Price of electrical energy from traditional sources that use fossil fuel including coal as well as those producing hydel energy are only bound to keep going one way – up and away. This is true not just for Australia, but every nation and city that is dependent on traditional sources for their energy needs. There is little that anyone can do to stem the rot because there are multiple factors that contribute to the rise in costs. In the first place, thousands of power plants across the globe face the problem of ageing. Most of these plants have either outlived their designated life span or are close to their last days. New investments in these plants are hard to come by because of the fast changing landscape of energy production and the increasing emphasis on green energy. Governments and businesses that run these plants also have other financial compulsions to keep them going until the proverbial ‘last drop’ is extracted. On the flip side, there is also the question of relocating or offering ‘golden handshake’ to millions of employees worldwide, or at least downsizing the workforce because modern technology would help fewer people for enhanced output. This is the backdrop in which we will now set out to examine the payback period for Australian households intending to invest in rooftop solar systems.
The Australian PM takes the lead in choosing solar power
In the aftermath of the eventful week, South Australia lose power and residents of NSW coming pretty close to forced outages because of soaring consumption on account of high temperatures. Mr Turnbull upgraded the solar power system at his mansion from 14.5 kWh and added another 14KwH battery stack (LG Chem) to shield him from possible blackouts potentially.
Admittedly, the exercise that cost about $25,000 for the PM’s system is well beyond what most Australians can afford, the event brings into focus, the urgency of considering solar power systems for individual households. The Australian government also make the target for the renewable energy to encourage solar power.
Rapid changes in Australian solar scene
The solar scene in Australia is rapidly changing with not only homeowners choosing roof top systems, but even the government turning to clean energy, such as the Tram system in Melbourne. As in any other business, with the demand for solar panels and batteries rising at a rapid pace, the prices are bound to come down and therefore, the payback period that we discuss towards the end of this article reckons only the current prices and feed in tariffs in force.
Absence of maintenance or production costs
The only raw material that you ever need is sunlight which is abundantly available almost across the nation for the most of the year. Remember, the sunlight is necessary and not the heat from the sun rays. Once the solar system is installed, you continue to receive electrical energy from the panels for as long as 15 to 20 years or more depending on the system you installed and quality you choose. The price of energy from traditional systems, on the other hand, is only bound to keep rising due to multiple factors. Rising wages and cost of raw material (such as coal or petroleum products) will have a continuous impact on the cost of traditional sources of energy.
Cost of solar panels
Across 2016 alone, the price of solar panels recorded a drop of 10%, and this trend is only likely to continue in the coming years, with demand for solar panels growing at a steady pace. Western Australia has recorded the best performance in solar installations during 2016. At today’s prices, typically a 5kWH system consisting of 20 panels cost more than $5000. The cost of storage batteries, however, will put you off by another $10,000 or even more, particularly if you choose upmarket systems like ‘Powerwall’ from Tesla Solar, USA. The entry point for storage starts at about $2,000. Thus, the cost of storage batteries would also need be factored in a while considering the payback period. Visit Facebook to find more information about Euro Solar, and to find out more about their solar panels.
The Payback period
As we have seen from the above discussion, the payback period can vary depending on a wide array of factors like the cost of panels you choose, storage system, the price of energy from traditional sources, the feed in tariff rate, and the like. But, to put it simply, if storage is excluded, typically it takes about five years for a home solar system to pay back itself. Considering that your system, once installed can produce electrical energy for as long as 25 years, the return on investment is more than decent. When storage is also thrown in, the payback period elongates to 10 years, which is also economically sensible. Another argument in favour of storage is that most Australian homes will need a storage system for the use of energy peaks during the evenings and night when input from the solar system will hit the lowest. Another reason to choose a storage system is that you can expect to get uninterrupted power during potential blackouts. Experts also emphasise on choosing the right system for homes so that homeowners use directly utilise at least 50% of the energy produced by the solar system.
In other words, using maximum solar power and minimum from the grid is a major factor that would impact your actual payback period. Heating and hot water constitute about 70% of all energy consumed by households. Therefore, for people who are away at work for the most part of the day and do not have a battery for storing solar power, will be forced to draw power from the grid and thus elongate the payback period.
The actual payback for solar systems can also vary from and here are some interesting charts to understand the variation from one region to the other.
How much can you save?
The exact amount of money you can save every month from a solar system will vary, and a host of factors will weigh in. But, in larger terms, your savings will be dictated by your ability to use a maximum amount of energy generated during day light hours and thus minimizing the wastage. Another important factor would be the amount of excess energy that you can transfer to the grid.