The Facts About Grid Connect Solar in NSW

    I, like everybody else thought solar in NSW was dead when the government stopped the 60c feed in tariff. The reality however is quite different. electricity prices are on the rise, and solar prices are falling; this means it is really quite compelling to put a solar system in your home.

    The only caveat to what I have just said is it needs to be the right type of solar system; If your system is too large it will never pay itself off; the right sized system is however a very good investment.

    What follows below is an indepth discussion on the financials of solar...


    if you just want to know how much it costs to get one installed Read here.


    How does your house use Electricity

    It is important to understand the basics of how electricity is consumed in 99% of homes. The graph below shows how your house consumes electricity v's how solar panels produce electricity.

    power consumed in your home vs power generated by solar panels

    as you can see with the graph, most of the electricity in your home is being consumed outside of the peak solar power production period. So why does this matter? ... read on.


    Electricity Pricing and Feed in Tarrifs.

    As most people know, in NSW there is no government subsidies for feed in tarrifs, this means you have to negotiate directly with your energy retailer for any solar energy you plan to feed back into the grid. At the present time the best price that can be obtained is 8c/kWh for any electricity you send into the grid.

    The other edge of the sword is the price you pay for electricity consumed in your home.. this is different for every energy retailed, but as of 1 July 2012 it will be somewhere around 30c/kWh.

    So to summaries.. you get 8c for each unit of electricity sent to the grid; you pay 30c for each unit of electricity you consume from the grid.


    Net metering 

    Since the end of the NSW Solar bonus scheme all new Grid Connect systems get installed as Net metered systems. This means any electricity produced by the solar panels get used in your home before it gets exported to the Grid.

    As you can see from the graph above, the demand for electricity is smaller during solar production hours, so most of the electricity gets exported to the grid (which is paying 8c/kWh), then in the evening when you get home you start to use your electricity and you have to buy it from the energy company at 30c.

    This means it is important to get the right sized solar system. If you buy a system too large then you will be throwing money away.


    Understanding the financials

    The most popular system installed in NSW was a 1.5kW Grid Connect solar system; This type of system will set you back approximately $2,500 (incl GST) depending equipment quality and Renewable Energy Certificate prices. For the sake of our example lets assume the system will cost you $2,000.

    A 1.5kW system will produce about 675 kWh of electrical energy over a 3 month billing period. based on the graph above lets assume 80% of that energy is used up in the home and the rest is exported to the Grid.

    Based on the above a 1.5kW system will reduce your electricity bill by the following:

    675 x 70% x 30c = $142

    675 x 30% x 6c = $12

    Total Savings on electricity bill = $154

    Total Savings across the entire year = $154 x 4 = $616/yr

    Now to work out how long it will take to repay itself we take the original cost of the solar system ($2000) and divide it by the savings ($616/yr)

    2000 / 616 = 3yrs.

    3 Yrs is a pretty good return on investment, especially when you consider a high quality solar system will work trouble free for well over 15yrs.



    To wrap all of this up...

    A properly sized solar system will pay for itself in aproximately 5yrs, plus it gives you some protection against the rising cost of electricity.

    Check out our actual Grid Connect Solar Prices 


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