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Solar panel incentive schemes do pay - eventually.

More and more Australians are installing solar panel systems thanks to generous financial incentives but you could be waiting a long time for your investment to pay off.

CHOICE asked the Alternative Technology Association to calculate approximate "payback times" for a 1.5kW solar system in each state. The verdict is anything from five to 45 years, depending on where you live.

"Several companies advertise payback times of two to three years for small systems but such claims are misleading as they ignore a number of potential costs and changes," says CHOICE spokesman Brad Schmitt.

"For example, no allowance is made for the decline of a panel's output over time or the likely need that at some stage key equipment such as the system's inverter will need replacing."

CHOICE found NSW and the ACT have the shortest pay-back times (5-6 years), largely due to a "gross" feed-in tariff incentive where households are paid for all the electricity their panels produce, irrespective of their domestic power consumption.

In the other states and territories, "net" feed-in tariffs apply where you're only paid for surplus electricity fed into the grid after domestic use is subtracted.

Under the Federal Government's Solar Credits Scheme, eligible households also receive rebates for Renewable Energy Certificates.

"On the basis households are currently paid five times the REC market price, you can receive as much as $6500 in sunny locations such as Adelaide, Brisbane and Sydney or around $5460 in Hobart and Melbourne," says Schmitt.

"When you add that to the less generous tariff system that applies outside NSW and the ACT, the payback time for Tasmania is estimated to be as long as 45 years."

CHOICE warns that while the NSW scheme is the most generous, there's uncertainty around how long these incentives will last.

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