If you want to work out the payback on installing solar panels, one way to get an estimate is to use the Electricity Cost Calculator.
Let’s say you’re going to buy a solar panel system for a notational $2,500. Using the current Peak 1 rate from Red Energy which is 24.75 c/kWh (which is the default for the calculator), you need to know the size of your system and the number of peak sun hours for your area.
Open up the Electricity Cost Calculator using this link.
For Watts you use the wattage of your solar panel system. If you are purchasing a 1.5kW system, the watts will be 1500W. This is because the k stands for kilo which is 1,000. Multiplying 1.5 by 1,000 gives you 1500.
For the hours per day use the average peak sun hours per day. Whilst this varies over the year, the averages for Melbourne, Sydney and Brisbane are: 4.6, 5.1 and 5.4 respectively. Since I’m in Melbourne I’d use the figure of 4.6.
In the section “Replacement unit payback period” for Cost enter the amount you’ll pay for the new system. Leave the Watts in this section as zero.
Thus entering Watts of 1500, hours per day of 4.6 and Cost of $2,500 gives us a payback of 48 months or four years.
The problem however for most people is they don’t save this much money. The trick that people weren’t aware of is when they installed their to solar system their rates changed so that they get charged more during the 16 hours of peak period and less during the 8 hours of off-peak usage. To make the calculation more complex people are also offered a rebate for the energy they put back into the grid. For those who leave the home empty during the day this is likely to give them a rebate, but for those such as the retired who are at home all day using electricity, they may find the amount they get as a rebate is much less, if at all. Keep in mind the average electricity used in a home is around 18kWhs per day. A 1.5kWh system will produce an average of around 6.9kWhs per day.
In the morning and night where electricity usage is greatest, the solar panels won’t be producing electricity, so the higher peak period charge will significantly increase the electricity bill, but this will be partially offset by the excess electricity produced during the quieter middle period of the day. I read an article that people in my local area were finding their savings averaging around $200 a year. Far less than the $623 saving shown by the Electricity Cost Calculator and since it is based on the experience of people’s actual savings, it is a good figure to use.
The Electricity Cost Calculator figure would have worked if the electricity companies didn’t switch you to the higher peak period charging rate. To get a more accurate idea you need to consider the rate you’ll be put on if you install a solar system and your pattern of usage during the day and then take into account any rebate. The payback period is more likely to be in the 8-15 years rather than the 4 year period.
There are a few ways to reduce your payback period and one is to use less energy. We’ve reduced our electricity usage to 6.5kWhs per day using some simple energy saving strategies. If you reduce your energy usage that could increase your rebate and thus reduce the payback period.
By using the Electricity Cost Calculator to determine the cost of using appliances around your home, you can work out which appliances cost you the most and thus which appliances you need to focus on to reduce your electricity bills.
Kelvin Eldridge
www.JustLocal.com.au
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