higher than the loan payments.
When a solar power system is financed with a loan, the payments come from the power bill savings and not from your pocket. Also, these loan payments are fixed for the entire financing period, unlike power bills that can increase without warning.