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Solar feed-in tariffs have dropped: why this doesn’t matter

Solar feed-in tariffs have dropped: why this doesn’t matter

The solar feed-in tariff – the amount you get paid for sending your excess solar electricity to the grid – is one of the most talked-about aspects of solar.

A lot of people believe that solar panels systems aren’t worth it anymore because the feed-in tariff has dropped so much. They reckon solar is now a bit of a rip off.  How can you make money from solar panels if you get peanuts for your solar feed-in?

Whilst we understand the sentiment, when you take a close look at the payback on rooftop solar it’s clear that the solar feed-in tariff no longer matters. Even with the feed-in tariff at the all-time low of around 7 cents per kilowatt hour, the payback on a well-designed solar panels system is around 3-5 years.

Valid reasons for low feed-in – but it still seems unfair!

Of course, it doesn’t seem fair that you get such a low feed-in rate for your solar electricity – particularly when your electricity retailer charges around 4x more for grid power!

Whilst there are valid economic reasons for this massive price discrepancy – like wholesale rates and the lower market value of solar exports during the middle of the day – it still doesn’t seem right.

That perceived lack of fairness is what’s driving many people to invest in home battery storage . With a solar battery, you store your excess solar energy and use it at night to power your home, avoiding paying for expensive grid electricity.

It’s also why new ways of trading electricity with your neighbours  and Virtual Power Plants  are starting to take off.

Why can’t I get a high feed-in tariff anymore?

No matter how hard you look on the various energy comparison websites, you won’t be able to find a feed-in tariff paying 40 cents or more per kilowatt hour. And that’s regardless of where you live in Australia.

That’s because the days of the premium feed-in tariff in Australia are over for new solar households.  Anyone still lucky enough to be on a premium feed-in will have it for a few more years yet – depending on which state they live in.  Then, they’ll be back down to the lower feed-in tariff like the rest of us!

Premium feed-in tariffs were introduced just over 10 years ago to stimulate uptake of solar. Back then, solar panels systems cost around five times more than they do now and only a tiny percentage of Australian homes had a solar system.

The Australian solar industry was tiny, the market was mostly early adopters getting solar for green reasons – and solar panels were relatively inefficient compared to now.

The premium feed-in was needed to encourage households to splash out the $10,000-plus for a tiny 1.5kW solar panels system. It was a way of rewarding households with a financial carrot that would go on paying for 10 or more years.

But now, the cost of solar panels has fallen by around 80% compared to back then.  Solar systems pay for themselves within 3-5 years – sometimes even quicker, thanks to the generous federal and state government solar panels currently available.

In a nutshell, there’s no longer any need for a premium feed-in tariff to make a solar panels system financially worthwhile.

How do you make money from solar with a low feed-in tariff?

These days, the way to get a fast payback on your solar panels system is to use as much of your solar power during the daytime as possible. In solar tech-speak, this is called maximising your solar self-consumption rate .

If you have friends on the premium feed-in tariff, they are likely to be saving their clothes washing and vacuum cleaning to the evening – but you’ll be wanting to do the opposite.  That’s because using your solar power during the daytime is free, plus it saves you from having to buy expensive grid electricity.

With the average rate for electricity in Australia at around 27-30 cents per kilowatt hour, it’s better to use your own solar electricity and avoid paying that cost.

Also, you only get around 7 cents per kilowatt hour for your solar exports. That means you’re around 4 times better off if you use what you generate instead of exporting it.

How to use as much of your solar power as possible

There are several ways you can increase the percentage of solar power used in your home – ranging from simple, low-cost ideas to bigger investments that can get you to 100% energy self-sufficiency.

Advanced solar monitoring

Whilst most solar inverters come with built-in monitoring, with some notable exceptions – like Fronius and SolarEdge – the data can be a bit basic.

Standard monitoring shows you how much solar power is being generated both in real-time and over any period you select.  This is useful as far as it goes – but what you really need to maximise your solar self-consumption is advanced solar monitoring that shows you how much of that self-generated solar electricity you’re using in your home. Without this information, you’re going to be guessing.

A better approach is to invest in Solar Analytics, one of the best solar monitoring systems , which provides real-time data on how much solar energy you’re using in your home, what you’re sending to the grid and lots more besides.  Solar Analytics can be retrofitted to any solar power system.  Get in touch if you’d like to find out more.

Change habits

If you aren’t home much during weekdays, it’s worth saving some of those energy-intensive chores like washing to the weekend.  Whilst this might sound like an inconvenience, this small change in your household routine could save hundreds off your electricity bill.

Timers

Most modern appliances – like split systems, dishwashers – come with timers that can be set to start during peak sun-producing hours.  It’s worth spending a few minutes working out how to set these timers, as it’s a sure-fire way to increase usage of your daytime solar energy.

Get a battery

OK, this is a bigger ticket item.  But if you really want to get your solar self-consumption rate a whole lot higher – maybe even to 100% – then battery storage is a great way to go.  Plus, there are other advantages that come with the right battery system, such as protection from power outages.  With battery rebates available in parts of Australia, prices are looking increasingly affordable.  Get in touch if you’d like a battery quote – you may be pleasantly surprised at the price tag!

Go electric

Electrifying all aspects of your home is the way of the future according to industry experts.  For example, inefficient heating can make up as much as 40% of your energy billand an inefficient gas hot water system can chew up 20% or more of a household’s total power.

It’s a good idea to gradually replace old gas appliances with new electric ones over time.  That way, those energy-hungry items – like heating, cooling, hot water, cooking – can be powered during the daytime with free solar power.

Down the track, it’s worth thinking about switching to an electric vehicle.  If that’s the way you’re thinking, you aren’t alone. Electric vehicles are predicted to comprise 80% of new vehicle sales by 2030 according to the Reliable Affordable Clean Energy for 2030 Cooperative Research Centre (RACE 2030).

One thing for sure, the last thing you’ll want is to send your excess solar power to the grid when you have an EV.  You’d probably be wishing you’d invested in an even bigger solar system!

Keen to save with solar?

Get in touch if you’d like a quote for the best solar system for your property.  We’re happy to crunch the numbers and let you know exactly what size and type of system will best meet your needs.

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