Solar panels buying guide

Install a system that produces carbon-free energy and insulates you from rising coal-fired electricity prices.
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03.Weighing up the costs

Domestic solar photovoltaic panels are still a costly way to reduce your energy bill and greenhouse gases, because of the up-front costs. Making your home more energy efficient is much cheaper.

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.
    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

Renewable Energy Certificates (RECs) are electronic certificates linked to the carbon emissions saved by installing renewable energy systems. Owners of solar power systems can sell RECs, which effectively gives additional financial support to households and businesses that install small scale solar PV, wind and hydro electricity systems. From 1st of January 2011, there has been several important changes to the scheme, including:

  • The renewable energy market has been split into two parts - the Large‑scale Renewable Energy Target (LRET) and Small‑scale Renewable Energy Scheme (SRES).
  • SRES will cover small generation units, such as rooftop solar panels and solar hot water (such as the ones discussed in this article).
  • The RECs created from small scale solar power units may be referred to as Small-Scale Technology Certificates (STCs).

There are also some important changes to the amount you will receive for your RECS. In the past, the price of these certificates was governed by supply and demand, which meant price fluctuations. To make it easier for people to estimate the cost of installing solar power, the government decided to fix the price of RECs at $40. However, the price you get will depend on how you choose to sell your RECs.

The most common option is to allow someone else - most likely the installer - sell your RECs. This may then be applied as a discount to your installation costs. The benefit is that the process is hassle free, which means all the paperwork is taken care of for you. The downside is that you probably won't get the full $40 value of the RECs, and you will still need to shop around and find a registered agent to make sure you are getting the best value.

The second option is to sell the RECs yourself, which involves considerable paperwork, applications and a few fees. Depending on the number of buyers and the time it takes to complete the process, it may be a couple of months after installation until you receive your funds. There's no way to tell exactly how long you could be waiting, which means unless you have the capital you might find yourself out of pocket. However, you will get the full value for the RECs.

Currently, the scheme applies a multiplier of five to the number of RECs your system can produce, and it allows you to claim the certificates you can potentially earn over the next 15 years today, regardless of if you later decide to sell the house or in the event of damage. A typical 1.5kW system is expected to produce about 31 RECs over 15 years (or 155 when multiplied by five as per the Solar Credits Scheme) in sunny locations such as Adelaide, Brisbane, Cairns, Canberra, Perth, Sydney and Townsville. Assuming you get the full value of the RECs, this means a return of approximately $6200.

However, the scheme is already scheduled to be gradually reduced. The multiplier will be reduced to four from 1st July, 2011, and it will be reduced by one every year until the multiplier is phased out in 2014. There's a lot of information to consider when it comes to the RECs solar bonus scheme, but don't let it overwhelm you. You can find out more information in this step-by-step guide from the Office of the Renewable Energy Regulator (ORER).

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.


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