PV (photovoltaics) have become very popular in Australia recently due to generous government incentives. These incentives (such as feed in tariffs) have now all but gone. So the question is, is it still worth installing PV? Well the answer is a definite yes and I'll tell you why.
In Australia most electricity providers are ripping people off when they feed power back to the grid. They charge customers around 25 cents a kW and pay them about a third of that for power fed to the grid. This means there's no great incentive to feed power into the grid but it doesn't make PV uneconomic. I've updated my payback calculator spreadsheet and come up with the following numbers:
Sorry, the formatting of the table didn't come out too well, but you should be able to get the drift of it. BAU stands for business as usual, or the price you'd pay if you didn't have PV. The prices for PV systems are based on ones I've seen advertised at Energy Matters. Power prices are based on current WA tariffs, assuming a 5% rise per year. Please note that these calculations are just a rough guide and will vary depending on your electricity provider, the power you use and the time of day you use it, the amount of power your panels generate and the price of the installed system.
What's interesting is that larger systems are still better in the long run, despite the fact that power fed to the grid is poorly priced. The payback time is the same, but savings over 25 years are higher. The essence of this table is in the savings you make, which range between $414 and $731 a year over 25 years. A relatively small investment now (eg $2,000) will give you a high return (eg $10,353). If you put it in the bank it would earn $4,450 at 5% compound interest (if the banks don't go bankrupt in the meantime!). And I haven't even mentioned the other benefits to society, such as greenhouse gases abated and water saved.
But I'm going to move house some day I hear you say. Don't worry, PV adds value to your house and makes it easier to sell so you'll make your money back anyway.
So if you're thinking you've missed the boat on PV then think again. Sure, the payback time has risen since the scrapping of feed in tariffs, but power prices are going to keep rising and I certainly wouldn't want to go into retirement without panels on my roof. By the way, most solar panels can last for 40 years.
In Australia most electricity providers are ripping people off when they feed power back to the grid. They charge customers around 25 cents a kW and pay them about a third of that for power fed to the grid. This means there's no great incentive to feed power into the grid but it doesn't make PV uneconomic. I've updated my payback calculator spreadsheet and come up with the following numbers:
| Price | $2,000 | $2,500 | $3,000 | $3,500 |
| System size | 1 kW | 1.5 kW | 2 kW | 2.5 kW |
| % generated fed into grid | 50 | 67 | 75 | 80 |
| Payback (years) | 6.1 | 6.1 | 6.1 | 6.1 |
| 10 year average annual bill | $981 | $899 | $816 | $733 |
| 25 year average annual bill | $1,441 | $1,315 | $1,190 | $1,064 |
| BAU average annual bill (10 years) | $1,307 | |||
| BAU average annual bill (25 years) | $1,935 | |||
| 25 year savings | $12,353 | $15,503 | $18,628 | $21,778 |
| 25 year savings minus outlay | $10,353 | $13,003 | $15,628 | $18,278 |
Assumptions: 775 kW from PV used in home per year, 1550 kW generated from a 1kW system per year, 10 kW is overall consumption per day. Price rises of 5% per year, feeding power in at 8.5c per kWh, paying 25c per kW and a daily service charge of 45c. NB: Payback time is independent of annual bills, but annual bills are a big factor in your choice of system. Payback calculated by subtracting 10 year average bill from BAU 10 year average (10 year average annual saving), then dividing the cost of system by this average. The savings made relate to the value of the power your panels generate, costed at either 25c per kW if you use it in the home or 8.5c per kW if you feed to the grid. |
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Sorry, the formatting of the table didn't come out too well, but you should be able to get the drift of it. BAU stands for business as usual, or the price you'd pay if you didn't have PV. The prices for PV systems are based on ones I've seen advertised at Energy Matters. Power prices are based on current WA tariffs, assuming a 5% rise per year. Please note that these calculations are just a rough guide and will vary depending on your electricity provider, the power you use and the time of day you use it, the amount of power your panels generate and the price of the installed system.
What's interesting is that larger systems are still better in the long run, despite the fact that power fed to the grid is poorly priced. The payback time is the same, but savings over 25 years are higher. The essence of this table is in the savings you make, which range between $414 and $731 a year over 25 years. A relatively small investment now (eg $2,000) will give you a high return (eg $10,353). If you put it in the bank it would earn $4,450 at 5% compound interest (if the banks don't go bankrupt in the meantime!). And I haven't even mentioned the other benefits to society, such as greenhouse gases abated and water saved.
But I'm going to move house some day I hear you say. Don't worry, PV adds value to your house and makes it easier to sell so you'll make your money back anyway.
This is really interesting. One kind of solar that is in no doubt is solar hot water - I can't understand why every house doesn't have it.
ReplyDeleteHi Peter, I can't understand it either. And people whinge about the power bill without seeing the solution before their eyes. I think every new house should have solar hot water, PV, grey water and a rain water tank. Here's hoping...
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