.Solar state of play
Installing a solar system is not cheap; the rewards come over time as the system gradually pays for itself out of the energy savings made and the money paid to you for the solar energy generated.
On this page we take a look at solar incentives such as:
In a bid to find out how long your investment might take to pay for itself, CHOICE asked the Alternative Technology Association to calculate approximate payback times for a 1.5 kW and 3kW solar system in each state. For more information, see How the ATA calculates.
And for more information on Solar, see Power and energy.
There was a time not so long ago when a solar photovoltaic (PV) panel system could pay for itself in under five years in several states in Australia (CHOICE March). But with the winding back of feed-in tariffs (FiTs) and the reduction of the multiplier for small-scale technology certificates (STCs), most new panel installations will take much longer to pay off.
Previous government grant and rebate systems have been replaced by two main financial incentives. There’s no longer means testing for eligibility.
This is the rate you’re paid for electricity that grid-connected panels contribute to the local network. Feed-in tariffs around the country have been cut, so it is best to get in early or miss out. The NSW and ACT FiTs were scrapped this year. WA’s FiT was also recently culled, and the current buyback rate of electricity retailer Synergy is 7c/kWh. The Victorian premium FiT was closed to new entrants in September 2011, and there is some uncertainty about what mechanism, if any, will replace it. In the meantime, the standard FiT is 23c/kWh. SA’s FiT is approximately 22c/kWh.
There are two types of FiTs: “gross” and “net”.
Gross feed-in tariffs applied only in ACT and NSW, where households are paid for all the electricity their panels produce, irrespective of their own domestic electricity consumption. However, the feed-in tariffs in both were scrapped in 2011, so only those who were already connected to the grid are able to take full advantage of them.
Net feed-in tariffs apply in the other states and territories. You’re only paid a higher rate for surplus electricity fed into the grid after domestic use is subtracted. If your system produced 3000 kWh, for example, and you used 2500 kWh of electricity in your home during the day (the time when your PV system was generating power), the higher rate is only paid for the 500 kWh difference. The current net feed-in rates are:
- Northern Territory: 45.76 /kWh, limited to the first 225 homes in Alice Springs.
- Queensland: 50 cents/kWh
- South Australia: 22 cents/kWh
- Tasmania: 20 cents / kWh
- Victoria: 23 cents / kWh
- WA: 7 cents / kWh
Under the Federal Government’s Solar Credits Scheme, eligible households receive money for small-scale technology certificates (STCs) created by their PV systems. STCs were formerly known as renewable energy certificates (RECs). The government uses these certificates as evidence of Australia’s contribution towards our renewable energy targets.
Households are currently paid three times the STC market price, a market subsidy that replaces the $8000 grant that was previously available. From January 2011, there have been several important changes to the scheme that will affect the amount you will receive for your STCs. 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 STCs at $40. However, the price you get will depend on how you choose to sell your STCs, and will likely be closer to $25 per STC.
The most common option is to allow someone else - most likely the installer - to sell your STCs. 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 second option is to sell the STCs 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 a better price.
Currently, the scheme applies a multiplier of three to the number of STCs 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 STCs over 15 years in sunny locations such as Adelaide, Brisbane, Cairns, Canberra, Perth, Sydney and Townsville.
However, the scheme is scheduled to be reduced. The multiplier will be reduced to two from 1 July, 2012, and will phased out in 2013.
- The calculations assume a system size of 1.5 kW, a system cost (fully installed, before payment for STCs) of $4.50 per watt.
- The STC price is $25, and the multiplier is 3.
- The zones used for the purpose of STC calculation were: NT: zone 1-2; Qld: zones 1-3; SA: zone 3; Tas: zone 4; Vic: zone 3-4; WA: zone 2-3; NSW: zone 3; ACT: zone 3.
- The electricity export rates for net feed-in jurisdictions assume households export 50% and 75% of the electricity they produce, for NSW and ACT 100% export.
- The system degradation rate is 0.5% per annum with 20% generation losses and inverter replacement (after 15 years) costing $900 per kW.
- The annual increase in retail electricity price is assumed to be 5%.
- The opportunity cost of money that could have been invested instead is 6%.
- The payback table is approximate as it depends on your inputs and assumptions. Allowances should be made for the decline in panels’ output over time and non-optimal placement and angle.
- Annual generation for the two locations within each state are calculated using the following formula: Annual generation [MWh] = System Size [kW] x PSH x 365 x (100% – Generation Losses) / 1000 (Where: Generation Losses was 20%