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Power bill reduction, Rebates, Feed-In Tariffs, Financing

The 'Rebate' (by Andrew)

On a recent visit to see my Mum in Scotland I got some quotes for solar.

I was shocked. The cheapest 5kW system cost, converted to Aussie dollars, $12,000.
Even allowing for their tricky installs on super steep double storey roofed homes, and lower demand due to a distinct lack of sunshine, it seemed incredibly expensive.

Initially, I thought, I'll open an office here, and clean up, and then moments later, I realised why. They don't have a rebate like we do in Australia. Almost nowhere in the World does.

Every brand new solar panel installed on a roof (in Perth) creates about 5 STCs.
e.g. a typical 23 x 265W installation creates 117 STCs in 2017

The number of STCs earned on a new system, or additional panels added to an existing one reduces by about 6% on Jan 1st each year from now for the next 14 years when the current scheme ends.

You can go to a very simple calculator here that gives you exactly how many STCs are created, depending on when your installation is going to happen, and where you are.

The price for each STC has varied over the years from a low of $18 in August 2011 to a high of $40 through much of 2016-2017. It's a traded commodity. Ironically, if there is a boom for solar, then more STCs are created. More sellers, than buyers, means the price goes down. If the price goes down, the rebate reduces and the price the next person pays for their solar goes up. So in boom times, solar is normally MORE expensive.

So, if your solar attracted 117 STCs, that's a rebate of $4680 if the STC price is $40 and that's a major reason why solar has been so cheap. It works like this...

True price of solar including installation $8,000. Deduct rebate of $4680. Price = $3,320

If the STC price dropped to $30, then that's 117 x $10 less rebate, so the price for solar would be $1170 more expensive. e.g. $8,000 - $3510 = $4490

The huge problem all solar companies face (and yes you should read this if you value your warranty from the solar company) is that when making sales in a market where the STC price is declining, and knowing that the STCs won't be created by the Goverment until about 4-5 weeks after the completed installation, the solar company has to guess what price they are going to get paid for the STCs in 2 or 3 months time. Many go broke because they guessed wrong. Our policy has always been to postpone all installations, refund deposits and wait when the STC price is in decline.

You can see what the current STC price is here

The STCs are purchased by electricity retailers. Once they have bought their quota for the quarter year, then there is very little buying activity in the market. As a result, when the STC price falls, it tends to do so very rapidly, but recovers very slowly.

Feed-In Tariffs refer to what you get paid for surplus power made by your solar during the day that wasn't needed at the time it was made. Synergy take it, pay you 7 cents and then sell it to your neighbour for 26 cents. Nice. Another more positive way of looking at it is that for every 3 units of power you export during the day, you get a free one at night. Not surprisingly, everyone is waiting for solar battery prices to come down enough to get a better return on surplus power.

Financing solar purchases is surprisingly rare in our experience and yet we are really not sure why. Totally legit unsecured Green Energy Loans have interest rates of about 6% and setup fees of $150. The 'Interest free' deals require the retailer to load their prices by $600 or so to cover the fees charged by the financer, so in reality, you pay less and have much more flexibility going for a green loan from folks like Community First Credit Union. Cheapest way though is to put it on your mortgage.

How much does solar cut your electricity bill?
Calculating how much electricity your installation will make each year is pretty simple, but what it's worth to you is going to be unique to your home power use during daylight hours, but the principle is easy.

Let's start with how many units of power a solar installation makes in a year.
A typical installation of a 5kVA inverter and 6.3kW of Tier 1 grade panels in Perth makes about 10,000 kWh a year (let's call kWh," units" from here on).

Now let us say that your house uses absolutely zero power during the day when the solar is doing its thing, so every one of those 10,000 units is exported back to Synergy, where you are paid (2016/2017 year) 7.14 cents per unit. So you make $714. If your system cost you $3,500 then that's a payback time of 4.9 years.

Next let's go to the other end of the scale. Your house uses every last drop of solar during the day with not a single surplus unit exported back to Synergy. In this case, instead of buying 10,000 units from Synergy at 26.47 cents, your solar has provided it, saved you $2647, giving you a payback on your $3,500 of just 1.3 years on a product that will keep on doing it for 25 years or more. Awesome.

The reality for most people is likely to be somewhere in the middle of the $714 minimum and $2647 maximum..about $1750, and a 2 year payback.

Oh, and of course, as power prices go up EVERY year without fail by an average 5%, your real payback time decreases with each price hike.

In 2011 when the boom for solar was just taking off, and a 5kW system cost $15,000 after deducting the rebate, but the customer got a bonus 40 cents on top of the 7 cents for every unit of power exported back into the grid for the next ten years, we calculated that their payback time on investment was likely to be 3 years after which they would likely see a profit of $5,000 a year for 7 years until 2021, and then dropping back to $1500 a year. So over 20 years a return of $65,000 for a $15,000 investment. That's a 435% gain.

In 2017 we are looking at a typical return of $35,000 over 20 years for a $3,500 investment, or a 1000% gain. Not bad is it? Now factor in power price rises of 5% a year and the real gain more than doubles over 20 years

The more you use, the less you lose.
Solar makes it's power when the sun shines and particularly when the sun is strongest.
Set your pool pump, bore, washing machine and anything else that can have a timer to operate during solar production hours. If you don't, then your solar gets sent back into Synergy and Western Power's grid and you get paid 1/3rd of its normal value.




 is the web site for Good Day Mate Pty Ltd trading as SOLAR4EVER Company registered in WA on 26th October 2008 (A.C.N.133884938)

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Telephone : (08) 6102 2527