Created December 2011, updated September 2012: We spent a lot of time tracking down the facts in mid-2011 before we were confident that going solar was a good thing for us to do. I updated the information in December 2012 in preparation for another installation the family was planning and presented it here on Green Path in the hope that it would be useful to others contemplating the same action. I have now (September 2012) updated it again, mostly because of drastic changes to Queensland incentives. Major changes are in bold.
As of August 2019 the whole post is due for an overhaul because so much has changed at the government level. I have removed broken links here but left the text unaltered, for historical interest as much as anything else.
Both national and state governments have incentives to encourage our move to renewable power generation, while the federal incentives also reward any steps we take to reduce power consumption.
Federal Incentive: RECs or STCs
The federal government, through the Small-scale Renewable Energy Scheme (SRES), gives an up-front lump-sum incentive payment calculated on the amount of energy a solar PV system will notionally produce over its lifetime.
The scheme aims to:
- encourage the additional generation of electricity from renewable sources;
- reduce emissions of greenhouse gases in the electricity sector; and
- ensure that renewable energy sources are ecologically sustainable.
This is achieved by:
- the creation of online certificates by eligible renewable energy sources based on the amount of electricity in megawatt hours (MWh) generated by a renewable energy power station, or small-scale solar panel, wind or hydro system; or displaced by a solar water heater or heat pump; and
- placing a legal obligation on electricity retailers to purchase and surrender a certain amount of these certificates each year. The trade in these certificates thereby provides financial incentive for investment in renewable energy.
In practice, this up-front incentive usually appears as a discount on the quote from your installer, who takes the certificates and on-sells them.
When we installed our own system, RECs were issued at five times the expected 15-year output in megawatts for installations up to 1.5 kW and one time (same number) for anything over that. They are now called STCs and credited at twice (same number) for installations up to 1.5 kW and one time for anything over that. The discount for a 1.5 KW system has therefore dropped considerably. At the same time, however, component prices have dropped so the net cost increase is not so significant.
For more information on the federal scheme, see The Small-scale Renewable Energy Scheme (SRES) at http://www.cleanenergyregulator.gov.au/RET/About-the-Renewable-Energy-Target/How-the-scheme-works/Small-scale-Renewable-Energy-Scheme
State Incentive: Feed-in Tariff
The other incentive is the feed-in tariff from Qld Gov’t via Ergon, who pay a certain amount per kWh for power fed into their grid. The payment goes through the power bill.
The bad news is that the Newman LNP government slashed the feed-in tariff for new customers as of July 2012, from 44 c/kWh to a mere 8c/kWh, and has said that, “The 8 cent tariff will end on 1 July 2014. However, the Government will also review the 8 cent tariff by 1 July 2013 to ensure the rate remains appropriate for Queensland,” which sounds like code for, “We will abolish it altogether if we can get away with it.”
Fortunately for early adopters like ourselves, existing customers will continue to receive the 44c feed-in tariff until 2028, “providing they maintain their eligibility for the scheme,” which basically means not changing the account name. That is, if the house is sold or rented out, the feed-in tariff lapses.
Our system is producing just over 6 kWh/day. If it all went in to the grid at 44 c/kWh it would earn us $2.60 per day; if we used all of it, it would save us $1.30 per day by replacing Tariff 11 power at 23.7 c/kWh. Our net benefit must therefore be somewhere between those figures, and in fact it has averaged just under $2.00 in its first full year. (Summary figures for the first full year of operation are here and month-by-month figures are here – scroll down to the comments).
Limits of incentives
- Basically one system per property and a maximum of 5 KW per system.
- The Federal incentives dropped in the middle of 2012, when the multiplier for small systems dropped from 3 to 2, and will drop again in July 2013 (see “What are Solar Credits” here).
- The feed-in tariff is guaranteed to stay the same for 20 years for people who signed up before July 2012 but there is no long-term guarantee for new customers.
The federal subsidy is available to owner-occupiers and landlords alike. So is the state’s feed-in tariff, except that the payment goes to the person whose name the power bill is in – normally the tenant, in which case the landlord would have to negotiate with the tenant to receive any benefit.
In December 2011 I said:
These figures make payback time for our 1.5 kW system 4.5 yrs and for a new system like ours about 6.5 years. That’s not bad, but a 5 kW system is mostly a solar farm, since no extra power would be used by the household. On the same domestic consumption, export to grid would be 6000 kWh / yr and pay the owner $2650 p.a. as well as saving $200 p.a. off the normal bill. On the other hand, it will cost more – about $14 000 – $15 000. On these (very rubbery!) figures, payback time is still, surprisingly, in the 5 – 6 year range.
I haven’t done all the calculations again but ‘solar farming’ has obviously become far less attractive since the state feed-in tariff dropped in July 2012, as that $2650 p.a. would become $480.
Grid-connected systems don’t usually have any stand-alone capacity. One installer told me the Australian standards for grid-connected inverters mandate automatic shut-down when mains power drops out. The only way to give your system stand-alone capacity is therefore to install a second inverter (a stand-alone model) and a rack of batteries, for a total cost far greater than the cost of a portable generator and a generator input plug on the main switchboard.
Is PV Solar the best thing for me right now?
This question was answered separately on Oct 22, 2011, here; I haven’t updated it since then, mainly because it still all seems to be correct. In fact, the potential benefits of energy savings seem greater now in comparison to the potential benefits of installing solar power, since the incentives for solar have dropped.
Try the Clean Energy Council
The current monocrystalline and polycrystalline cells are both mature technologies and radical improvements seem unlikely. Amorphous and thin film technologies are newer and potentially cheaper per watt but less efficient (i.e. you need a bigger area to make the same amount of electricity) at this stage and are apparently not really worth considering for domestic installations. See http://en.wikipedia.org/wiki/Low-cost_photovoltaic_cell for regularly updated information.
Flexible cells are coming – there has been a demo set-up at Townsville airport for a year now – and may have their uses but don’t seem particularly relevant to fixed installations. For something further out, look at these printable and paint-on solar cells.
The three big sites for authoritative information are the Clean Energy Council (the peak industry body in Australia), the federal government’s Office of the Renewable Energy Regulator (ORER) and (for Queenslanders – I assume other states have similar sites) the Office of Clean Energy which has a more people-friendly page at Do the Bright Thing. The solar PV guide (pdf) from the Clean Energy Council is good introductory material, but there is plenty more on these sites.
The Desert Knowledge Australia Solar Centre (DKASC) is a demonstration facility for commercialised solar technologies operating in the arid conditions of Alice Springs, Central Australia.