At time of writing, the Senate is opposing the changes and it appears possible that the RET will be retained for existing projects, but closed to new producers. If this happens, the cost of residential solar hot water heaters and solar panels may increase by to 50 per cent, raising the question for consumers: is now the right time to install solar power or hot water act?
The economics of solar hot water are relatively simple. The initial purchase price is slightly higher than for conventional hot water, but the cost of running the system is much lower. The running cost isn’t zero, because when the weather is cold enough or cloudy enough, solar hot water systems use some electricity or gas to boost the temperature. For most consumers, the savings don’t necessarily justify replacing a working system, but for those in the market for a new or replacement system, solar hot water may make financial sense.
The economics of solar panels are more complicated. To use my own household as an example, my wife and I spent about $7,000 to purchase a 2.4kW system in December last year (a bigger system than we actually need). When we use more power than our panels are generating, our power company charges us around 27 cents per kilowatt hour (kWh). When our panels generate more power than we use we export the extra to the grid, and the power company pays us around 5 cents per kWh – less than one fifth of what they charge us.
To get maximum value we try to arrange our activities so that we use our own power. This is not always easy. Solar panels produce the most power during the middle of the day, when the sun is strongest, and we mostly manage to run the washing machine and the dishwasher during the day. But the timing of other activities is not so flexible, e.g. cooking the evening meal, heating and lighting. We use the bulk of our power early in the morning and in the evening, when the panels are producing little or nothing.
To date, our panels have produced almost as much power as we have used, about 2000kWh. We exported about two-thirds of that, and about two-thirds of the power we used was imported. Without the panels, we would have imported 2000kWh. Instead, we’ve imported 1315kWh, saving about $165, and we’ve exported about 1245kWh, earning us about $75. Over a full year this will be a return of just a bit over $500.
It’s not going to make us rich, but it pays for itself, and we know we’re doing something very real to reduce our carbon footprint. A smaller system might have been better value – it would have cost more per kilowatt of power generated, but we would be using a higher percentage of the generated power. To purchase a similar system today would be cheaper, perhaps 10 per cent cheaper, although if Tony Abbott has his way it will be significantly more expensive sometime soon. If you are thinking of getting solar power, it’s possibly better to do so sooner rather than later.
We didn’t just get solar panels. We also replaced all our old downlights. What a lot of people don’t realise is how expensive lights are to run. A standard 60W lightbulb that might cost two or three dollars to buy will use about $23.60 worth of electricity a year, if run for four hours a night. A 100W lightbulb will use $39.50 worth. A 15W energy efficient bulb might cost $6 or $7 to buy but it will only use $5.90 of power per year. It felt odd throwing out perfectly good light bulbs, but it was the sensible thing to do. Light bulbs cost more to run than to buy.
Sometime in the next year or two, we plan to get batteries for our solar system. Then we’ll be able to store what we generate during the day and use it at night, instead of exporting it at 5c/kWh and reimporting it at 27c/kWh. Such batteries are available, they’re not cheap – but they are getting cheaper.
