One Power Solar’s technical director Sean Barry shares his formula for working out whether solar panels will save you money on your electricity bills.
The number one question people want to know when it comes to weighing up whether solar is worth it in Australia is: will solar panels save me money?
When you first start doing your homework on renewable energy systems, working out whether or not you can save money with solar can feel like a pretty confusing and overwhelming exercise.
One Power Solar has an online quiz to give you a quick calculation on the potential savings to be made, depending on factors such as the state you live in, your average bill, the style of your home, and whether you own or rent.
During a free in-home assessment, some of the factors our Energy Assessors consider are:
- How much power you use
- When you use that power
- The size and style of your home
- Your feed-in tariff rate
- How much you’re paying for power
- Your state and where you live
But if you’re looking for a super short answer to ‘will solar panels save me money’ right now, then the simple answer is….
Yes! Solar panels will definitely save you money on your electricity bills.
And the reason is fairly straightforward.
An electricity retailer charges you for each kilowatt that comes off their network. When you install a solar power system, the power is generated off your roof instead of from a network provider. When you draw power from your own network, so to speak, you save the money you would have paid to a retailer.
Furthermore, the power that you don’t use from your solar panels is exported to the grid for a feed-in credit, which is another way you save with solar.
With the price of electricity continuing to surge across Australia year on year, more and more households are switching to solar in order to save.
(There’s another super simple calculation you can do yourself at home, which we’ll cover further down.)
The real questions to ask
For those of you who want to dig a little deeper on the ways in which you can potentially save with solar, the real questions you need to ask are:
HOW MUCH will I save with solar panels?
HOW LONG will it take to start making money back from my solar system?
If you’re interested in understanding the answers in more detail then read on…
QUALITY + TIME = SAVINGS
When the One Power Solar team sits down with a new customer for a free in-home assessment, there’s a process we work through to guide you towards an informed and confident decision.
Some of the factors we invite you to consider are quality and time. Quality systems aren’t cheap, cheap systems aren’t quality.
To save money with solar you need a quality system that will operate effectively over an extended period of time.
What the cut-price cowboys in the solar market won’t tell you is that cheap solar systems don’t operate as efficiently, the materials and components deteriorate within the first 3-4 years, and those systems are highly subject to premature failure. By the time you realise this, those pop-up operators are long gone or they will try to charge you to fix their shoddy workmanship.
For you to get optimum return from your solar system over an extended period, we recommend investing in a quality system that’s installed by a reputable solar company with a track record of servicing their customers needs, before and after the sale.
A premium system that’s made using high-grade materials and components is designed to last for around 25 years. These systems are also supported by generous warranties of 10-25 years, depending on the system you choose.
The quality of solar power systems has gotten better and better over the years, thanks to the ever increasing demand for solar panels in Australia.
Any good panel will outlast its warranty, and be well supported by a company that’s got the long-game in mind and not just the short-term turnaround of clients.
This brings us to the second main factor to consider when working out whether you will save money with solar panels in 2019.
The return on your solar power investment will take time.
For approximately the first five years after your solar system is installed, the savings you make on electricity bills are effectively covering the cost of buying the system.
Once your solar system is paid off, the system starts making you money in years 5-10 — the money you would have spent on your electricity is now going back into your pocket to spend on other things, like family holidays, home renovations or into savings.
To consider this from an investment perspective, the long-term return on a solar system is, on average, around 20% — that’s higher than you would get back on the property or stock markets.
A five-year payback on a system that can last 25 years is a significant return on your investment.
To recap at this point, we now know the basic formula for working out, ‘Will solar save me money?’: QUALITY + TIME = SAVINGS
Now that we’ve got a clear understanding of how solar can save you money, we can break those savings down further in a way that’s relevant for your household.
Ready to dig a little deeper to understand how you save you can save with solar?
Let’s do this…
The Investment Savings Method
Find out if solar will save you money.
This first savings method involves a similar mentality to investing in shares, but much less risky.
Let’s consider this example…
Your solar system may be saving you $42 per week off your power bill.
Your repayments on your solar system may be costing you $50 per week.
This means each week you are investing $8 per week into your solar system purchase.
For an asset that’s making you money from years 5-10, a solar system presents as a very cost effective purchase given the financial gain.
Cost Neutral Method
For this second savings method, let’s consider this example…
Your solar system is saving you $50 per week off your power bill.
Your solar system is costing you $50 per week to pay back.
Using this method you’re not investing any extra money into the purchase of your solar asset. Instead, you’re redirecting the savings from your bill straight back into your new solar system purchase.
Regardless of which method you use, the outcome is the same — you will save money with solar.
There’s a super simple calculation you can do at home to know for sure whether you can save money on solar.
Using your latest power bill, take the amount owing and multiply it by .40.
For example, $400 x .4 = $160.
If the number you see is less than your latest power bill, then you will save money from solar using either method above.
Solar Power Rebates in 2020
The Renewable Energy Scheme was established in 2011 to make solar a more affordable investment for Australian households and to kickstart the nation’s solar industry.
The rebate entitlement depends on your system size and post code. One Power Solar advisors can calculate yours as part of a free, no-obligation assessment.
So, will solar save me money?
Hopefully by now you will have a clear sense of whether solar panels will save you money.
It’s clear to see that a quality solar system installed by a reputable company can be paid off within 5 years, using the money you save on your quarterly power bills.
It’s also clear that over time your solar system can then start making you money. Once your system is paid off, the next 5-10 years see the money you would have spent on electricity remain in your pocket.
On top of that, the rebate available under the Renewable Energy Scheme in Australia further reduces the cost of purchasing your solar power system which amounts to bigger savings.
So is solar power still worth it in Australia in 2020?
Damn right it is.
Start saving with solar today, book in a free in-home assessment with One Power Solar to see just how much money can save. Call 1300 568 589 or contact us online.