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How quickly do solar panels pay for themselves?


#41

The ATA used flat rate solar FiTs in the calculations however it’s worth highlighting that Queensland, Victoria and New South Wales are introducing time-variant FiTs (FiTs) where different prices are paid for exported solar at different times of the day.

AFAIK, no retailers have introduced variable FiTs, and so far I don’t think there is any real indication that any plan to in the near future. In Vic at least, it is only a voluntary arrangement- much like paying any FiT at all is voluntary in NSW - some people get nothing for exported energy


#42

… you’d think, that power is power - at the street level it’s worth x cents per kW/h - it should be worth that to whoever gets it there, the guy in the house with the panels, or the corporation we sold off to some other country.


#43

Hi, have you considered you have just one faulty panel that is bring the rest down to its level (I’m by no means an expert but have heard that shading of one panel can do this too depending on installation/inverter and the like).


#44

You don’t sell it to a wholesaler though, its going through a middleman/retailer etc.
AEMO also tries to manage wholesale production to keep things balanced (ie if you’re producing power when no-one needs it they technically don’t even want it on the grid prices can go negative).


Its something like 5 min increments from memory

I have worked (software eng) on programs for foundries (they use a lot of electricity) last time I was around one of their managers was saying they had an RDO and the price dropped to the point they’d be earning 10k an hour based on their consumption (they were frustrated). Other times they shut things down early because prices get to the point it eats their profits.


#45

Feed in Tariffs Oct 2018

Noted several retailers are now offering 2 year flexible contracts with rates of between 16c and 20c (AGL) per kWh exported. Of course there is no guarantee on the daily connection charge or supply charge for the same period. You can opt out to another retailer though at any time which may help to keep any other increases down.

In pricing Solar PV for our property several solar PV retailers have suggested the feed in tariffs have gone up from 8.5c in AGL’s instance to discourage battery up take. The cost of Battery power is down to approx 20c-25c per kWh which compared favourably over ten years for some users. A suitably sized hybrid systems could take 90% of a customers demand off the grid. Not a good trend for retail turn over! Although they still get a dollar a day for nothing if you stay connected.


#46

Last I checked, a couple of years ago, it was $1.50/day around here.


#47

At $1.50pd or higher the option of off grid must be attractive for many customers with $540pa of savings on top of generation benefits.

Standard supply charges here SE Qld are AGL $1.09 per day and Origin $1.24 Both gst included to the nearest cent. (Per actual billing)
AGL usage peak rate is 28c near enough per kWh and Origin 27c.

Both typically show all rates and hence costs on the bills excluding gst. The split up sub-totals don’t look that big. Gst is a one line add in at the bottom of the bill.

It has been interesting listening to how each sales rep explains payback. The assumption is the money you outlay to purchase a PV system is free money and there are no CPI or inflation effects. Near enough if you are talking 2 to 3 years. Not so reliable if the period is five years or longer.

All are spruking as big a system as the roof and your retailer will permit. The pitch is the pay back benefit due to the recent jump in feed in tariff makes your electricity bill zero. For them of course is a $7,000 sale instead of a $3,000 sale. For our usage we would export 85% or more of our PV generation.

Curiously they would rather sell a $5,000+ Solar PV system than a $13,000 solar + battery system. Are they genuinely looking after the consumers best interests?


#48

They are in business to sell electricity, and sometimes hardware. Why would they worry about consumers beyond their timely payments, and beyond the basics of their ‘plan’? it is all about dividends and growth and the financial community stops with those concepts well before customers best interests, or have I missed something from the RC?


#49

Four years ago we installed 10 panels. I estimated given our energy usage it would take 4-5 years. However since then the price of electricity has risen I we have paid off these panels. We installed another 10 and a battery, The new panels are 20% more efficient and electricity prices continue to rise. I keep a spreadsheet which includes cost of power and feedin tariff. As others have mentioned what you can’t factor in easily is how your power usage changes, eg we run air cons and run them during the day while the sun shines to keep the core of the house cool.


#50

As an aside, probably one of the most interesting and I think beneficial aspects of alternative power is how it makes us ‘think’ about power and power usage. That’s how it is for me anyway, and your comment seems to line up - we spend some money with the intention to save, and the panels do save us a lot - but there’s a bit of a ‘game on’ mindset where thinking smarter to maximise the return also benefits.

I’ve had panels for a year now, have been in credit for nearly all of that, and got a bill yesterday for nearly -500$. The gains won’t be so much over the summer months with the relentless sun but I don’t expect to slip based on the numbers from last summer. Two years and a couple of months is my expected payback - well on track.

When I talk to people who don’t have solar, they seem to just not ‘get it’.


#51

I suspect this be the assumption driving many of the comments in this thread; people are ignoring the time value of money. Unfortunately, net present value (NPV), future value (FV) and similar accounting concepts are… complicated. Excel has functions for them, and tries to make them simpler, but does a fairly poor job - and you have to guesstimate future interest rates.

To be even more thorough, you need to consider changes in purchasing power - either as an individual or economy-wide through the Wage Cost Indicator (WCI).


#52

Less complicated if you are hiding it under the bed - not that anyone does of course ! :rofl:


#53

This is a simple way to approach it if you do not have access to a computer with sophisticated economic modelling applications. It is probably as accurate for TVM as most share brokers predictions are for ‘the market’.

edit: what is TVM about for the layman?

and re the math, unfortunately this site requires a registration for the full story, but what is presented in the teaser is pretty good.


#54

Do most consumers who might benefit from Solar PV power fall into one of four groups?

  1. Renters who depend on the landlord to upgrade.
    Having been on both sides of this fence, I thought landlords would be rushing out to install PV. They add value, you can claim interest costs and depreciation. The property can be made more marketable and the rent a premium. Am I missing something here? Yes - something in the heads of landlords perhaps and how retail billing works?

  2. Home owners with spare cash or surplus equity to invest.
    This topic appears to have focused on the financial considerations for this group. Enough said for now.

  3. Home owners on tight day to day budgets with no spare cash or surplus.
    Do these consumers have suitable options? We were offered a contract by Origin to install solar on a townhouse with a monthly payment scheme. No additional finance application requirements other than being a current customer. The total cost was a premium, however there was still a net benefit. It just took longer for payback and you were less likely in the first years to be zero cost. You still saved from day one.

  4. The rest who own or rent properties that are not suitable for a PV install.
    Do green retail suppliers offer a genuine cost benefit to these customers compared to any other option?

Pay back may differ for each group and will give a different answer?

Should Choice consider a more in depth look at how the financed options from the retailers and larger installers stack up? At least two of the installers who quoted as recently had finance options, subject to application and approval. We did not need to go there so can’t comment further.

As for rental properties, what are the real reasons tenants are not seeing the benefits of solar?


#55

It’s the same method as used by Excel, and by any financial planner. The major problem is that over time, and inaccurate estimates of inflation or investment returns grow ever-larger. Subsequently, accountants are required to re-estimate the expected asset yields of financial assets each year.

(This is a ‘relatively’ recent change to accounting standards, which are ‘improved’ almost every year. A cynic might suggest that in all professions, constantly changing ‘standards’ are a major source for continuing employment.)


#56

Most aspects of life are complex multi-variate, simplistically the world of differential equations not linear algebra. We both know that. Expecting one prediction with one set of initialisers to be accurate over multiple years would be like running the daily weather forecasts for the next 5 years this morning and expecting them to hold accuracy into the future. (Major weather services run multiple forecast models each day to account for ever-changing conditions.)

Are you not also considering the regular changes to tax laws, subsidies, STCs, and so on? :laughing:

My reading has been that most evolutionary accounting standards have been carefully crafted to make ‘the money’ and ‘their politicians’ and what they do for each other look as good as possible to the rest of us. :roll_eyes:


#57

Wut’s dat you sayin’?

:wink:


#58

I think he’s saying the world is complex like differential equations - I wish mine was that simple !! :rofl: and I’m certainly not a maths guy …

Lets take a case in point - I had the choice a year ago to go solar, and I did. Talking round figures, 5k$ to go 5kw on the roof. Lets say my cost of power per year was $2k5. Now, almost exactly a year down the track, I’ve paid one small power bill of $0k1 and am $0k5 in credit with my power corporation. To me, that suggests I am $2k9 into my $5k payback - minus the interest I’d have earned on $5k in a year - well I wouldn’t have earned any interest on it but I’d rather not go into that :slight_smile: but I could have. I’d worked on a payback of a little over 2 years, which wasn’t hugely critical, but nice to think of. Another thing I worked on is the intangible of not having the regular payments to worry about, by putting some inactive money into panels/etc.

In a practical sense is it much more complex than that? I could slice and dice and come out with much finer grain detail, but to me it just comes under the column of ‘on track’, not ‘damn I screwed that up’. Am I missing something? Don’t hold back now !!!


#59

Sorry @draughtrider - I suspect you may have misunderestimated my comment’s intent. (I am an accountant by trade.)


Edit for following comment (rather than creating an extra reply):

DOH!


#60

Maybe - but I guess my question following went back a few comments …