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Solar panels seem like a good idea. But are they really worth it?

It’s going to be a long, hot summer for the Wilkes family.


Their home in Sydney’s outer suburbs has westerly facing windows and last year, the first in their new build, the electricity bill for summer was $1,000.


This year, they’re hoping it will be significantly less, having scraped together enough cash to install solar panels on the roof.


“It was definitely a stretch,” said Crystal Wilkes, who is currently at home on maternity leave after having her third child.


“After tax time we were like, we’ve got a refund from tax. We decided to put that plus a small amount of savings [together] and cash flowed the rest.


“You get very good at eating beans and rice to get it together.”


But have the Wilkes made the right decision? Is getting solar the best way to cut down on costs this summer?


About a decade ago, many state governments were keen to encourage solar uptake, introducing generous rebates and feed-in tariffs.


It created a lot of hype around the financial benefits of solar, and hundreds of thousands of homes took it up.


Those same offers are now long gone.


OK, so is getting solar still worth it?


According to Chris Barnes from consumer group Choice, the answer is pretty clear.


“In almost all cases for almost all homes, yes, it’s still worth it,” he said.


“That’s a reflection of the fact the price of the actual panels has gone down and the capacity of the solar panels has gone up. So really it makes sense to put as many on your roof as you can afford.”


The Wilkes bought a 6.6-kilowatt system for $7,500 after the federal government rebate, which was about $4,000.


This out-of-pocket cost included the panels themselves and the inverter, which transfers the power into usable electricity.


That’s about the average size and cost of a solar installation, according to Choice.


But prices do vary and could be between $4,000 to $8,000, after the rebate, and depending on the quality and the size you’re after.


“There’s a really wide range of pricing,” Sarah Morton, from Green Energy, said.


Mr Barnes suggests getting recommendations and shopping around for installers, while avoiding door-to-door sales tactics.


He also says it’s important to understand the product warranty on the panels and inverter.


For example, a 10-year product warranty on the panels and at least five years on the inverter is fairly standard.


“You’ll often see a 25-year warranty mentioned. Be a little careful with that, because that’s actually a performance warranty,” he said.


“What they’re saying is over its 25-year expected lifespan, this panel will deteriorate in a predictable and linear fashion and in the 25 years will still be producing 80 per cent of what they claimed.”


Righto, I’m sold. What sort of discount can I get?


This is where it gets a bit tricky.


In the past, different rebates have been offered separately by state governments and the federal government.


All states have stopped offering generous rebates for solar installation, except for Victoria, which still has a rebate of up to $2,225 for households earning less than $180,000.


Some other states are trialling schemes for low-income earners. It’s worth looking at the Department of Energy website to see whether you can claim for this.


And on top of all of this, most households can still get a rebate from the federal government’s small-scale renewable energy scheme.


“When you buy a solar panel system each will be rated to a certain number of certificates and each is worth a certain amount,” Mr Barnes explained.


“At the moment they’re worth just under $40 per certificate … typically you’re looking at about $600 per kilowatt of solar system you add on. So it does add up.”


Usually the installer will process the certificates and consumers pay the balance of the cost.


But how long until solar starts paying for itself?


It’s always going to be different for each household. But for the Wilkes, they’re thinking about four years.




Well, there’s the size of the system itself, how much electricity a household uses, how much is sold back to the grid and where you live.


“If you live in a place that gets a lot of sun — north-west Victoria or inland New South Wales or Queensland — you’re going to get more output from the same sized solar system than if you’re living in southern Victoria or Tasmania,” Ms Morton said.


With three young children under six, and the baby using cloth nappies, the Wilkes’s washing machine is constantly on.


Like most Australians, the family tended in the past to use a lot of appliances in the evening, but since getting solar they’ve changed their habits.


They use an app to monitor their usage and set timers on their appliances to run during the day.


That way they’re using the solar energy produced on their roof for free, rather than paying for electricity from the grid.


“With the app we can also see the drain of the air-con when we do switch it on. We’ve learnt that after the house is cold we switch it to a dehumidifier setting which is a lot less expensive to run.”


Any extra electricity they don’t use is sold back into the grid, which means they get some extra money.


It also makes the payback period for their panels shorter.


Woohoo! I’m generating extra power! Tell me what to do next


Well, solar power is only generated during the day.


You need to ask yourself: are you better off using that during the day? Or keeping old habits and using the bulk of your electricity at night, essentially buying it from the grid?


“As a general rule for most people, you’re far better off using your own solar power and using as little as you can from the grid,” Mr Barnes said.


About a decade ago, retailers were paying up to 60 cents for every kilowatt hour that households fed back into the grid.


Only those who are still enjoying the benefits of a legacy contract get to keep reaping the benefits of that deal.


For everyone else, those days are long gone.


But every retailer can offer a different price for your power. It can vary from nothing to 30 cents a kilowatt hour in the Northern Territory.


“It varies significantly between retailers. Even within a state, it can vary a lot. People should shop around,” Ms Morton said.


Victoria is the only state to have a mandatory minimum rate which is set by the Essential Services Commission. It can either be a single rate (which is currently 12 cents per kilowatt hour) or a varying rate depending on time of day (between 9.9 and 14.6 cents per kilowatt hour).


The Wilkes get about 11 cents per kilowatt hour for the electricity they send to the grid, but are paying double that for any electricity they buy.


In short, that’s not an unusual story. It’s common to pay way more for electricity than what you’d earn if you sold it back to the grid.


“At the moment we’re actually ahead, we’ve just come in to credit. We’re selling more back to the grid than we’re using,” Ms Wilkes said.


Let’s talk battery storage. Should I bother?


Despite being keen on sustainable energy, the Wilkes won’t be getting a battery any time soon.


“We looked in to getting a battery but … the payback was closer to 10 years and the battery’s life is about 10 years. So it doesn’t work out,” Ms Wilkes said.


Mr Barnes agrees.


“Our view is that for most people, [batteries] don’t make full economic sense yet,” he said.


“If you’re in the NT and you’re getting a generous feed-in tariff, you’re probably better off getting that than putting your surplus energy into a battery that may not pay for itself in time.”


As technology advances, it’s hoped batteries will either last longer, or the prices will come down.


“We’re still watching and waiting for that magic moment to happen,” Mr Barnes said.


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