I wrote a post called Cost of Living in Australia: Electricity, almost 3 years ago. Since then electricity prices have soared as you will read in my imaginatively titled post Australia’s Soaring Electricity Prices.
In that second post, I explained that prices had increased by 35.8% in Queensland over the last eight years and that I was tempted to switch electricity supplier.
Well, I never got round to it, but at the beginning of this week I did start arrangements to switch to a new supplier …… ME!
Solar power is not new, but for me, living in a country where the sun shines long enough to make it worthwhile is relatively new. I first looked at installing solar three or four years ago, but at the time ‘I think’ I calculated that payback on my outlay would have taken almost 15 years.
Since then the cost of solar panels and inverters has come down. Government rebates are still in effect although ever-changing and, most importantly, there is a thing called a ‘feed in tariff’.
Remembering of course that Australia is a country made up of different states and that each has its own rules, the feed in tariff varies greatly across the country, so do be sure to check the latest deals available to you.
But what is a feed in tariff anyway?
Feed in tariff
Here’s the deal. If a residential customer installs solar panels to generate electricity, then the electricity generated by those panels is fed back into the grid.
There are for two reasons for this, I think.
Firstly, electricity produced by solar panels is DC, it needs to be converted to AC. By some magic of electrodes, solenoids, lots of wires and maybe a dial or two, the grid turns this power into AC.
Secondly, storing electricity is an expensive job, just look at the price of batteries. So what happens when lots of electricity is produced during a sunny day while you’re out? I think there is a rule of physics somewhere that states that energy (like electricity) cannot be wasted, it can only be converted into something else like, for example, heat.
Or it can be stored if you have the right equipment, and that’s the second reason for feeding back into the grid.
So when your solar produces energy during the daylight hours of a sunny day, it is all fed back into the grid. During that same day, you use energy in your house, so you end up with a credit and debit situation.
If you produce more energy than you use during these daylight hours, the excess is paid back to you as credits to use for electric during the night time when you’re solar isn’t producing, or in cold hard cash!
I am with Origin, they currently charge me 20.69 cents plus GST per kilowatt hour. When they buy my excess electricity, they pay me 44 cents, (to be more accurate, it’s actually a government subsidy) plus Origin top that up with an extra 6 cents, so I get back a whopping…
50 cents per kilowatt hour!
Here’s the full maths on my system, not yet installed, but will be within a month or so.
With my 5 kw system:
- 5.75kwH solar usage @ .23c (inc GST) = $1.32
- 14.53kwH solar export @.52c = $7.55
- daily saving = $8.87
- yearly = $3237.55
- system cost $11,795
- ROI 3.64 years
Let me explain the above in rounded numbers.
- The system I am having installed will produce just over 20 kwh per day on an average sunny day.
- I will use about 6 kWh during the daylight period.
- So I feed 14 kwh back into the grid whilst effectively paying nothing for my daytime electricity usage.
- I get paid 50 cents per kilowatt, so $7 a day.
- With that $7, I can buy 30 kwh of more electricity. (At 22 cents per kilowatt hour.)
My electricity bills are hefty; between $700 and $800 per quarter. With solar installed, for my one-off fee of $11,795, my electricity bills in future should be…
In fact, I might even get a small rebate.
This has got to be a great deal, surely? I get my money back on my system within around 3 1/2 years, and from then on in its savings all the way.
This deal gets better. My system should have cost $15,370, but the government give me a rebate for going solar of $3,575.
Different governments in different states give different feed in tariffs and they change all the time. For example, currently I understand that Victoria are offering up to 60 cent per kilowatt hour and both South Australia and New South Wales as much as 44 cents per kilowatt hour.
But Western Australia have now reduced their previous feed in tariff of 60 cents down to 8 cents. Each state also guarantees a period of time for those who have signed the contract, I’m guaranteed 44 cents for the next 16 years.
This current deal in Queensland is so good, I just had to sign up. It is also so good, that it ends at midnight, July 9, 2012, just a few days from now, at the time of writing.
After that, as they’ve done Western Australia, the feed in tariff reduces to just 8 cents!
I think all my above figures are accurate, but it doesn’t overly matter, and the rules are way more complex than stated here. The point is though, wherever you are living in Australia, solar power is worth checking out to see what kind of deal you can get at the time you are ready to go for it. It may save you a packet!
“Bring Me Sunshine…”
Update: July 2014
I’ve now had my solar system fitted for nearly 2 years, does it work? Was it worth it? Find out in my post…