Going solar – when should I jump, and how many panels?

Pondering adding to the solar hot water on my roof with PV panels for electricity generation.

My last electricity bill says I used up 659 kWh in 92 days, costing $187.61 (only including the cost for power and the 100% GreenPower surcharge; excluding the $76.41 service charge which I’d incur no matter how much power used)… that adds up to 2614 kWh in a year costing $744.32, or about 28.5 cents per kWh.

According to Origin Energy’s online quote (which I’m using as a rough measure, because I use them at the moment and they have a 2-years interest-free deal — obviously other companies may have better offers):

  • a 1.5 kW system costing $2315 will generate about 1971 kWh in a year
  • a 2.07 kW system costing $4315 (which includes a $250 discount because I got the solar hot water through them) will generate 2628 kWh in a year
  • a 2.76 kW system costing $5815 (ditto on the $250 discount) will generate 3626 kWh in a year

Leaving aside feed-in tariffs, and assuming for a moment that every kWh generated I actually use (which wouldn’t be the case), theoretically the 1.5 system would save me $562 per year, taking about 4 years to pay off.

The 2.07 system would pretty much save me the full cost of power every year, but take almost 6 years to pay off.

The 2.76 system would give me an excess of about 1000 kWh of power each year. The feed-in tariff is only 8 cents per kWh these days, so I’d be saving $744 plus another $80 or so, so it’d take about 7 years to pay off.

Some factors to consider:

If I cave and get some kind of cooling system, then my energy consumption will of course go up.

From what I understand, PV panels are dropping in price pretty fast. The longer I wait, the cheaper they’ll be (which is why I’m a little cynical about the ads you see on the telly implying if you don’t get in and order quickly, you’ll end up paying more).

Meanwhile, electricity prices are expected to rise only moderately in the next few years.

The bigger the system, once paid off, the greater potential in future years to make more money back from the feed-in tariff.

But I also need to check how much space I actually have left on the north and northwest-facing sides of my roof, given the solar water panel already up there.

And of course, once I jump in and switch to solar, I’ll be markedly reducing my personal emissions, which will be good!

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14 thoughts on “Going solar – when should I jump, and how many panels?

  1. Good analysis and open conclusion (fair enuff!). Also to consider: how long do the panels last and do they need maintenance?
    PS Be careful adding phrases like “my personal emissions” in your blogg. It leaves you open to bad jokes.

  2. They do need to be checked at times to make sure they’re working properly and all the connectors are safely insulated. The company that installed mine failed to tell me this before or after the sale, but I was informed later by the company that took over the bankrupt shell of the original company.

  3. Have a look a beacon solar as they have 20c/kwh for the first 137 hrs per month. I know this does not sound like much, but it does all add up. We have just put on a 5kw system on and had the same thinking as yourself. Look at interest free as this will reduce the initial financial outlay. Again Beacon solar has 50 months interest free.

    PS I am NOT a beacon solar rep, just a customer.

  4. Those guys must be predicting different climate for Bentleigh.

    There is something wrong with the pricing of those systems. ( Not just your quotes, all of them are like that ). How does a system which is less than twice as big, cost more than twice as much ? Nothing else works that way, economies of scale and all that.

    If you double the size of the system, you double the number of panels. But a 3 kW inverter doesn’t cost twice as much to make as a 2 kW inverter, and it certainly doesn’t cost twice as much to physically install it.

  5. A friend in a large unit put in a system that cost about $8,500. His best generation day was around 25kWh and worst about 4. He is doing very nicely out of it and the system will pay for itself in less than five years. I don’t think it costs that much more to go bigger, if you can.

  6. @enno – the pricing is not linear because of the solar rebates available – they apply only to the first 1.5kW or so, so after that you’re paying full price.

    Under the current tariffs, you’re best off self-consuming (effectively getting your retail rate of 25c per kWh), rather than feeding back in at 8c. So matching your panels to demand is the most cost effective return, rather than going over the top.

  7. One thing that nobody has mentioned is that when you’re on solar, your tariffs will increase (that is, the amount you pay). You will be put on peak/off peak tariffs which may end up costing you more (unless you do your washing and whatnot in the middle of the night).

  8. Buy a solar system that covers your daylight electricity consumption and no more. Why no more? Because the 8c feed in tariff isn’t enough to cover the extra cost of buying the panels you don’t really need.

    Your comment “The bigger the system, once paid off, the greater potential in future years to make more money back from the feed-in tariff” is not correct as you will never pay off a system that is too large for your needs. The 8c feed in tariff is simply too small to pay for the excess capacity – on an NPV basis it can be an infinite payback period.

    Of course in practice it’s very difficult to work out what you need because sunlight varies so much during the year, as does your usage.

    If you have a smart meter then you should be able to look at your half-hourly electricity consumption and make some calculations/estimates. I think you’d be in the United Energy area which is well advanced in its smart meter rollout. Register for the free ‘Energy Easy’ portal on their website and download a spreadsheet of your consumption.

    If you and the rest of the family are out of the house on weekdays and you don’t have anything electricity guzzling like a pool pump you’d probably be fine with a 2kW system.

  9. @Lach, what you say is correct for some people, but many others, particularly those out of the house during the day, will pay less overall on a time of use tariff.

    On Victorian time of use tariffs only 40 hours a week (M-F 0700-2300) are peak – the other 88 hours are offpeak.

  10. Some great comments – thanks everyone. Food for thought.

    @DD, you’re right, I do have a smartmeter, and have looked at the data out of it — clearly worth another look.

  11. ” So matching your panels to demand is the most cost effective return,”

    Good advice. So I’ll wait for the panels that work at night, since I have almost zero electricity usage during the day.

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