Buy a Solar Panel for your Home and Save Money
Guide to buying a solar panel for your home
The concept of generating electricity from the sun right from your home sounds very attractive. The energy produced is of a very clean nature, significantly helping the good fight against climate change. The total amount of green energy that can be produced from Australian households is estimated to be higher than the national demand, assuming each and every house has their own solar panel on the roof.
Not only are solar panels great for the environment, they make great sense financially as well. Current electricity from the grid is mostly derived from coal and other petroleum sources, which are non-renewable. Energy prices from these sources are set to rise in the future, therefore the additional electricity generated at home might prove to be less expensive than the one bought off the national grid.
These two factors, environmental and financial, has contributed to the ever increasing popularity of solar panels at rooftops. If you are considering one for your own home our detailed guide will be of practical help. Here is a summary of the main points we will discuss:
- How exactly does it work?
- How much does a solar panel cost?
- What will be the payback time (i.e., how long would it take for the system to pay for itself)?
- What are the factors to consider when evaluating alternative systems.
- How to choose the right installer for your home.
- What types of Government rebates and incentives you are eligible to receive.
- If you are considering an imported system, the main red flags you should be aware of.
- How much can you expect in payment (“feed-in” tariff) for the electricity your system contributes to the grid?
- Where to find additional information and guides.
How solar panels work
A solar panel converts the energy present in sunlight into a form of electrical energy we can use. This is accomplished by a collection of solar modules (called photovoltaic – or PV – cells), which are usually flat in shape and are mounted on your roof, working on electro-chemical processes that mimic the process of photosynthesis in plants. The difference being that plants convert energy from sunlight into chemical energy stored in complex molecules, whereas solar modules generate electricity.
The electricity thus produces is of the DC (Direct Current) type, the kind of electricity provided by car batteries and single-cell batteries, for example. But most of our household appliances expect AC (Alternating Current) input, which is also what flows through the national grid (the electricity network). The conversion of DC to AC is accomplished by the inverter, a device built-into solar panel installations.
This AC energy will be utilised by the appliances running in your household. You will need a battery to store the excess energy if yours is a standalone system, or you could setup the system to directly feed this energy into the national grid.
Obviously the effectiveness of these solar panels would depend on their access to sunlight. For optimal efficiency they should be mounted at a northward direction so that they receive direct sunlight. There should not be any obstacles in the way such as trees or buildings which cast a shadow over the system. The local climate also plays a defining part, by dictating the number of sunny days as opposed to cloudy or overcast periods. For example, the same solar panel installation in Darwin or Adelaide would produce approximately 30% more electricity than one in Melbourne or Hobart.
How to choose an installation company
When selecting a provider of solar panel installation or design services you should look to their accreditation status. The Business Council for Sustainable Energy (BCSE)
The good news is that there’s an accreditation scheme in Australia, which the industry claims is world’s best practice. To be eligible for solar credits, your designer/installer must be accredited by the Business Council for Sustainable Energy (BCSE) (formerly the Clean Energy Council) — that means they’re deemed qualified to design and install PV systems.
At the time of commissioning of your system, the installer must personally sign off on the installation report. Installer’s work is usually guaranteed for one year. Clean Energy Council provides a list of accredited designers/installers. Ideally you should also look for an accredited company that’s been in the business for a while and that has an established track record, relevant experience, specialist expertise, and a good reputation.
Does the panel and its components meet standards?
To be eligible for the solar credits, your solar panels must be certified to international standards, either IEC61215, IEC61646 or IEC61730. Ask your installer to supply proof that panels meet the relevant standards. Grid-connected inverters must be approved for connection to the grid in Australia by complying with AS4777 and having a current Certificate of Suitability. Check the list of currently approved inverters and modules.
Make sure that your panels meet the international standards and that you’re using an accredited installer. This is vital to the safety and reliability of your solar system installation.
How much panel capacity do you need?
An average Australian household’s electricity use is comparatively high, at about eighteen kilowatt hours of electricity per day – and growing. Average electricity consumption differs across states; Queensland is higher than the national average, for example.
The most popular sized domestic solar panel (a one kilowatt system) produces nearly 4 kilowatt hours (kWh) per day of electricity, depending on where you live. That’s about 20% of the average household’s electricity consumption. The bigger the system you buy, the more electricity you’ll produce.
What warranty can you expect?
Manufacturer warranties or guarantees range from five to 25 years. Solar systems should last at least 25 years – obviously, a warranty or guarantee for that length is best.
Efficiency claims
Manufacturers and suppliers use energy efficiency claims to sell their PV systems, but according to the Alternative Technology Association (ATA), an energy efficiency rating doesn’t tell you how the panels will perform. “The most important figures to look at are how much energy the system will produce each year, versus the money spent,” the ATA says.
What should you pay?
The standard one kilowatt solar panel system including installation costs around $10,000, before the solar credit rebates (See Solar Credits). 2kW systems cost about $20,000. After the solar credit rebates this will bring the costs down to around $6,000 – $7,000 for a 1kW system fully installed; and around $11,000 to $12,000 for a 2kW system – depending on where you live and the current price of solar credits.
Cheaper panels are becoming available, but experts warn that some don’t meet Australian standards or last as long as you’d expect. “If something looks impossibly cheap, there’s probably something wrong with it,” says Dr Muriel Watt, a Senior Lecturer at UNSW’s School of Photovoltaic and Renewable Energy Engineering.
Installation company, LJW Solar, agrees: “Price is a guide and is indicative of quality. We stay away from the cheap ones.”
Weighing up the costs
Domestic solar photovoltaic panels are currently the most expensive way to reduce your energy bill and greenhouse gases. Making your home more energy efficient is much cheaper. The industry states that at present rates, it’ll take 15 to 20 years for a system to pay for itself. But payback times vary widely depending on a range of variables.
Here’s what to consider to get an idea of your system’s payback time:
- Up-front cost of the panels and installation.
- Are you eligible for a rebate?
- Is your roof north facing?
- What will you be paid for electricity you produce?
- Does gross or net metering apply? (see feed-in tariffs). Net metering makes payback times more difficult to work out, as you don’t know what proportion of energy generated will be exported to the grid.
- System size: one kilowatt systems have the shortest payback time, as (if you’re eligible) the rebate’s value is a high proportion of the cost of the system.
- What are the Renewable Energy Certificates worth? (see below).
- The cost of upkeep. While proponents of solar panels say they’re reliable and require little maintenance, apart from occasional cleaning you’ll need to replace the inverter once during the PV system’s lifetime (an inverter usually costs several hundred dollars).
- Ideally, you’d also take rising electricity costs into account. Producing your own solar electricity is becoming more financially attractive as coal-fired electricity prices are expected to rise.
The Renewable Energy Target and Solar Credits
The Australian Government has set a target to achieve a 20 per cent share of renewables in Australia’s electricity mix by 2020. The Renewable Energy Target (RET) scheme, legislation currently before the Senate, aims to guarantee that we achieve this target by using a mechanism of tradeable Renewable Energy Certificates. RECs are electronic certificates linked to the carbon emissions saved by installing renewable energy systems.
The ‘Solar Credits’ mechanism will give additional support to households and businesses that install small scale solar PV, wind and hydro electricity systems by multiplying the number of tradeable RECs able to be created for eligible installations. Solar Credits replace the support previously provided under the Solar Homes and Communities Plan.
The level of subsidy will depend on a number of factors, including the price of Renewable Energy Certificates (RECs), the period in which you buy the panels, the location of the solar PV system and the size of the system. For example, a solar PV system in Sydney, Perth, Adelaide, Brisbane or Canberra will receive $5,150 for a 1 kW system and $7,750 for a 1.5 kW system installed in 2009, based on a $50 REC price.
A system installed in Melbourne or Hobart will receive fewer RECs as these areas have less sunshine so less renewable energy is produced. For example, a 1 kW system installed in 2009 will receive $4,400 and a 1.5 kW system will receive $6,650 based on a $50 REC price.
Government rebate means tested
The Solar Credits scheme is not means tested and anyone can apply – whether your are a household, business or community group – on or off the electricity grid. This however, is may change as the legislation passes through parliament. Best to check with the Office of the Renewable Energy Regulator (ORER).
Green Loans
As part of its Energy Efficiency Homes Package, the Australian Government announced its Green Loans Program. All Australian households (home owners and renters) earning less that $250,000 per annum are eligible for a subsidised Green Loan of up to $10,000. The loan is conditional upon having a ‘Home Sustainability Assessment’ by a suitably qualified assessor.
The Assessment will bring someone to your home to provide you with tailored advice on how to make your home more sustainable. This program provides households with access to low cost finance through a subsidised Green Loan of up to $10,000 for a maximum of 4 years to implement changes recommended in the Assessment Report, including the installation of solar panels.
Check out the other grants and rebates you might be eligible for.
A viable alternative
GreenPower is a much cheaper and easier way to buy renewable energy that gets fed into the national electricity grid. Choosing the GreenPower option with an electricity supplier will only cost between $4 and $7 extra per week on top of your normal electricity bill. That extra amount is much less than the cost of installing your own solar panels. To have the best effect, choose 100% Accredited GreenPower. Some companies offer a solar power option.
However, GreenPower is not without its own problems under recent legislative changes. The bottom line is if you want to buy GreenPower, wait until 2010.
Feed in tariffs
A feed-in tariff is what you’re paid for energy you feed into the national electricity grid. The key distinction between feed-in tariff plans, apart from their rates, is whether you’re paid for all the energy you feed in (called a ‘gross metering’ system), or just the difference between the amount of energy your household uses and what it produces (‘net metering’).
Gross metering
Gross metering is best for households because it means you’re paid the higher rate for all the electricity you produce. That system has been used in most countries where solar power has been successful.
Net metering
With net metering, you don’t know what you’ll get paid so it’s hard to estimate your system’s payback time — a disincentive to investing in solar panels. You’ll probably be paid less under net metering, because if your household appliances are being used at the same time as the panels are generating electricity (during the day), the ‘net’ effect is you’d be exporting little energy to the grid.
Feed in tariffs state by state
| State | Model | Rate paid (Per kWh) | Max size | Program Duration | Commencement |
|---|---|---|---|---|---|
| ACT | Gross |
50.05c (up to 10kW); 40.04c (up to 30kW);
|
Under 10 kW – premium rate; over 10kW – 80% of premium rate; over 30 kW – TBC | 20 years | March 2009 |
| QLD | Net |
44c+
|
10kW | 20 years | July 2008 |
| NSW | Gross |
60c
|
10kW | 7 years | January 2010 |
| VIC | Net |
60c (credit only)
|
5kW | 15 years | 2009 |
| SA | Net |
44c+
|
10kW | 20 years | July 2008 |
| WA | Net |
TBC
|
TBC | TBC | TBC |
| TAS | Net |
20c
|
TBC | TBC | 2009 |
| NT | Net |
45.76c (Capped at $5 per day, then reverts to 23.11c per kWh)
|
TBC | TBC | Available for 225 rooftop PV systems in Alice Springs. |
Source www.energymatters.com.au
Avoiding dodgy imports
There’s concern in the industry about the quality of some cheap imported panels. The problem for consumers is that it’s impossible to tell a good panel from a bad one just by looking at them. You should ensure that any panel you consider has met Australian standards.
And while nobody wants to spend money on cheap panels that don’t last, a more serious concern is over their safety.
Spooner says the safety risks resulting from poor quality panels and wiring could even include electrocution or house fires. It’s important to check that your installer is accredited.
The standards for solar panels and their wiring are currently being tightened. A list of panels that are eligible for the government rebate isn’t available from the Department of the Environment, Water, Heritage and the Arts , but manufacturers must provide the Department with proof of their certification by accredited labs to Australian standards, before the panels are eligible.
The Business Council on Sustainable Energy has published a list of all solar panel models that meet Australian standards.
Checklist and more info
Checklist
Before buying a solar panel:
- Improving the energy efficiency of your home can save you up to 30% on your bills – turning off appliances, using the dishwasher when full and purchasing energy-efficiency appliances.
- Check if the roof faces the right direction. Only north-facing panels will produce their full capacity.
- Find out what local council approval is needed. Increasingly, local councils also have advisors that can assist you with making the best decisions on solar.
- Determine what energy reduction you would like to achieve. Assess what energy you currently use and the capacity panel you need (and can afford).
- Do the sums to estimate the system’s payback time and the environmental difference it will make.
- Identify various providers/installers available. Seek quotes. Make sure the installer is accredited and that the panel meets the international standards.
For more information
- The Department of Climate Change has rebate information and application forms, and information about low-interest loans for households buying energy- and water-saving devices (including solar panels).
- The Alternative Technology Association (ATA) is a not-for-profit organisation providing independent information and advice on sustainable living. Its ReNew magazine recently published a solar panel buying guide.
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