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But is now the right time to install solar panels? While some people may worry that the time isn’t yet right for solar, others are concerned that they may have already missed the boat. Let’s look at the past and the future. You’ll see why the present is a fantastic time to invest in a solar PV system in Australia.
First, let’s talk about the recent history of solar power in Australia. Back around 2009-2011, various Australian jurisdictions (mainly the federal and state governments) were offering generous incentives for panels.
Although these incentives have all decreased, solar system prices have also come down significantly. In a nutshell, this means that returns and payback times for a system weren’t necessarily better for a system installed five years ago – even at the peak of the solar incentive feeding frenzy.
On the federal level, there’s an up-front ‘discount’ off the cost of a solar installation under the Renewable Energy Target. This incentive saw some steep drops year-on-year for a couple of years, but for the last 4 years or so it’s been stable and hasn’t changed much. The federal incentive knocks about 30% off the cost of installing a system (although this amount will vary with the details of your situation).
From 1 January 2017, the amount of this subsidy will fall by about 6-7%, and will continue to fall slightly every following year until it drops to zero in 2032 – unless the Renewable Energy Target is increased (which is unlikely at this point).
A feed-in tariff is an incentive that pays solar system owners for the energy that they send into the grid. This helps to improve the economic proposition of going solar by ‘artificially’ increasing the value of the solar energy produced, in this way it helps to reduce system payback times.
At one point in time, virtually every state in Australia had a generous feed-in tariff on offer. While many of these incentives still exist in legacy form, they’ve all closed to new applicants.
Unfortunately, modern-day feed-in tariff rates are now as low as 4-6c per kilowatt-hour (kWh) rather than the 30-60c/kWh rates once on offer. So sending your solar into the grid now is akin to wasting it.
If you go solar now, instead of sending your power into the grid, can use it yourself because ‘self-consuming’ it will save you more money.
Using your solar energy will save you 20-30c/kWh, depending on how much you pay for electricity. If you’re unsure of your current position and whether you should be using or sending your solar energy, check out this blog post on selling or using your solar.
Does the lack of incentives mean that solar is no longer worth it? Definitely not. Even without these incentives, solar payback periods can be as low as 3-5 years. There is a trick to keeping payback periods short: you should use as much of your solar energy as possible.
The perfect setup
carbonTRACK can help you get the most out of your solar system. Learn how.
8 ways you can use carbonTRACK
While some people may feel (mistakenly) that the solar ship has already sailed, others believe that it hasn’t arrived yet. They think that new technology developments are just around the corner, and that making their investment now would leave them stuck with obsolete technology for the next 20+ years.
Solar costs over time. Historic solar PV system prices from 2012 to present. (Via Solar Choice.)
The fact is, however, that the solar market is incredibly stable. Installation prices for systems (in Australia) with decent quality components have been hovering around $1.60-$1.70 per watt ($/W) for the last year.
When it comes to solar panels, most efficiency and costing improvements that make their way onto the market these days are incremental, and there are no dramatic price reductions on the horizon. (In fact, the Australian solar market is already one of the most competitive in the world.)
Meanwhile, the rates that households pay for energy from the grid continue to increase, meaning that every day without solar is a missed opportunity for savings.
Right now, solar panels are already a great investment for your homes or businesses – all you need is some unshaded roof space, a modest budget (or access to financing), and some electricity demand in your building.