4 Myths About Solar That Could Be Costing You Money

With nearly 1.5 Million Australian households having solar panels on their roof (that’s more than 1 in 6 houses with solar!), 4 major myths about the value of solar still persist.

These myths are costing home owners money, usually in the form of lower power bills, and are mostly due to misinformation spread by anti-renewable “fans” and people who haven’t got the most up-to-date facts about the market space.

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So, here’s the 4 myths and the FACTS as of 2016:

Myth 1) Solar power systems are expensive

5-10 years ago, that was probably true to some extent. However, with the growing popularity of solar power, the combination of economies of scale (i.e. more people buying solar means costs to manufacture systems have gotten cheaper over time) and always-improving technology have significantly reduced prices in the last decade and average system prices are lower than they’ve ever been before.

For example, back in 2009, a 5kW system cost somewhere in the region of $20,000 – $25,000. The average price now (Q1 2016) is much closer to $5000 (with some firms selling systems even cheaper than that.) Entry-level 1.5kW systems now average $2,500 – $3,200 across Australia – a LOT more affordable than they were 5 years ago.

According to the Clean Energy Council, even without feed-in tariffs, a combination of rising electricity prices and the falling cost of solar PV systems means the business case for solar remains compelling. In its 2012 Australian Energy Technology Assessment, the Bureau of Resources and Energy Economics estimated that solar power would be among the cheapest of all energy sources by the end of the decade.

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Myth 2) With Feed in Tariffs now down to 6-8c/kWh, it’s not worth installing solar

This one is probably the BIGGEST myth and misconception people have about solar power and whether it’s worth the money or not.

In the early days of the industry, the govt decided to introduce feed in tariffs, which were payments given to the home owner (with solar) for the excess electricity they sold back to – or fed back into – the grid. The reasoning behind introducing these tariffs was to encourage people to invest in solar when it was more expensive, with a view to speeding up sales of solar, reducing prices (through economies of scale) and – most importantly – generating spare electricity capacity in case the grid was overloaded (especially on hot summer days when everyone turned their airconditioning on.)

Note: These tariffs were never designed or planned to run forever. They had a time limit on them AND once they achieved their goal of bringing prices down, they would be reduced or removed.

Early tariffs were substantial (40-60 cents per kWh of power sold back to the grid) and many people found they were making more money from their tariff payments than they were spending on their electricity bill, by exporting ALL their daily power back to the grid rather than use it themselves.

HOWEVER, as the tariffs did their job of increasing sales (and reducing prices) of solar power systems throughout Australia, the need to pay high tariffs was wound back over time by governments, and in most cases they are now in the 6-8c/kWh range, which has upset some people, as you can imagine.

The one key element people seem to be forgetting in all this is that the real point of solar power is to generate your own free power and use it yourself, so you don’t have to purchase power from your energy supplier at full retail price. In most cases, the SAVINGS in using your own power instead of the grid means you’ll pay your system price back in approx 4-5 years, which is a better Return On Investment than putting your money in the bank and waiting for the interest payments!

Consider a simple example:

If your current grid power costs 24c/kWh (typical rate most energy retailers charge) and the Feed in Tariff payback is approx 8c/kWh, why would you export electricity back to the grid to earn 8c/kWh when you could SAVE 24c/kWh by using your own solar-generated electricity? It just doesn’t make sense to earn 1/3 as much as you can save for the same unit of electricity!

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Myth 3) Solar power is only for big energy users. Am I paying all this money just to run my fridge during the day?

Since your solar panels only generate electricity while the sun is shining (i.e. daytime, when most of us are at work or school), some folks think that solar isn’t much use to them when they aren’t at home in the daytime.

However, there are a variety of ways to use your power even if you’re not home during the day. Focus on ways you can use the energy generated during the day instead of paying full retail price for it from your energy supplier. That’s where the true savings are.

Look at ways to switch as much of your electricity usage to daytime as possible. For example, put your washing machine, dishwasher and dryer on a timer so they run during the day. If you have a pool, run the pump during the day (pool pumps use a HEAP of electricity – in the order of $500-$1000 per year!)

If your solar system provides most or all of the energy for these items and others, you’re ahead of the game. Have some fun figuring out other ways to switch power usage to the daytime and you’ll save more & more money and come out ahead. That’s how people pay for their solar system in 4-5 years (We’ve heard of some who did it in 3-4 years) – not just relying on the feed in tariff to make money.

And last but not least, remember that most people are home in the daytime on the weekend, so there’s 2 days when you can use most of your solar-generated electricity. Plus, if you work from home, or are a full time parent at home, you can also use a lot more of the power generated by the sun during the day.

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Myth 4) Electricity costs keep going up because of solar

One thing I think we can all agree on is that the price of electricity has continued to rise year-on-year.

Given that electricity prices have gone up 100% or more in the last 7-8 years AND they are predicted to keep going up – possibly another 40% (plus) in the next 10 years, it’s pretty safe to assume we won’t see the end of exorbitant price rises for power anytime soon!

Here’s the average increases in electricity prices for householders from 2007-08 to 2013-2014 (7 years).

Note: These figures do not include rises in the 2014-15 & 2015-16 Financial Years so the real figures are higher than those listed below.

Average increases in household electricity prices 2007-08 to 2013-14
Sources: Lynne Chester & ABC Fact Check

Some people blame the massive growth of solar power in Australia for what sounds like most of that price rise, but the reality is that what has mostly caused these massive price rises is overspending by the big energy producers (to the tune of $45 BILLION!) on network infrastructure that is no longer needed. In fact, power usage across Australia has been on a downwards trend since 2010, but the power companies went on a big spending spree and built a heap of poles & wires + fossil fuel powered plants that we just don’t need!

If you want to know more about this, just do a google search for “gold plating of electricity grid” – you’ll be horrified at what you find! Or you can read our overview on the subject.

Lastly, the carbon tax was also blamed for the big prices rises, but that was less than 9% of the cost of your power AND it was recently reported in Victoria than the price of electricity has gone back up PAST the prices they had before the tax was removed!

So much for saving you money by getting rid of it!

How To Start Saving Money With Solar Power

OK, so if you’ve made it this far and have had your eyes opened as to the benefits of solar power (and maybe also had a few misconceptions brushed aside), the next step is to get 3 FREE no-obligation quotes for solar power from installers servicing your area.

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