Is Installing solar Power Worth it?

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Are you wondering whether installing solar power is worth it?

A little internet research provides hundreds of pages of solar power companies reassuring you that it is totally worthwhile. But there is a bit of a conflict of interest there isn’t there?

I thought those considering splashing out may appreciate my consumer’s point of view.

The Aussie Doc household is now on our second set of solar panels. Having just been through the process of replacing our panels, it’s a great time to share our experience.

The Cost of Electricity is Rising

You would have to be living under a rock to fail to notice the headlines complaining about rising power prices. The graph below is data from the ABS on the increase in average household electricity costs since 2009.

In 2011, when we installed our 1st set of solar panels on our 1980 house, the calculations told us it would take around 7 years to break even. We purchased a “cheaper” system at the time, although it certainly didn’t feel cheap! It was a big outlay and we were concerned the calculations provided by the solar power company may prove to be exaggerated.

The significant increase in price since 2011 actually would have shortened the time it took to break even. We were lucky enough to time this well enough to secure a 44c feed-in tariff until 2028 (unfortunately no longer available). We didn’t realise what a huge bonus this was at the time, but feed-in tariffs now are usually 7-16c per KWh.

Initially, we were completely bill-free (or even paid a little from the electricity company!). Over 3-4 years our bills started to creep up, reflecting the increase in prices. The bills were still far lower than our friends until this year when there was a sudden spike in our bill from $300/quarter to $500.

After my brave partner got on the roof to check it out, turns out one of the panels was broken. Discussion with solar companies in the days after revealed that solar panels are far more efficient now than those produced in 2011. Our solar panels were pretty much at the end of their lives after 10 years. But we could replace the system and still take advantage of our old feed-in tariff agreement.

Cost of a Solar Power System

Prices of solar power systems have come down significantly. In 2011, our 4KW system cost around $9000, and this was from a cheaper company. Ten years later, we have had to replace it with a new 4KW system for $5563.

This is a pretty small system to install. We have an advantageous feed-in tariff that we can continue to take advantage of until 2028 as long as we don’t put a bigger system in.

It is also more expensive than many of the prices listed because we chose panels with micro-inverters. Each panel has its own micro-inverter rather than all panels connecting in series to an inverter. The advantage of this is each panel acts independently. If one is broken, the other panels are unaffected. It also means we can monitor the electricity production of each panel, helping to identify and pinpoint malfunction.

Price range online in 2021-

A 6.6KW system will cost $5200-$9000

A 10KW system will cost $8000-12000

Pricing should include panels and installation.

Small-scale technology certificates are rebates offered per panel installed. Your solar panel company will generally organise these and provide a discount on the quoted price. You can work out your STC rebate eligibility here.

The STCs are scheduled to reduce the rebate every year until the rebate completely ceases in 2030. They vary in generosity depending on where you live. These discounts are already included in all the prices above.

Electricity Feed in Tariffs

Feed-in tariffs vary according to your location and energy company. You can review them here. Unfortunately, feed-in tariffs of 40c+ are no longer available.

If you signed up for a fabulous feed-in tariff before 2012, you may be able to continue using this if you have to replace your panels.

For new solar systems, you can find out feed-in tariffs in your area. The price you receive for electricity is now usually less than you pay the same company for electricity. For new installers, it is better to use as much of your own electricity as possible due to this imbalance.

Installation of Solar Power

This should be organised by your solar power professionals. If you need roof repairs, get these sorted before solar power installation day.

We discovered the roof under our old panels had deteriorated. The solar power company we used identified it and gave us time to get it fixed before they completed the installation.

How Many Solar Panels Do You Need?

Look at your electricity bills. What is your daily usage? How large is your roof? What is your budget? Your solar panel company will be able to help you work out the optimally sized system for your situation.

Remember to allow extra if you may purchase an electric car in the future, are getting a pool or spa or have kids that will one day become teenagers!

The Aussie Doc household stuck with a 4KW system to maintain the 44c feed-in tariff. After this runs out in 2028, it is likely we will upgrade our system and add a battery.

Choosing a Solar Power Company

There are a lot of companies selling solar panels. They beat each other down on price, which is great for buying a system at a reasonable price. But it also means many of these companies seem to go broke quite often.

It’s not uncommon for households to realise there is a problem with their solar panels, only to find despite the system still being under warranty the company no longer exists.

For this reason, and the desire to have good quality panels that last as long as possible, look for longstanding solar power companies with a good reputation and customer service reviews.

Find out which solar panels they provide. Are they made by a good manufacturer? How long does the warranty last?

Our solar panels were out of warranty. We brought cheaper panels due to financial constraints at the time but paid in cash. The solar panels provided good value.

We asked for quotes from a couple of local companies. Those that no-shows for the quote can be ruled out immediately.

You can gain an understanding from the solar power company representatives about your options, and cost-benefit. They should be able to provide all this for you. Compare the options available and make your choice.

Is It Worth Borrowing to put in a Solar Power System

With it taking 3-5+ years to make your money back, it is generally not worth going into debt and incurring interest for in my opinion. If you do decide to borrow, Canstar recommends green loans over the other deals the solar power companies offer.

Are Solar Power Batteries Worth It?

There is now a range of solar batteries on the Australian market, including the Tesla solar.

Many households use electricity primarily in the evening when solar panels are not productive. Particularly for those with pathetic feed-in tariffs, the ability to store excess electricity produced during the day to use at night can be powerful in reducing bills.

Others like the idea of being completely off-grid, for environmental reasons.

Many want a battery system as backup during power outages, so they don’t need to annoy their neighbours with a noisy generator.

Solar batteries are still very expensive, and will likely at least double the cost of your solar power system. It is still worth getting quotes with and without a battery, but many will find the expense too great.

Even if you’re not ready to commit to the expense of a battery right now, ask your solar power provider if the solar power system they can install will be “battery ready”. If a drop in battery price occurs similar to the way panel prices have come down, it could soon be very worthwhile installing a solar battery.

Efficient Solar Power Usage

To get the most out of your system (and minimize your bills)

  1. Increase power production – Maintain your solar panels with annual inspection and cleaning to get rid of soot and grime which may reduce efficiency. Position panels to take advantage of maximal sunlight (at the time of day you use more electricity ideally).
  2. Reduce power use – Always to reduce bills. Turn off the LEDs. Fill the dishwasher and washing machine before turning on. Switch everything off standby
  3. Time power use – You will want to use electricity when it is cheaper. For most with solar panels installed in the last few years, that will be using electricity during the day. So time dishwasher and washing machine cycles for daylight hours. For those still enjoying a high feed-in tariff, it’s more efficient to use electricity after dark.
  4. Monitor electricity production. With our 1st solar system, we only realised there was a problem with the panels when we received the quarterly bill. With our new solar system we can monitor electricity production (hourly!) via an app. We have already used this to identify shade that needed to be removed from one of the panels.

I Solar Power Worth It?

With electricity prices continuing to rise, and return on investment often 3-5 years, solar panels are worthwhile for the majority.

Solar batteries are still quite expensive and the cost-benefit will vary. If installing a battery is too expensive at the moment, get a battery ready system.

Solar power is an expensive initial outlay. I don’t think it’s worth going into debt for solar panels. If you do, you are better off with a green loan or borrowing from your mortgage (and paying it back fast).

As well as the financial benefits, it’s pretty awesome environmentally to use solar. Being as self-sufficient as possible means you are less vulnerable to financial shocks and unpredicted price hikes.

Your wealth accumulation journey starts as soon as you make the first step. Subscribe to Aussie doc for a weekly email to keep you up to date on track to your goals.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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