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Are Solar Panels A Good Investment?

May 25, 2024

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I recently invested in solar panels for Strong Money HQ (our house).

After buying a home in 2022 and thinking about it for a while, I decided it was a good idea.

In this article, I’ll explain that decision.  We’ll look at the numbers behind solar, my (admittedly basic) understanding of solar setups, and whether it’s a worthy investment.

For homeowners interested in saving money and reducing their bills, solar is often an idea that’s front of mind.  Even more so if you’re interested in moving towards cleaner energy.

The problem is, this stuff can get confusing.  Especially if you’re not technically minded (which I’m not).   If that’s you, don’t worry, this will be all be very simple, since I don’t know how to explain it any other way 😁

Solar nerds will probably be seething, but hopefully they can add some extra info for us in the comments for things I miss.   Hopefully it helps you if you’re also curious about whether solar panels make a good investment.

Let’s start with the system I had installed a couple months ago.

 

Strong Money Solar Setup

After doing some research, we went with 6.6kw of solar panels with a 5kw inverter.

Why did we get this size system and not bigger?  As I understand, a 5kw inverter is the limit in Perth if you want to remain connected to the network and receive credits for excess power sent to the grid.

The first thing I learned about solar panels is that quality can vary a fair bit between systems and brands.

We have a Fronius inverter, with Jinko panels.  Overall, I think this would be considered a middle of the range system.  Good quality, but certainly not the highest.  Here’s a snap of one side of the house (most are on the other side where I can’t get a good photo).

 

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With our quote, we received an estimate of how much energy the system should produce each month on average, which fluctuates wildly depending on time of year (understandable).

So far, the panels are actually performing slightly better than expected, which is a pleasant surprise.

One concern I had was around longevity and how I could be sure the system will still produce good energy after say 10 years.  Well, thankfully the panels came with a product/performance guarantee of 25-30 years.

There is an allowance for degradation, but it’s minimal.  After 25 years, the panels should still be well above 80% of the original performance capacity.  That’s a lot more than I originally thought.

Alright, onto the numbers.

 

Solar Cost, Payback Period + Investment Return

How much did the system cost?  $4,800.

This is sharp pricing for the setup above.  Apparently, Perth is one of the cheapest places in the world to get solar.

That’s supposedly due to both competition and a poor feed-in-tariff relative to other states making system pricing incredibly important.  Plus, it’s an incredibly sunny place, making it a good place to run a solar business.

Anyway, that’s what we spent.  How much will I save?

Our average yearly electricity usage has been hovering around the $1,100 mark.   Almost $400 of that is the wonderful ‘Supply Charge/Admin Nonsense’, with our actual energy use making up the rest.

Using this calculator the current setup would likely save us around $800 per year.  That’s a pretty decent return of 16% in the first year.

The ‘payback’ period – a popular metric in solar circles – is 6 years, and this assumes a ‘self-consumption’ rate of 15% (more on that later).

Side note:  Personally, I don’t care for the ‘payback period’ metric.  I much prefer looking at annual savings vs amount invested.  My brain thinks in assets and cashflows, not “when do I get my money back.”  Anyway…

This brings us to another lesson I learned: the benefits of solar are far better if you’re able to consume the power yourself.  Otherwise, you’re selling it to the grid cheaply and buying it back at a much higher rate, losing much of the benefit.

In Perth, we’re currently credited about 2.5c per kWh, whereas we’re buying paying about 12x that to buy it back 😂  So yeah, not optimal.

But there’s more to the story here.

 

Solar and EV savings

The Strong Money household uses about $600-700 of actual electricity per year (before supply/admin fees).

With the new addition of an EV, our power consumption will almost double.  That’s another $500 per year on our power bill (essentially, our new fuel cost).

Driving is much more enjoyable now, which means I suddenly get the urge to go for a nice drive to random places… whereas that urge was non-existent before – haha!

This actually improves the return on investment from solar.  Why?  Because we’re able to ‘self consume’ even more of the power we generate, by charging the Tesla during the day.

To be perfectly honest, I won’t know the full outcome of all these numbers for at least 12 months of having the system.  But my guess is the savings will be a few hundred bucks per year higher than the original numbers.

So let’s sum it up using my current best estimates for the year…

Power bills before solar: $1,100
Power bills after solar: $300

Power bills including EV before solar: $1,600
Power bills including EV after solar: $500 (assumes we can’t always charge using solar).

Either way, including the EV, it looks like we’ll probably save anywhere from $800-$1,100 per year.

Which is better than the original example I gave.  Not bad for a $4,800 investment (almost 20% pa).

There’s a tiny catch to these return calculations which I’ll explain later (that nobody seems to mention).

This example also highlights another (rather obvious) lesson: the more power you use, the larger your potential savings.  We aren’t huge power users, and we also have gas at this house, so your numbers may be a lot higher than this.

But we do have one advantage to maximise our solar benefit…

 

Solar and self consumption

Maximising your solar savings is done through self consumption.  Which just means consuming the energy your panels produce.

Self consumption is the #1 factor at play for solar savings.  It can make the difference between a so-so return on investment and a great one.

Given we’re home during the day, this is actually quite easy for us.  We can shift a good part of our consumption to when we’re generating energy.   This way we’re using free solar (yay!) rather than the expensive grid power (boo!).

Now, this isn’t feasible in many cases though since many people work during the day.  Again, I would use this calculator to try and get a rough gauge on your savings (play around with the ‘self consumption’ option).

What does self consumption look like in practice?  Here’s a few things you can do while your system is producing energy:

—  Run the dishwasher
—  Cooking with electric stove, oven, microwave, etc
—  Washing and drying clothes
—  Air con and heating
—  Shower if you have an electric HWS
—  Use appliances, TVs, and anything else
—  Car charging if you have an EV
—  Charge phones and devices

You probably don’t want to just blindly use a bunch of shit you weren’t going to anyway (blasting the heater or air con when there’s no need).  Yes, you may want to cool the house down (or warm it up), using solar to avoid having to use it later.  But you know what I’m getting at.

The ‘cost’ of these is essentially whatever credit you’re missing out on by not sending that power to the grid.  But where possible you definitely want to shift when you do different things to maximise the benefit you get.

I often joke that we turn everything off at 6pm.  After that it’s just reading by candlelight and already-charged devices which have to last until 7-8am the next day 😁

Mrs SMA found it funny the first few times… ahhh good fun.

Anyway, you get the absolute most savings by boosting your ‘self consumption’ as much as possible.

Given you have to buy power from the grid at a much higher price than what you’re selling for, you want to use as much of that power as you can.

People complain to no end about how poor the ‘feed in tariffs’ are now.  That’s true.  But keep in mind, the cost of solar is now a fraction of what it used to be, for a more powerful system.   Grids are now getting so much solar during the day they almost don’t know what to do with it.

 

Common Questions on Solar

Which systems are good?  Here’s some images I took from the Solar Quotes website, which is the most unbiased solar site I could find (everyone else is flogging a particular brand or two, but more on them later).

Solar panel brands…

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Inverter brands…

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What size system do I need?  That depends how much power you use.  It also depends how much you care about either maximising your return on investment, or getting your bills (and emissions) as close to zero as possible, even if the return isn’t as good.  More info here.  And state limits here.

How much will it cost?   Depends on the size of your system and the quality/brand you go with.  From most estimates, a ballpark range in 2024 for a 6.6kw setup seems to be between $4,000 – $8,000.

What if I move house?   If you plan to move, you might want to wait until you move before adding solar.  Having said that, people are willing to pay a little more for a home with solar installed.  So it seems unlikely you’d ‘lose’ that money.

How long do solar panels last? And what about the inverter?  Solar panels are typically expected to last about 25-30 years, and many have guaranteed performance for that timeframe.  Inverters last about half that long and need to be replaced after about 10-15 years, at a cost of $1,500-$2,000 (apparently).

 

Are solar batteries worth it?

From what I’ve read, in most cases, I’d say batteries probably don’t stack up financially.

To be fair, there are scenarios where it makes sense, and maybe you see it as more of an environmental decision than a financial one.   Or you might want to support the technology and further protect yourself against future power price rises.

It’s not a straightforward discussion as there are many factors at play.  This article provides a good breakdown with examples, and this one compares battery units and prices

But for the most part, batteries do seem to offer a lower return on investment than solar panels.  If you’re a believer in the 80/20 rule, most of your benefits will come from getting a decent solar system, with battery storage not quite there yet in terms of bang for buck.

Batteries require a bigger investment than solar – say $10,000 rather than $5,000.  The lifespan of a battery is also much lower than solar panels, at about 15 years.

So it’s twice as expensive, and lasts half as long.  Costs are coming down, but I don’t think it’s super attractive yet, so we didn’t bother with a battery.

That being said, for a higher consumption household, a solar + battery setup may be an excellent choice for two main reasons:

1- They might not be able to self-consume much of the solar they generate due to their schedules and lifestyle.
2- They may not invest the same money elsewhere, but instead spend it on other things (giving no financial return).

So it probably can make sense, but for a financial optimiser, I’m not convinced.

 

Caveats and finer details…

The payback period, system cost, size allowances and feed-in-tariffs will differ in each state and situation.

So you’ll want run the numbers rather than relying on a solar newbie like me to help you decide!

Depending on your state and usage, a bigger system (or even adding a battery) could make sense.   Or solar itself doesn’t even make sense if you consume very little.  It all depends.

I also want to highlight something when calculating solar savings that I’ve never seen mentioned…

People like to say “over 30 years you’ll save this many thousands of dollars.”

They often ignore two things:

1- After 10-15 years, the inverter will likely need replaced at a cost of say $2,000.

2- After 25-30 years your solar system is worth zero dollars and needs replacing.

This means you can’t compare a ‘compound annual return’ like you can with other investments.   A share investment can literally compound forever with no further input from you.

With solar, you eventually need to ‘invest’ more cash to keep those savings coming, which does dilute the return a bit.

Now, there’s nothing wrong with that, but it’s worth being aware of.  I still think solar is worth it (clearly), but some people are guilty of juicing the ‘savings’ estimates and forgetting about this.

 

How I learned about solar

Learning about solar was on my to-do list for quite a while.

Then I stumbled upon the podcast that Aussie Firebug did with Finn Peacock (founder of Solar Quotes).  It was a great listen – check it out here. 

Finn seemed like a really genuine dude, so I went to his site and starting reading about solar.

After some more research and settling into our house, I decided it was time to look into it more closely.  I looked over our bills, played around with the calculator, did some more reading, got quotes and went ahead.

The reason I trusted Finn’s site is because they don’t really sell anything.  From what I gather, Finn actually set it up as a blog back in the day to help people understand solar.

Then he started vetting solar companies to help people find the good ones and avoid the dodgy operators (of which there’ve been many come and go).  Many will offer cheap prices, but either the systems are shit, or the company is unlikely to be around in 3 years time.

The way Solar Quotes makes money from passing on leads to solar companies they’ve vetted and approve of.  So they don’t actually care whether you go ahead with the purchase or not.

After going through the process myself and having a good experience, I found out they actually have a referral program.  I decided to sign up as an affiliate – here’s the link – so if you use that to get quotes, this blog will receive a small fee from Solar Quotes.

Long-time readers know that I recommend companies sparingly.  It has to be something that I have used, trust, and believe is genuinely useful for you.  Solar Quotes passes that test.

As for the quotes, I found pricing to be pretty good from the installers.  I also got 2 quotes from other companies (so 5 in total), and ended up going with one from Solar Quotes, since they also offer a guarantee to follow-up with the installer if you’re not happy with the installation, and if anything goes wrong, it’ll be corrected at their cost.

Whoever you choose to go with, be sure to compare company reviews and ask if they’ll price match a competitor on a like-for-like system (they often will).

 

Are solar panels always worth it?

If you’re a very low power user, and you invest in high returning assets, then no, solar panels will not be the most optimal use of your cash.

That said, you still may like the technology, or reducing your emissions and reliance on grid power, or getting a decent tax-free return while adding value to your home (most people would pay more for a home with solar vs without).

Some people overestimate the benefits, and some dismiss them entirely.  As always, it’s worth crunching the numbers and seeing if it’s going to work for you.

Your return on investment is driven by lots of things…

— The price of your system
— Your personal power consumption
— How much energy your system produces
— How much you’re able to self-consume
— Feed-in-tariffs in your state

Obviously, not everyone is in a situation where solar panels are feasible.  But for most homeowners, I definitely think solar panels are worth investigating.

But don’t just take my word for it.  Do some reading, check your bills, seek out prices, and figure out how much you could realistically save.   Ultimately, that’s the only way you’re really going to know.

 

Summary of key points

  • The more power you use, the more solar can save you
  • System quality and installer trustworthiness varies a lot (cheaper isn’t always better)
  • A good system will last 25-30 years, while an inverter needs replacing after 10-15 years
  • Self-consumption can dramatically boost your payback and return on investment (optimise this as much as you can)
  • Battery costs are improving, but probably don’t offer a great financial return in most cases
  • Crunch the numbers to see if solar is worth it for you, as numbers vary dramatically based on many different factors.
  • Read reviews, get quotes, ask questions, and negotiate prices before going ahead to get the right system and best price for you

 

Final thoughts

If you’ve been meaning to find out more about solar, hopefully this post helps you gain a better understanding of it all.

There’s a bit to learn, but solar also offers decent upside for lots of Aussies – even those in grey old Victoria 😉

I’ll be eagerly awaiting my power bills over the next 12-18 months and seeing how close my estimates are to reality.  I’ll be sure to report back here if these numbers are off base (better or worse).

I also find it quite exciting to look at the app on a sunny day and see how much power we’re generating.  The idea of effortless energy from the sun is pretty fun think about.

Instead of a growing stream of dividends, these solar panels will provide me a growing stream of sunny tax-free savings 😎

Do you have solar panels?  How have you found it – do the savings stack up?  Let me know in the comments.


34 Comments

34 Replies to “Are Solar Panels A Good Investment?”

  1. Dave, I have had solar (5.6KW for 11 years). I also have a ‘solarhart’ hot water system. Its over 20 years old and never been serviced. I have a manual override ‘heat’ switch for cloudy days to heat the water. I have never had my solar panels cleaned. That is a mistake. Last year I had my roof sealed and painted and the tradies notes a couple of ‘spider’ cracks on two of the panels. I had noticed in the last couple of years that the output of the panels was down. Sure enough the cracked panels was causing a loss of power generation. I put it to my insurance company and they replaced the lot including a new Fronius Inverter. About 6k altogether. Power output is up significantly. I get 4cents rebate. So that is not a factor. Despite all this my power bills are averaging zero. In fact I am in credit about $500 at the moment. So, for me a good decision. What I have learned. Clean the panels with a soft brush and water once a year. Do not use detergent. Check once a year for damage. Have the system checked every two years by your original installer for peak operating efficiency. Would cost about $350.00 each time. My brother has an 18000.00 , top of the range, battery. He admits he will never get his money back. But he is an engineer and has a ‘green’ bent.So for me a good experience. The 20 to 25 year claim on panels is a big one and you need to follow a full maintenance schedule to achieve that I would think.

    1. Interesting stuff Bob, thanks for sharing! I was told by 1-2 installers that they don’t need cleaning at all, maybe there’s some disagreement in the industry about that?

      1. I second Bob’s comments. My panels needed cleaning after several years and I also noticed better performance afterwards. I also agree about service/inspection costs needing to be factored in as inspections every two years roughly equal the cost of the inverter over an assumed 15 year lifespan.

  2. Great article, thanks Dave.. and I highly recommend Finn over at Solar Quotes too. Have you tried comparing compound annual returns more accurately by including a depreciation rate for both the panels and inverter?

    1. Hey mate, I haven’t tried that. I’ve included the inverter replacement but haven’t gone to the level of yearly deprecation. Reason being, it meets the ‘good enough’ back-of-the-envelope test for me without having to bother fluffing around with a spreadsheet 😁

      1. It’s just that under Caveats and Finer Details… you stated “This means you can’t compare a ‘compound annual return’ like you can with other investments”. You could if you deducted an amount for depreciation each year. Hope it pays off.

        1. Yeah I hear you, I guess it depends how one wants to calculate it. The overall point was that it’s not a one-off investment like shares that you can just leave + watch the gains stack up, you still have to fork out more cash later. Most ppl I’ve seen just say “I spent x amount, and now I save this much” ignoring the future investment needed to keep it going.

          Depreciation is also somewhat unknowable. The system ‘should’ last 25 years, but it might last longer, or much less. So I think just a general awareness of future outlays and how that affects returns is good enough.

    2. I went with a recommended company and told them to be careful as I am on tank water. You gutters were full of off cuts and other leftovers.

  3. Not sure if I am a solar ‘nerd’ or not but I have installed three systems on houses over the years, and also work on utility scale plants. e.g. I have bought circa 1,000,000 panels for a project in operation.

    Good write up and I don’t have too much to add.

    I would say your inverter is top end, and if you are going to spend a bit more on a part of system it may as well be the inverter.

    For panels, the sales team will often talk of some panels being better quality than others. They are certainly more expensive, but I haven’t seen any evidence of more expensive panels being better quality. For utility scale plants we would usually buy from any of Longi, Jinko, Ja, Trina, Canadian Solar (ignore the name, they are chinese) or risen. The solar sales guys may refer to these being equivalent quality to a toyota camry. If you really want to nerd out you can look at independent testing: https://scorecard.pvel.com/top-performers/

    I think panels could potentially last 30-40 years but if one panel in a string on panels dropped out that might impact the whole string / plant. It may be difficult for a residential system owner to fix this as replacement panels may be well out of production. i.e. it may be cheaper easier to replace the whole system.

    It is also probably a good time to buy as there is a glut of panels and prices have crashed maybe 50% from where they were a year or two ago. That might change as some manufactures may go out of business close production lines. Particularly the European suppliers.

    The other negative of solar not mentioned is supply chain issues. The providence of raw materials going into productions of panels is difficult to verify and it is likely that some amount polysilicon from each panel may have come from slave labour.
    https://www.ohchr.org/en/documents/country-reports/ohchr-assessment-human-rights-concerns-xinjiang-uyghur-autonomous-region

    This is true even if you pay a massive premium for ‘Aussie made’ Tindo panels who, (last time i checked) import PV cells and assemble them into panels.

  4. Dave, Perth feed in tariff is actually 2.25 cents, 2.5 cents was before 1st July last year. I think they may drop it again to 2 cents after July 1st.

    1. Well it depends mate, because the ‘peak time’ feed in is higher (something like 10c), so you get higher credit for that. Given its only a small % of total feed-in – late afternoons I think – I upped the ‘average’ feed in a little to account for that.

  5. I live in Brisbane and we installed solar panels in February of last year, I’ve had the opportunity to analyze my actual energy usage against my initial assumptions and the original quote. Our family of three, including an EV (though not for the entire year), has averaged 12 kWh of imported power per day. We have a 10kW system with Jinko panels and a Sun Grow Inverter.

    My spreadsheet analysis revealed the following after having solar. We used more power than anticipated, primarily due to increased air conditioning and heating use during the day. I put this down to the fact we felt less guilty about using it with the solar panels. The system proved most cost-effective during autumn and spring when we had ample sunlight but minimal need for AC or heating.

    Summer was a different story. The numbers were significantly off from my assumptions, as frequent storms and rainy weather resulted in lower solar production while AC usage was at its peak. The price also was different too, Queensland’s power rebate of $500 per household, now increased to $1000 plus a $300 federal government contribution, will boost financial benefits. Also, my assumptions about power prices increasing in July, were a bit off.
    It’s also really important to be aware of power spikes, where a sudden surge in energy demand from multiple appliances can cause a significant import of power even when solar is producing. I’ve had to educate my family about this, demonstrating how to avoid spikes by staggering appliance use. For example, instead of turning on the TV, kettle, iron, and microwave simultaneously, my wife now uses the microwave first, then the kettle prepares her coffee, turns on the TV, and finally uses the iron.

    While this may seem trivial, some power plans now include a ‘demand charge’ for these spikes. This daily charge, often buried in the fine print of cheaper plans, is based on your highest electricity usage during a specific period, typically between 3 pm and 9pm. Essentially, you’re charged a monthly fee based on your peak usage during those hours, which can make seemingly affordable plans significantly more expensive. It’s crucial to carefully research and understand demand charges, as more companies are implementing them to increase their profits. I’d be very interested in a follow-up article detailing your solar system’s performance after one year, comparing actual results to your initial assumptions.

    1. Thanks for sharing mate. Would you say it’s still been a worthwhile investment so far, or you’re not convinced?

      I’ve also heard of people using a lot more energy during the day, following the ‘use it or lose it’ type strategy. Cooling down the house (or heating up) during peak solar then coasting off that while trying not to use it later in the day.

      It’s almost inevitable that usage patterns + overall usage would change if someone is trying to get the most out of it. And this could inadvertently cause them to use more and actually save less. Though their extra usage may actually be more enjoyable to them and come at a much lower cost than if they’d used regular power for that, which results in better value usage overall I suppose.

      I’ll make a note to check the figures 1 year from now and put an article together 🙂

  6. Thanks Dave for a good explanation and thanks also to the letter writers.
    I have a 10K system with an 11K battery. Feedin tariff here is around 8c with pricing at peak around 32c. I have found my inverter HW can easily be programmed to run only in daytime and avoid the price peaks.
    Our battery system works well. I agree it is hard to assess the benefits which arise from hanging on to your own cheap power and avoiding sales to the grid. How much this has saved is very hard to assess. However, a benefit of batteries worth nting is the backup benefits. I have all lights and the main power point circuits hooked in to the backup provided by the battery. Can give me a few hours of power during a blackout.

  7. Great article Dave, thank you. And well timed! I have a few questions for you and/or the readers: 1. What happens to the system (including the battery) in the event of a power surge or (doomsday prediction) massive solar flare? Do these events fry the system and make it useles, either temporarily or permanently? And in the event of a prolonged power outage, if you have panels and battery, can a household continue to function throughout with careful electricity use? Thanks all in advance for any info!

    1. Glad it was useful Sharon.

      In regards to power surges, it’s possible to get surge protectors if this may be a concern depending on location. You can also cover your system on your home insurance. More info here: https://support.solarquotes.com.au/hc/en-us/articles/360000298496-How-can-I-protect-my-solar-power-system-from-lightning-strikes

      With the outages/battery, it would depend on the battery you have, its capacity vs how much power you use. But someone more knowledgeable may have a better answer.

  8. Here’s an interesting idea for those with super low feed in tariffs (like 2.5c) that want to boost their returns. (And don’t want to get a battery)

    Instead of feeding excess back to grid for 2.5c/kW, connect a Bitcoin miner (small home option) to use that excess energy and turn it into money instantly. Sell the Bitcoin for fiat, or keep the Bitcoin.

    Setup an auto timer (like catch power relay) that turns on/off miners in the day and diverts the excess unused power in the day (only excess not grid power). Profit.

    Assuming feedback tariffs are going to zero eventually, this becomes more and more profitable/ feasible.

    1. This is interesting, but beyond my understanding. How feasible would this be for a know-nothing person to do? And how profitable would it be? Extremely rough estimate is fine.

      1. Easier than trying to learn how the global financial system works haha. It’s more profitable than 2.5c/kw, probably not worth it if >5c feed in Tarif. If Tarifs dropped to $0c or they start charging you to feed to the grid and batteries were still not financially feasible, absolute no brainer and good alternative for your excess energy. Super small scale obviously so would expect only a small return. But it’s scalable to whatever you want.

        Alternatively if you live in a cold climate and need to heat your house, you already need to use up electricity (eg Aircon) why not make money (mining Bitcoin and using the heat it generates) using the same electricity as a secondary benefit. Lookup Heatbit Heater. Pretty cool tech. Look like a Dyson heater.

        1. I appreciate the response. Probably going to fall into my ‘can’t be bothered’ bucket, but an interesting idea nonetheless, thanks!

  9. Pretty good summary.
    Only thing you didn’t mention was your hot water. I got a simple timer installed and the element swapped for a 1800 watt and it runs on about 99% solar now I reckon. Heat pump HWS are apparently still cheaper in the long run, but I had a fairly new electric system, plus no moving parts and no noise.

    I’d like to see in a year or 2 if you wished you’d gone bigger 😁

    1. Cheers Tony. Our hot water is gas at the moment. Will likely switch to electric later on to try and add to the solar savings.

      Haha, while a bigger system may provide us more overall savings, the return on investment wouldn’t be as good. The extra cost vs benefit is less appealing. In WA I also think going bigger is discouraged as we lose the rebate/feed-in tariff (can’t remember precisely, but it’s generally not recommended)

      1. I decided to switch from gas to heat pump HWS a few years ago. My research suggest that this is the most energy efficient way to heat water. Gas unit was still working fine but 12 yo old, so I wanted to replace it before it suddenly stopped working and required emergency replacement. Hot water heating makes up about 20-25% of home energy use. The heat pump HWS can be thought of as a form of “thermal battery ”. Solar panels can run the heat pump during peak generation 11-3pm and the storage tank keeps the water hot for >24 hrs. So hot water almost free. Cost range is $2000-$6000 depending on quality and warranty. STCs available in most states that reduce the cost. Haven’t done the maths, but pretty sure it allows you maximise solar panel use, costs far less than a battery. One can also get off gas – better for environment and one less connection fee to pay

        1. Interesting, thanks! See that doesn’t really stack up right now then. Our entire gas bill including cooking is like $160 per year. Even if we assume most of that is hot water and solar made it absolutely free, spending $3k to save $100-160 pa isn’t great.

          1. True, it’s more something to be aware of when it comes time to replace a HWS -cost for this is probably around 1500-2500. What can happen is sudden failure in the middle of Winter requiring an emergency replacement. Most plumbers will suggest an instant electric or gas storage system, not a heat pump HWS so opportunity is missed to replace with something that over its life span of 15 yrs would be cost saving (and reduces CO2 emissions)
            There’s a Facebook page My Efficient electric home (MEEH) which has some useful posts and cost analysis of various home electrification options

          2. Thanks for the follow-up and shedding more light. I’ll have to check out that fb page too 🙂

  10. Hi Dave,
    Thanks for the article. I was lucky enough to purchase my solar system back in 2011 in Qld. I had no idea how good it was at the time, however the Qld government offered a 44cent feed in tariff and additionally by shopping around with energy retailers it has not been uncommon to pick up and extra 8-14cents from the retailer making feed in tariff of approximately 56cents. I have not paid for electricity since 2011 and receive anywhere from $1000 to $2000 annually with the feed in tariff. I have a 3kw inverter and 5kw on the roof. The qld government stopped this scheme in July 2012 and if you were lucky enough to get it you can receive the feed in tariff until July 2028. If you move/ transact the sale of the home
    the feed in tariff ends. Back of the envelope calculations would suggest that my 5k investment has produced over 30k in savings/ cash from the solar thus far with another 5 years to go. We are the opposite and try to use electricity at night as we want to profuse as much solar export as possible. Hopefully by 2028, I can convert over to a battery system and enjoy minimal electricity costs! Aj

    1. No bills since 2011? Damn, I don’t think anyone will beat that – you might be the winner!

      And impressive that it only cost you 5k back then too. Thanks AJ 🙂

  11. Everything you said was spot on Dave!

    The value of solar panels really does depend on your power consumption during the day. Cause I’ve seen people say Solar doesn’t save money when in reality they use most of their power at night.

    And we’re super fortunate that Perth (and Australia in general) has the most affordable solar systems in the world. I think in the US it costs around $15k – $20k (I could be wrong but that’s what I heard)

    Everything you said was absolutely spot on and there’s quite a few factors to consider when deciding whether solar is worth it.

  12. I reckon the real game changer will be the wide spread availability of Vehicle-2-Home technology as outlined in an AussieFirebug pod from a while back. For EV owners who have their vehicle at home much of the day, this will remove the cost of a dedicated home battery from the equation and make being able to capture and utilise more of what you produce more practical. As also mentioned in that pod, the increasing penetration of EVs will eventually make available used batteries that are no longer good enough to power a car but which can be networked together into units to serve as cheap home batteries.

  13. We upgraded our solar system when we bought EV’s, but we are out during the day a lot, so we have to charge overnight regularly. In SA, AGL has an EV plan with a cost of 8c/kwh between 12am and 6am. The feed in tariff is 6c, so the cost differential is only 2c.
    So, the upgrade was worthwhile, but with the EV electricity plan, it wasn’t as beneficial as expected!
    We also use an app called ChargeHQ, that can control charging so you only charge on excess solar.

  14. To Aj jJohn. .. I also bought my first solar system in 2011 and have received the 60+ cent gov rebate. I payed back my original loan in a year and have received credit on the bill during the year which has been used to cover my winter gas heating bill. Basically not much in energy ever since. It was a very small system.

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