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Should I get solar power for my home?

Should I get solar power for my home?

As energy bills continue to increase across Australia, you may be wondering what you can do to reduce this costly utility. If you don’t have the patience to monitor every member of your household and what they’re leaving plugged in, or if you’re looking to reduce your carbon footprint, you could consider getting solar power for your home.

What are the benefits of solar power?

  1. Environmental benefits

Electricity emissions make up a third of Australia’s greenhouse gas emissions, and this number is on the rise. One of the main reasons people switch to solar energy is to reduce their carbon footprint.

Solar energy panels are installed on your roof and used to convert the sun’s energy into electricity. This is a green, clean and renewable energy source as it does not produce greenhouse gases and other pollutants.

  1. Solar panel “rebates”

When considering making the switch to solar energy, a major factor that holds people back is the installation cost. These figures may be intimidating, however it’s worth keeping in mind that you may make the money you spent on installation back in savings over time, and there are still solar panel “schemes” available that help reduce installation costs.

The price of a solar system depends on the size of the installation, and this can be measured in how many kiloWatts (kW) are installed.

According to SolarQuotes, the approximate cost of a “good quality Tier 1” solar system in Australia is:

  • 3kW : $4,000 – $6,000
  • 5kW : $5,000 – $8,500
  • 10kW: $12,000 – $16,000

When it comes to solar panel financial assistance, the Australian Government’s Clean Energy Regulator website recommends the Small-scale Renewable Energy Scheme.

This scheme creates a “financial incentive for individuals and small businesses to install eligible small-scale renewable energy systems such as solar panel systems, small-scale wind systems, small-scale hydro systems, solar water heaters and air source heat pumps.

“It does this through the creation of small-scale technology certificates which Renewable Energy Target liable entities have a legal obligation to buy and surrender to the Clean Energy Regulator on a quarterly basis.

“Small-scale technology certificates are provided ‘up front’ for the systems’ expected power generation over a 15 year period or, from 2017, from the installation year until 2030 when the scheme ends.”

SolarQuotes explains that these certificates give you back roughly $630 per kW. Therefore if you wanted to install a 3kW solar panel system, you would get approximately $1,890 back.

Example:

Jessica installs a 3kW solar system at $6,000. She gets $1,890 back through a small-scale technology certificate, with the total cost of installation now $4,110.

Further, if you generate extra electricity that your household doesn’t use for that quarter, you may be eligible for electricity feed-in-tariffs. This allows you to be compensated for any electricity you generate and feed back into the grid. This is state dependent so check out whether you qualify here.

  1. Energy bill savings

If these government financial incentives aren’t enough to help you make up your mind on solar panels, the most obvious benefit to weigh up would be potential energy bill savings.

While the average energy bill is a fairly subjective number, we do know that they are increasing in cost across the country. Energy Australia released figures showing that from July 1 2017, electricity costs in New South Wales grew 16.1 per cent, or $282 annually. They also grew 15.9 per cent of $313 annually for South Australia and 3.5 per cent or $61 annually for Queensland.

Take a look at your latest energy bill and find the current price per kWh you pay. Once you have this figure, you can use a solar power savings calculator to determine potential financial benefits.

Example: Jessica lives in NSW, is installing a 3kW system and the out-of-pocket cost quoted for her solar system is $6,000. She currently pays 25c per kWh with her electricity provider.

  • In one year she will have saved approximately $573
  • She would have made back the money spent on solar panel installation in 9 years
  • In 30 years she will have saved approximately $48,666

What if I can’t afford solar panel installation out of pocket?

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There are special personal loans available that help consumers to make environmentally friendly products, called ‘green loans’. These are typically used for solar panels or hot water systems.

There are a number of green loans available, including the Community First Credit Union Green Loan. To find the most competitive loan product for your specific financial needs, it’s worth utilising RateCity’s personal loan comparison tools.

However, you should always keep in mind when taking out a personal loan that they will always cost you in the form of interest and/or fees.

Pros and cons of solar power for your home

As you can see there are a number of factors to consider before installing solar power into your home. While there are environmental and economic benefits, you also need to weigh up the potential downside to this process.

If you’re not planning on staying in the home the solar panels are being installed in for the length of time it takes to make your money back in savings, it may not be worth it for you. It is an investment, and one that you’ll reap the benefits from long term, rather than immediately.

And worse, your neighbours may complain to the council about glare from your solar panels and demand they’re removed, even if you are planning on staying in your home long term. There’s even been reports of neighbours building upwards and blocking direct sunlight from hitting your solar panels, and Australian laws protecting your right to direct sunlight are murky for solar power.

Further, not every roof can handle having solar panels installed, and not every wallet can handle the upfront costs. These are all factors you need to keep in mind before making the decision to install solar power.

Pros
  • Reduce carbon footprint
  • Potential savings over time
  • Government financial assistance
Cons
  • Expensive to install
  • Not worth it if you move home
  • Issues with neighbours may arise

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This article was reviewed by Property & Personal Finance Writer Nick Bendel before it was published as part of RateCity's Fact Check process.

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