If you asked me how much solar you should put on your roof I would say, “As much as you can without doing something stupid like borrowing from the mafia or doubling up on solar panels by stacking them on top of each other.” In other words, install as much as you can without making problems for yourself. Because rooftop solar power is often the best investment households can make, I generally recommend installing as much as will easily fit on your roof or your budget allows.
The reason I can give this advice is because good quality solar power has fallen so far in cost households with unshaded roofs can usually save money with a large system regardless of how little solar electricity they may consume themselves.
In the past when solar energy was more expensive it could make sense to “right size” a system based on household electricity consumption rather than going with what easily fits on the roof, but those days are gone except for those with the tightest of budgets.
Despite the current low cost of solar there are still people — including some installers — who think it makes economic sense for people with low electricity consumption to always install small systems. I can understand home owners thinking this, as they usually have better things to do than keep up with the economics of solar power, but by now all installers should realize the majority of people are going to be better off with more than 3 or 4 kilowatts. Some may just be slow to update their thinking, but there may be some using it as a dodgy selling point — “Trust me! You don’t need a big system with your low electricity consumption. Those other installers are trying to oversell you! We’ll give you a smaller one at a lower cost…”
To show, beyond a shadowy doubt, that — in most situations — everyone who doesn’t owe money to the mafia will be better off with larger solar system, I will compare how much money a typical household will save over 10 years with a 6.5 kilowatt solar power system compared to a small 3 kilowatt one.
For my main example I will use a household in Sydney — Australia’s largest city. But I’ll also consider what is best in Western Australia, where the solar feed-in tariff is tragically low.
A Few Provisos, Caveats, Exceptions, Etc…
Just to make things clear, I am not suggesting people with a small roof should install more solar panels than will fit. This does not spark joy. (But an installer who breaks the rules like that could spark a fire.)
Nor should people spend more on solar than they feel comfortable with. I’m just a guy on the internet, so don’t let me convince you to do anything you think is iffy. After all, you have no way of knowing if I’m wearing my pants on my head as I type this. I could be a complete nutter, rather than only 97.5% nuts as I portray myself.
If you don’t care about savings and just want a small system for whatever reason, that’s also fine. I don’t think that makes sense, but I’m not going to try to stop someone from doing what they want to do. Not given the amount of time I spend perusing goatsinbikinis.com.1
Why 3 Kilowatts Vs. 6.5 Kilowatts?
These days a 3 kilowatt solar system is puny. Less than 3% of people using SolarQuotes want a system that size or smaller. Clearly the word has gotten out that bigger is better. Maybe this article will be the final word on the subject.
Around 6.5 kilowatts is actually around the most commonly installed size today. I am using it as the example of a larger system because the majority of homes have single phase power and in most of Australia they are only allowed to install a maximum of 6.66 kilowatts without complications.2 It is also a size that fits on most roofs as these days 6.5 kilowatts can be 20 panels or less.3 But if you can install more, I say go for it. It’s still likely to pay for itself outside of Western Australia. Although Tasmania is also a bit iffy due to low solar output. But for now I’ll just demonstrate that 6.5 kilowatts of solar is normally better than 3.
A Variety Of Factors
To compare the two different sized systems we’ll need to know the following:
- How much the different sized systems cost
- Their annual output.
- Solar electricity self consumption.
- Electricity prices and feed-in tariffs.
- Maintenance and repair costs.
I go into all these below.
Solar Power System Cost
I’m going to assume a 6.5 kilowatt system will cost $6,500. That’s $1,000 per kilowatt and enough to pay for a reliable inverter and solar panels from an installer who does good quality work. It won’t pay for the best hardware available, but it will be decent — provided, of course, you avoid the shoddy side of the solar energy industry. (We can help you with that.)
A 3 kilowatt system is 46% the size of a 6.5 kilowatt system, but it’s not going to cost only 46% as much. A system that size of the same quality is likely to cost $4,000 or more. This is because smaller inverters cost more per watt than larger ones and installing the system requires much more than 46% the amount of labour. Also, the sales and design costs are the same. I will assume a three kilowatt system will cost $4,000. This is 33% more per kilowatt than the larger system.
Solar Electricity Self Consumption
Solar electricity sent into the grid receives a feed-in tariff that lowers electricity bills. But if a household uses that solar electricity themselves, it saves even more.4 The more solar electricity consumed yourself the more you save.
Because smaller solar systems produce less energy it is easier for households to use a large portion of it themselves, so they can have higher self consumption percentages than larger systems. But — all else equal — the total number of kilowatt hours of solar electricity self consumed will be greater with a larger solar power system, even though the self consumption percentage may be considerably lower.
Solar Analytics kindly gave me some median figures on solar electricity self consumption and in NSW they are:
- 3 kilowatt system (2-4 kilowatts): 41%
- 6.5 kilowatt system (6-8 kilowatts): 34%
These figures are for the state, but as two-thirds of NSW’s population lives in and around Sydney they’re probably accurate for that city. But two things to consider are people with Solar Analytics are likely to have higher self consumption than average, because the monitoring system helps them with this, and people with lower electricity consumption are more likely to install a smaller solar power system.
For these reasons I will lower the self consumption percentage for a 6.5 kilowatt system down to 30% and bump it up to 45% for the 3 kilowatt system. I’m not using these percentages because I think they’re accurate, but because I want to show a larger solar system is likely to be the best choice even if the self consumption percentage is much higher for the smaller system.
Solar Electricity Production In Sydney
The PVWatts site says 3 kilowatts of north facing solar panels in Sydney will produce 4,182 kilowatt-hours over a year. I’ll assume it will produce 95% of that for a nice round figure of 4,000 kilowatt-hours. This allows for the minor decline in output that occurs with age and for also accounts for them often not facing directly north.
A 6.5 kilowatt system is 2.17 times larger, but I won’t assume it will produce 2.17 times as much energy. This is because the larger the system, the harder it is to face all the panels in the best available direction. So I’ll assume the larger system will only produce 95% the output of the smaller system per kilowatt of capacity. This means it will generate 8,667 kilowatt-hours a year.
Feed-In Tariff And Grid Electricity Prices
At the moment the best electricity plan for solar households in Sydney appears to be Origin Energy’s Solar Optimizer, which has a 21 cent feed-in tariff. That’s pretty good and I have double checked it’s available to normal households and doesn’t require you to buy a solar power system from Origin, as is the case with some of their other high feed-in tariff plans. This plan’s features are, to the nearest cent:
- Daily supply charge: 86 cents
- Per kilowatt-hour charge: 30 cents
- Feed-in tariff: 21 cents
But I want to look at savings over at least 10 years and these figures are unlikely to stay the same. To keep things simple I will assume the cost of grid electricity will remain the same in real terms. This means it just keeps pace with inflation. Electricity prices are predicted to mildly decline over the next couple of years, but I am too lazy — I mean, efficient — to try to take that into account.
Some people are pessimistic about the future of feed-in tariffs. I don’t think they are in any danger of disappearing, but there will be downward pressure on them as overall solar energy generation increases. To allow for this I’ll assume the average feed-in tariff a household will be able to receive over the next 10 years will be 15 cents in today’s money rather than the 21 cents currently available. This may require changing electricity plans or retailers at times to get the best of what’s available, but that’s not particularly difficult. So the figures I’ll be using are:
- Per kilowatt-hour charge: 30 cents
- Feed-in tariff: 15 cents
Maintenance Costs
Because I’ve assumed a reliable system will be put in place by an installer who does quality work, I think it’s unlikely there will be any out-of-pocket costs for the household for repairs in the first 10 years. Panels have a product warranty of at least 10 years and inverters have a minimum warranty of 5 years, but it’s not difficult to get one with a 10 year warranty these days. So I will assume there will be no repair costs in the first 10 years.
I will assume maintenance will be performed after 5 years. Because Sydney is an expensive place I’ll assume it will cost $400. This charge is likely to be the same whether the system is 3 kilowatts or 6.5. Because I’m looking at savings and costs in the first decade I don’t think the cost of the10 year maintenance needs to be included, but if you want to add it in yourself, please go right ahead.
6.5 Kilowatts: Total Savings Over 10 Years
Using my assumptions, over ten years in Sydney, a 6.5 kilowatt system will give the following figures:
- Total solar electricity generation: 86,670 kilowatt-hours
- Total solar self consumption: 26,000 kilowatt-hours
- Total solar energy exports: 60,670 kilowatt-hours
- Total savings from self-consumption: $7,800
- Total savings from feed-in tariff: $9,100
- Maintenance costs: $400
- Savings in full: $16,500
With a total savings of $16,500 the total return is more than two and a half times what was invested and the system will continue to save money for many years to come. This is in today’s money and doesn’t take inflation into account, so the actual inflated figure would be higher.
If I subtract the original $6,500 cost of the solar system, the household comes out exactly $10,000 ahead. While it’s unlikely anyone looking at that nice round number will believe me, I didn’t actually plan ahead to get this.
3 Kilowatts: Total Savings Over 10 Years
For a smaller, 3 kilowatt system, over 10 years in Sydney, the figures are:
- Total solar energy generation: 40,000 kilowatt-hours
- Total solar electricity self consumption: 18,000 kilowatt-hours
- Total solar exports: 22,000 kilowatt-hours
- Total savings from self consumption: $5,400
- Total savings from feed-in tariff: $3,000
- Maintenance costs: $400
- Savings in full: $8,000
With a total savings of $8,000 that’s another nice round number, and again, I did not try to get that! This is double the amount invested. It’s a good result, but not as good as the larger system. If we subtract its cost from the savings and then add on the $2,500 that was saved by getting a small one, the household is $6,500 ahead. The smaller system definitely paid for itself, but the household would be $3,500 better off if they had bought a larger solar system.
But, this isn’t quite right because I’ve assumed the value of the $2,500 saved by getting a smaller system only kept pace with inflation. If it was invested in something that gave a positive return, the difference between the two systems is not as great. However, the larger one still comes out ahead.
Investment Returns
Many people who own a roof also have a home loan. If the money saved by getting a smaller system is used to help pay it off it will have an effective real return of roughly 3%. So after 10 years the $2,500 saved would be worth $3,370 if invested at that rate.
Another possible investment is the share market. This gives an average real return of about 8%, but with a lot of variability. If I assume an average of 8% then after 10 years $2,500 would be worth $5,550.
If I add the earnings from these investments and subtract the cost of the solar power system to get the net saving, then we get:
- 3% real return (eg. Home loan payments): $7,370
- 8% real return (eg: Share market average): $9,550
So not even getting a smaller system and investing the savings in the share market at the average return can beat getting a larger system, as it puts a Sydney family a nice round $10,000 ahead after 10 years.
Go Bigger! Systems Larger Than 6.5 Kilowatts
If your home has single phase power you may be able to install more than 6.66 kilowatts by export limiting your system. This is often worthwhile and I recommend looking into it if you have the roof space for 7+ kilowatts of panels.
If you have three phase power (or are willing to spend the several thousand dollars it may cost to upgrade to it) then, depending on where you are, you may be able to install either 20 or 40 kilowatts of solar panels. Very few home roofs will be able to fit 20 kilowatts, let alone 40, but it can definitely be worthwhile to go as large as you can because the cost of solar per watt is less for larger systems. So even if some plans with high feed-in tariffs don’t accept solar systems over 6.66 kilowatts, you are still likely to economically come out ahead with a very large solar power system.
WA: A Low Feed-In Tariff Example
I’ve used Sydney as an example and assumed an average feed-in tariff over 10 years of 15 cents. But the large majority of households in Western Australia can only receive a low solar feed in tariff of 7.1 cents and there has been no hint it will be raised any time soon. If I keep my assumptions the same but use Perth’s sunnier climate for solar energy generation, I get the following net savings after 10 years using WA’s current electricity price of 28.8 cents and a 7 cent feed-in tariff:
So, with the assumptions I’ve made, in Western Australia the feed-in tariff is so low it is possible to come out ahead by buying a smaller solar system and investing the money saved in the share market at its average return. But if your next best option is to pay off your home loan, you’ll be better off with a larger system.
I’ve used the same cost for solar as in my Sydney example, but Perth is the lowest cost capital for solar power, so if you do your research and get a good quality 6.5 kilowatt system installed for less than $6,500 that will improve its return.
Systems Over 6.66 Kilowatts Don’t Pay In WA
Unfortunately in Western Australia, if you install more than 6.66 kilowatts you normally won’t be able to receive any solar feed-in tariff at all. The grid will still take your surplus solar electricity, but it will be stolen. This makes it very difficult for larger systems to pay for themselves in WA. In other states it can be possible to work around this with export limiting, but this is not permitted there.
Go Big! (Or Not So Big — It’s Your Choice)
Most people don’t invest their spare money in the share market. Often it goes into things such as home loans or just having a good time. So even in an area where only low feed-in tariffs are available, it still make sense for most people to invest in a larger solar system. This is because it will either provide a better return than the next best investment option they’re likely to use or the savings on every electricity bill will enable them to have an even better time overall for decades to come.
But even if you are living in Western Australia and are happy investing in the stock market, you may still want to invest in a larger solar power system of around 6.5 kilowatts because you can either get a good quality system for less than the figure I used or because you are happy with a return that is close to the share market average without sharing its volatility.
It depends on individual circumstances, but as a general rule of thumb, I would say if you are confident your feed-in tariff is likely to average over 7 cents for the next 10 years you should go big with solar. Mind you, this only applies if the only thing you love is money. If you also have some small particle of concern about the environment, the future of humanity, or even just the future of duck billed platypuses, then go big anyway.
Footnotes
- For the articles. ↩
- There are exceptions to this. For example in the Ausgrid area in Eastern Sydney single phase homes can still install up to 13.33 kilowatts of solar power and this is also the case in the Jemena and United Energy network areas in Melbourne. It is also possible to ask for permission from your Distributed Network Service Provider (DNSP) to install more than 6.66 kilowatts. For example you may be allowed to install a 8kW inverter export limited to 5kW and 11 kW of panels. ↩
- To be grammatically correct I should have written “20 panels or fewer” but I refuse to write that because I have never forgiven him for invading Poland. ↩
- The exception is households that have locked in old, high, solar feed-in tariffs. ↩
About Ronald Brakels
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great article!!
We just had solar put on (with the help of solar quotes) and we let budget be our limiting factor. This was set and I was tasked with getting the biggest, best quality system I could get for the money. We ended up getting 9kW enphase for just over $10k.
I absolutely love the idea of taking the electricity savings from our budget and dumping it on the mortgage! Great idea!! Perhaps a greater ROI than just spending it or saving it in a low interest account. Thanks!!
Agree, we installed a 9kw E-W system on single phase in Qld. Am on AGL’s 15c feed in and 26c usage. We just missed out on their 20c feed in.
However, not too happy that AGL installed a smart meter with ‘phone home’ ability to log our usage without our approval, its an invasion of privacy not to mention charge us 7c/day – imo they should be paying us if they want to collect our data.
Hey cj, I had a smart meter installed without the wifi antenna. You have the right to refuse the wifi component of the installed meter so Agl cant read or log in. but be prepared for a headache if you want true meter reads. Still trying get an actual meter read after 6 mnths. Only received estimates calculated on previous bils before solar install.
I didn’t want that hassle. After watching the ABC a few days ago about line losses with the export because of older electricity infrastructure I want to monitor the Solar V’s export V’s AGL accepting the feed in, in my case. The week before 0.14% variation and last week 0.08%. So far I’m happy with no loss.
We have a 10kw Enphase LG panels mainly East panels and yesterday in a miserable Melbourne Spring day, raining, we generated enough Solar to break even between midnight and 5-30 pm. Part of my justification was an increase of our Pension/month. So far with those savings and the Solar we have $664 in our Solar Saver bank account in 2 months. Also there is only 0.08% difference between the Smartmeter and my feedin kWh so I have no line losses.. AGL feed in 12c
who benefits with a 6 klw system if feed in tariffs are stopped altogether.
You do during the day and then govt during the night therefore the bigger the system the better for the govt .
Also when you buy the system the govt gets %10 great for them and if you get 20 cents feed in then who gets the other half of the power generated for free
some companies last year reduced the feed in tariff during summer to 10 cents and isn;t that conveneant for them .The time you can get the best results for your solar outlay and the energy companies take advantage and screw you over. there excuse was there is an excess of power into the grid.
If that is the case then that means power stations must be running at there lowest output so why is power prices going up as there will be savings on whatever fuel they use .and with the shutdown of at least 4 power stations there savings should have flowed over to consumers yet it has not .
All that solar out there the govt gets for free can anyone justify to me why the cost should not go down .
Hi Mitchell,
Not much we can do about it at the moment. The ever higher prices act to ‘encourage’ more people to stop paying them, and every time the prices and standing charges go up, more and more people are ‘encouraged’ to go solar or even off-grid.
To a degree, the power generator and grid owners themselves are ‘victims’ too. How would you like to run a business where a large part of your future planning and the billions of dollars of capital expenditure those plans require are derived from government policies emanating from Canberra? And those policies change every election cycle?
I’m not saying the power companies aren’t part of the problem, nor am I that sympathetic toward them either, but let’s recognize that they do have ‘problems’ of their own with government too which they have to manage..
Same old same old. Fortunes are spent by big companies* in figuring out the best ~ie least-unpalatable ~ ways to increase their income.
The results of their research ALWAYS dictates that when you’re dealing with bunnies dangle carrots.
…and that, in it’s own way ~ also applies to the power-co/government relationship.
And the one thing we know about bunnies is that they breed like rabbits on Viagra.
*In a formal debate years ago we discovered that more money was spent in the US in a given year on advertising research than on the military and eduction combined. DOH!
Another excellent article, thanks Ronald.
One quick question for you… if you install an Enphase microinverter system, are you restricted to 5kW of panels per phase?
Thanks, Andy
Hi Andy
In locations where you are restricted to 5 kilowatts of inverter capacity per phase you will only be able to install 5 kilowatts of microinverter capacity on each phase, but the panel capacity can be up to one-third greater. So 290 watt microinverters could be used with a panels of up to 385 watts.
In my area of Melbourne United Energy maintain the infrastructure and the Smartmeter. We are allowed 10kw Feed in. Through the 2 months I have had my 10 kw Solar operational, the best day was 7.05Kw exported (Feed in) at one point.. So it’s working..
Ron,
Always happy to read your lucid comments on the economics of solar power, but as someone who lives off grid, I feel misled when I read articles like this, because you never qualify your statements to allow for people with no feed in tariff. I realise we’re a small minority, but it would take only a few words to make an allowance for our circumstances.
For us, it is not a matter of making discretionary investments to maximise our returns, it is a matter of installing what we need to power our homes – no more and no less.*
Please keep us in mind in future and spare a few words to make it clear that your calculations do not apply to us off gridders.
* Reminds me of a grave marker from Boot Hill in Tombstone Arizona:
Here lies Lester Moore,
Two shots from a .44
No Les, no more.
You make a valid point, and nobody should assume that feed in tariffs for on grid users will last for ever. Rumblings about grid capacity (this is the grid that was described as gold plated a couple of years ago) and blackouts during heatwaves and lack of “base load”, all signal that a rapacious and largely foreign owned industry is not about to hand control of domestic power to us mealy mouth home solar generators. Meanwhile they are quietly allowing connection of mega solar farms everywhere because they they do deals with large investors and maintain full control.
Hi Richard W,
Different people have different motives for going ‘off-grid’. Some do it simply to save electricity costs, etc but still want or need to continue going to work, and see ‘solar’ as helping to maintain or improve their existing lifestyle.
At the other end of the spectrum, there’s the ‘survivalist’ and ‘self-sufficiency’ type objective which aims to eliminate as much as possible anything or everything connected to ‘the system’ and live a much simpler life.
There are all sorts of graduations in between, but the fact that motives are different usually implies that ‘priorities’ become different too.
If I was intent on being ‘survivalist’ then among my first priorities would be to ensure that I had enough electricity to power electric tools such as portable power drills, shrub trimmers etc in addition to household lighting. My main reason for that arises out of the fact that ‘self-sufficiency’ requires much hard work, and so ‘saving time’ in order to reduce daily workload allows me to be far more productive.
My point is: saving ‘time and effort’ and improving ‘convenience’ (which also tends to save time) is an equally valid objective for anyone off-grid. And you’ll probably find that somewhere along the line you get some minor cost savings too.
Us poor wage slaves have far less scope to think along those lines, because so many hours have to be devoted to ‘work’, along with incurring associated expenses such as: cost of traveling to and from, clothing and shoes needed in some cases to meet ‘organizational dress standards’; all kinds of stuff. The focus is far more on ‘cost reduction’, along with general environmental concerns.
Even if you only valued your ‘time’ at $7 an hour, then saving just 1 hour in effort a day has an implied value of around $2500 a year, which is more than the cost saving people in suburbia achieve on their power bill.
I know the above is totally subjective for each off-grid enthusiast, but so what? Be creative.
Thanks for your comments, Des. You’re quite right that people have different motives for living off grid, and here’s another that you didn’t mention – perhaps because it didn’t occur to you.
In my case the decision process was even simpler than you describe, and involved no particular “motives for going off-grid”.
I sympathise with you poor wage slave devils, as I used to be one myself, but what you seem to overlook is that nearly everyone reading these posts lives in a world of unappreciated luxury, where they can indulge themselves in endless philosophical musings about lifestyle options and incremental financial returns. They completely take it for granted that continuous, reliable power is available at the flick of a switch. They live in a world that was simply unimaginable to every generation of humanity until the time of our grandparents, and they no longer even notice it.
When I say I live off grid I don’t mean that I have opted to do my bit for the environment or to reduce my financial commitments. I live off-grid because I literally live Off the Grid, beyond the outer fringes of Melbourne, where the power infrastructure you “burbies” take for granted simply does not exist. Living off grid is not a matter of choice for me, unless you consider it a real option to pay $60,000 just to have power poles and lines brought to my door, in return for the doubtful privilege of receiving ever higher monthly bills into the indefinite future.
I have installed solar simply because I have grown accustomed to being able to see after dark, and to run the occasional appliance, and have grown tired of the noise and trouble and expense of running generators.
I don’t expect anyone to feel sorry for me living out here where life really is beautiful. I’m only hoping to remind you that Off Grid is a real place, not just a lifestyle choice.
Well said….Now DO something about it. I’ve dodged thge system (EVERY system) for 60-odd years, and cn vouch for the efficacy and self-satisfaction of doing so.
(You did, however, fail to make the elemental point that the lack of dependence on a system opens up endless options of what YOU decide your needs are, and for optimising the efforts you CHOOSE to put in. That includes ‘going to work’.
Finn is a good example of exchanging your business suit for goofy t-shirts/faces and and oversized sneakers.
I quit my first and only ‘job’ at the age of 14 when some crowd of clowns calling themselves the ATO kept sending me letters of demand. Never looked back!
My off-grid roof has just gone up (finally). There’s only room for 3 kW (9 panels) on the west, but that should do for the aircon late on a hot summer afternoon. There’s room for at least 10 kW on the north skillion, but that has to be a single string, I figure, as the other inverter string input is used by the western array. There’s a limit on max input voltage to any inverter – not Vmp, but rather Voc. So we’ll see if I can manage any more than 6 kW, perhaps.
If winter yield is a third of the summer peak, then I can expect 2 kW without clouds. If there’s 4 hrs/day of that, then we have 8 kWh per fine day. With room and water heating being wood-fired, that’ll mostly do me, I figure. The 40 degree tilt (for a 38 deg, south latitude) might boost that winter yield estimate a bit. We’ll see.
I recently had a 6.5KW system installed and it is working beautifully – generating 36KWh yesterday and today. Still waiting for my energy retailer to get switched over (to Energy Australia) at which point I should be making ~$5 per day vs spending ~$2 per night to power the house overnight.
I paid $7k which is marginally more than Ronald’s reference price but that was for REC panels with a 25 year warranty so well worth it I reckon.
I’m in Qld
Had an old 2kw system North facing
Installed 5kw enphase system well technically 4.8, 6 panels east 10 panels west cost $8500
6 months later 2kw invertor died , installed new cheap arse 3.0kw system for $2480 on both facing roof
Yesterday enphase system produced 27kwh
Cheap arse system 23kwh
Just commenced my journey into acquiring a solar system. First impression is everyone seems to be out to bombard you with so many “facts” but you really cant trust anyone. I received an e/mail from a supplier who said if I went for a cheap system I would just be ” paying energy supplier feed in costs forward”. I gather what they meant was if I got a cheap system it would just stall any future payments to an energy supplier until the system broke down. I dont like this sort of ledgerdermain, but it is everywhere in this industry, and quite frankly its bastardisation. Needless to say I wont be getting a system until I have a better understanding of what the best is for me.
Onyer Paul. I’ve been-there-done-that since 1980, and worked on probably 1000 DIY systems over the years. Y’can get me –> lucitall@y/7mail.com if you want to look at some possibilities,
Hi Ronald
I put solar on my roof way back in 2010 and got some good input credits and free power. I have upgraded my system 3 time since, I now prefer LG Neo and Enphase inverters as they really deliver though I know the panels are pricey. I have also put a Tesla Powerwall 2 on my house. My point in writing this is that I have installed Solar Panels on two rental properties and my tenants really appreciate the benefits of low power bills. I also have helped my children get solar on their roofs and this has really helped with their domestic family budgets. So really I find it hard to understand (especially for small busiesses with business premises and a suitable roof and north aspect) why Solar is not on nearly every home, even rental ones! I note it is deductible plant for tax purposes. I believe the extra benefit of cheap power helps keep your tenants happier! I like the Youtube videos with Finn. More clean power (as one says) to you both. Cheers Matthew
I agree with the overarching principle of install as many panels as you can fit as soon as possible is a no brainer if you can get a reasonable FiT. If you FiT is even just 12c, you can usually get reasonable return even if most of it is exported. If you can do justification like this, solar self consumption is all cream on top, which all adds up to being pretty likely to be a good investment even if there are falls in electricity prices and FiT.
The other thing I would say, is do it ASAP, because my guess is the solar FiT might be trending down with electricity prices over the coming years as more cheap large scale solar and wind is installed. I would hope that if we make the transition we need to make for the environment and cheaper power prices, which will almost certainly include LOTs of solar, the downside for us is likely to be less valuable solar FiT (simple supply and demand). So from my way of thinking, get it in early to get the payback done early before it might become less favorable. Then you have a fully payed back large solar system that will support a future battery (when economic which it is NOT today), or at least give you free power if and when solar FiT is less valuable.
HOWEVER, 1 caveat to consider. There appears to be a number of retailers who offer very attractive deals with premium solar FiT which will will probably want to be on if you have a large solar system. eg 20c seems not hard to find, and if you can get on one of these deal, payback of solar is going to be very good irrespective of whether you use it yourself or export it. HOWEVER most of these deals seem to have a caveat that limits system size to 10kW. So it is probably sensible to factor this in. Eg a 10kW system that is eligible for 20c FiT will cost a lot less than a 16kW system which might only be eligible for 12.5c FIT. But both will likely off the same return because of the difference in the FiT. This makes the 10kW system a much better deal if you are only doing it for financial gain. But my advice, is get the 10kW system carefully installed to keep your options open so you can add the rest later later when the premium deals go or the 10kW restriction is lifted.
It’s an anomally across the business world these days that ~ in one way or another ~ businesses have upfront charges (and/or Ts&Cs) whereby they charge you a price for the privilege accepting your money (in the sale of whatever they’re selling). Even the local auto-wreckers tried it on with me last week.!
As with most rorts, thye can only work because the bunny-in-the-steet let’s ’em get away with it. As a matter of principle I always tell them to get furcked and why. I’d sooner go without.
I don’t know why people put up with such shit: it’s YOUR money, Ralph: and THEY want it.
He who pays the Piper STILL calls the tune.
Thanks for this informative article. However, your Origin Solar Optimiser calculations are based on a daily supply charge on 86 cents/day. Origin’s web site is quoting 151.25 cents/day which if true will significantly reduce savings. Can you please clarify? Many thanks. Richard
I’ll just have a look at that…
The information Origin is currently supplying for this plan has a supply charge of 86 cents a day. You may be looking at a different plan (they have 113 just for Sydney) or possibly Origin has made a mistake and is giving one of us the wrong figure.
Thanks for getting back to me…the plan I am referring to is Origin’s Solar Optimiser as listed on the Governments ‘Energy made easy’ website. It clearly states that the daily supply charge is 151.25 cents, General usage rate 31.54 cents and FIT is 21cents. I have been considering switching to this plan but
before doing so I would appreciate very much if you could direct me to the site you are referring to. Many thanks
On the Energy Made Easy site there is this Origin Solar Optimizer plan with an 86 cent daily supply charge:
https://www.energymadeeasy.gov.au/offer/934713?postcode=2000&fuelType=E&customerType=M&solarPanels=Y&pool=N&smartMeter=notSure&distributor-E=11&provider-E=notSure&electricityUsage=N
Many thanks…that is sooo much cheaper than the web page I accessed:
https://www.energymadeeasy.gov.au/offer/934704?postcode=2489
I am in northern NSW so perhaps that is the reason for the huge difference in pricing. Very disappointing.
hehehehe…. If you can’t dazzle ’em with brilliance, baffle ’em with bullshit. 🙂
“Shadowy doubt” ??
It’s “Shadow of doubt”
Absolutely right, but as Finn is a specialist in solar systems, he must be forgiven if his mind strays to “shadowy doubts”. I’m having some shadowy doubts of my own lately, but installing solar was definitely the right thing for me to do, beyond the shadow of a doubt.
Normally it is “beyond a shadow of a doubt”. However, when you are a master of not just double Dutch, but triple Dutch, you can have shadowy doubts all the time.
Interesting. My feed in is 12c per KWH.
My daily charge is over $1.20
My power rate(sell to me) is over$0.42 per KWH.
I run 2 phases, totalling 9.8Kw.
I have had it about 9 months and I have changed provider 3 times(poor rates and charges).
My first bills with the first company started last October and ran for about 5 months, where my total bill was -$395.00.
Then I moved to another company for 2 months which came to a total of about -$25.00.
Then I changed again(My second provider put my rates up before I got the first bill).
So now I’m with my 3rd provider in 8 months and pretty happy with them.
My bills from them were (about) $65.00 for 3 months and my last one was for one month, about $30.00.
I got paid out by my first company(I had to ask for the money) around $395.00
My second provider owes me about $25.00
and my 3rd and current has cost me about $95.00
So overall I’m technically MINUS about $200.00 which includes the end of spring, all of summer and most of winter.
Our whole house is electric except hot water(gas bottles). Ran my big 9kw aircon whenever I wanted including a few times in winter.
I am now noticing my generation amounts per day are increasing.
I hit 56.2 kwh of generation today and it’s only 11 September.
My expectation(basic calculations) are that when I stay with my current provider for 12 months I expect to be around MINUS $200.00 PER YEAR, easy.
It did cost me about $12k fully installed.
No trees to block my sunlight.
Within a few degrees of facing North.
My app provides we with info that helps my control my usage.
Only run washer when Im generating enough power to cover the power used(its easy by the way)!
Run electric oven and induction hob(4.7kw) anytime we want.
Run my big 9kw mitsubishi heavy industries reverse cycle unit any time I want(but during summer the vast majority of it is during the day and turn it off in the evening(because the house didn’t heat up).
Good insulation , double glazed windows, no curtains, slab floor.
There’s a masochist born every minute.
Hi Ron
Good article.
Agree with most of it, especially a larger system being cheaper per kW but a few extra points:
We have 9.86 kW on our place but Just organised my parents to have solar put on and went with a 3.15kw system because the Vic government subsidy meant the cost was only $2315 and the rebate maxed out there so that was the best return on capital. They are also in their eighties and interested in a faster payback.
We put a large one on because we both run an office out of home and my wife has a staff member with her as well, so our energy use is higher than most people. I am a bit more cynical than you on feed-in tariffs because peak solar is really affecting prices in the market. I realise there are some government issues in pricing that will affect the maket but I think prices for feed-in tariffs may come down further than you have assumed. Therefore I am more wary about larger systems than I was three years ago.
I am surprised that you did not mention overclocking of the inverter as Finn talks about it all the time. On my calculations the extra panels we put on above the (8.2kW) inverter were the cheapest investment of the whole lot and the system only peaks out for a short time each day so they are operating at full output most of the time.
Keep up the good work. I find the site very informative and we have used Solar quotes to organise both systems and been very happy
Paul
Hi Team
I am in Melbourne, going through the motions of solar now, and Im in a town house with limited north facing roof.
Choice 1
4.4 Kw system of Sunpower maxeon 400watt panels with enpahse microinverters @ $7800 and potential savings of $1000 per year
11 panels total, effectively 3 orientations of panels, 3 panels North east, 5 panels north, 3 panels North west
Choice 2
6.6 Kw system of Jinko 330 watt Panels with Optimizers with SolarEdge inverter $8200 and potential savings of $12 per year
20 panels total, effectively 4 orientations of panels, 3 panels North east, 6 panels north, 3 panels North west, and 8 panels South east.
I also figure that the south facing panel generate %30 less so this effectively drops system to around 5.6 kw by my calculations
I suspect that the quoted savings are over stated
Haven’t checked retailers feed in as yet, but neighbour is same retailer is .11 cents
but wouldn’t mind some feed back, thanks
Hi Gary
It will depend on your daytime electricity consumption, but the 4.4 kilowatt solar system can save a typical Melbourne home around $1,000 a year and the larger system could certainly save around $1,200 a year.
It will depend on how steep the roof is, with less steep being better, but in Melbourne, south-east facing panels will typically produce around 22% less than north facing ones, so the total output will only be around 9% lower than if those eight panels instead faced north.
Sunpower Maxeons are good panels with a long product warranty, but I would recommend getting the larger system for higher output and savings. Both Enphase and SolarEdge are quality hardware I can recommend. Neither is a low cost system, but provided the installation is carried out by someone who does high quality work, you’ll have a reliable and long lasting solar system regardless of which you get.
Thanks for the Advice
“A 6.5 kilowatt system is 2.17 times larger, but I won’t assume it will produce 2.17 times as much energy. This is because the larger the system, the harder it is to face all the panels in the best available direction. So I’ll assume the larger system will only produce 95% the output of the smaller system per kilowatt of capacity. This means it will generate 8,667 kilowatt-hours a year.”
In the end this figure (8,667 kWh per year) is precisely the result of 4000kWh * 2.17
By reading “So I’ll assume the larger system will only produce 95% the output of the smaller system per kilowatt of capacity. This means it will generate 8,667 kilowatt-hours a year”
I thought the equation should be (4000kWh / 3kW) * 0.95 * 6.5kW = 8,233 kWh per year, 434 kWh per year less, did I get my head?
Excuse my impertinence, in the graph “Sydney Solar net savings over 10 years” 3kW + 0% of real yield is not $ 4,000 but $ 6,500 since you are adding the savings to buy a smaller system,
I can be wrong?