The Financials For Solar With A Low Feed In Tariff In Brisbane

You may read of claims of 3 or so year payback periods for solar installation in Brisbane. Here we discuss how crunching the numbers to see how viable solar power installation is, is subject to many variables. Lets look at some examples.

Say we consider a 3 Kwatt System Installed in Brisbane – Price $6500. This price could represent a reasonable quality system, although as we state throughout this website, do your research – from the brand of solar panels used, to the inverter, to the ‘quality’ of the financials of solar installationinstallation company and the ongoing support for both the installation and the panels and inverter in years to come. These are a bare minimum.

A 3 Kwatt system will produce around 4.2 x 3K Watt = 12.6 Kwh of energy per day or 12.6 x 365 (days per year) = 4599 Kwh per year.

How much Solar Electricity You Export To The Grid Makes A Huge difference in Payback Times:

Now, a critical factor is – How much of the electricity that your 3 K Watt system generates is exported to the grid and gets payed the current 8 cent / Kwh feed in tariff?

Example 1: Lets say you use all of the power generated by the system in your home and export none to the grid (can you see how many variable there are already?).

Ok, Lets say you pay $0.30/Kwh for electricity (probably on the high side for many, but again, this is likely to change, and increase in years to come – another variable). So your system will save you 4599 x $0.30 = $1379.70 in the first year. This is the amount that Grid Feed In Percentageyou would (had you not installed a 3kW solar power system) have paid for that 4599 Kwh of electricity in the first year.

Example 2: Lets say you export 50 Percent of the generated solar power back onto the grid. In this instance:

Feed in tariff will earn you: 4599 Kwh (The energy the solar system produces in 1 year) x 0.5 (50 per cent export to grid) = 2299.5 x $0.08 (current feed in tariff in Qld.) = $183.96 You will also save (from not buying power from grid) 2229.5 x $0.30 (price you pay for electricity) = $668.85.

Total ‘Savings’ = $668.85  +  $183.96 = $852.81 (as opposed to $1379.70 if you use all of the generated solar power in your home and export none).

So, obviously, with a low feed in tariff (as is the case in Queensland now) you benefit the most by consuming as much of the solar power yourselves, in your home. As you can see it makes a big difference. In the first example, the system saves you $1379.70 per year. If you paid $6500 for the system the payback period would be less than 5 years. In the payback calculationsecond example it would take more than 7 years to repay. Knowing your daytime average electricity usage and ‘matching’ that to the size of solar system you have installed is a reasonable starting point when thinking about system size in Brisbane.

 Important – More Variables and Unknowns!

The above examples are simplified and there are many factors that will change the ‘financials’ of solar installation. Some of these variables include:

1. Feed in Tariff. Some of the energy retailers in Queensland offer a feed in tariff in addition to the 8 cents used in the above example. For example AGL offer 8 cents (this may change in the future?). If you are exporting a reasonably large percentage of your solar energy to the grid then 16 cents as a feed in tariff versus 8 cents makes a big difference. Variables impacting solar payback times

2. Factors impacting the pros and cons of solar will change in the future. Electricity prices will more than likely increase making solar more attractive still. The existing feed in tariff is only payable until 30 June 2014 (ref http://www.dews.qld.gov.au/energy-water-home/electricity/solar-bonus-scheme/how-scheme-works).

3. You need to factor in some maintenance costs for your solar system. Hopefully this will be minimal (cleaning of the solar panels occasionally etc), but should the solar inverter, for example, fail, you could be looking at $1000 ++ to have it replaced. Again, this is why it pays to get quality components in your system with enforceable warranties.

4. Solar system owners could potentially be charged more for electricity in the future (there has been some speculation around this)

Conclusion. So it pays to be wary of unsubstantiated claims of payback periods for solar power systems. Hopefully the above has alerted you to some of the many variables. Considering solar as a long term investment and ensuring the quality of the system, installing company and the installation itself are factors equally or probably more important than simply looking at ‘payback periods’.