How to avoid solar feed-in tariffs affecting your pension


In a previous blog, we discussed “Why Solar Power Should Be Part Of Your Retirement Plan” and the long-term benefits of investing in a residential solar power system. What we haven’t spoken about is whether solar feed-in tariff returns could affect pension payments.

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Solar Feed-in Tariffs

For those unaware of what a feed-in tariff is, it is a rate you are paid from your energy retailer for excess electricity your solar power system has generated. Feed-in tariffs are only issued if your solar power system has generated more day-time electricity than your household has used. Rates can fluctuate around .0c-.15c per kWh in most states but it is dependent on your energy retailer.

Do Solar Feed-in Tariffs Count As Income?

While a solar power system can reduce your electricity bill by as much as 80%, it is unlikely without battery storage that you’ll have zero electricity charges from your energy retailer. This is due to the need to pull energy from the electricity grid at night. In this case, a feed-in tariff payment will be received as a credit and will further reduce the electricity bill for that quarter.

When a feed-in tariff is received as a credit on an electricity bill it is not counted as income and therefore does not affect pension payments.

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If the feed-in tariff that you receive puts you in surplus credit, meaning the energy retailer owes you money, there is a chance that it could jeopardise your pension payments. However, there is a way around this!

Avoid Sacrificing Pension Payments

If your solar power system has sent you into surplus credit with your energy retailer, they may send you a cheque in the mail. If so, this can be classified as additional income. To avoid this some energy retailers will allow you to nominate that quarter’s surplus credit to be put towards your next electricity bill.

If this is not an option and it is affecting your pension payments, you may want to consider adding battery storage so that you are able to store your excess electricity to use in times your solar power system is not generating enough or any energy e.g. at night or in winter.

Due to the costs of adding battery storage, it is only recommended if you find your solar power system is generating superfluous of energy consistently. If the surplus credit you receive from the energy retailer is small, it should not affect your pension payments by much, but will still be worth monitoring.

If you’re considering solar power in your retirement plan, receive obligation free solar quotes from local installers to get started and compare prices.


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Understanding Batteries

Off-Grid Systems

For some households a battery system can be of great benefit and minimise a home’s reliance on the grid. However, it’s important to understand for a battery to be useful your solar system needs to be generating excess energy for the battery to store, which you can then use at night or when the sun is not out.

When selecting a battery, you’ll want to invest in a system that is most suited to your home and can drive the best return on investment (ROI). Despite a larger upfront cost, a higher quality battery may significantly increase your ROI.

    Battery systems start from $6,000 and costs can vary greatly based on the following factors:

  1. Cycle Life-Time

    The number of times a battery can fully charge and discharge.

  2. Battery Power (kW)

    How fast it can be charged or discharged.

  3. Storage Capacity (kWh)

    The maximum amount of energy a battery system can store.

  4. Battery Management System (BMS)

    An electronic ‘smart’ system that gathers data and manages the battery ensuring it does not overload or operate outside of its safe functioning zone..

  5. Inverter

    Battery systems require their own inverter if your solar system does not have a hybrid inverter.

  6. 'All-In-One Unit’

    A system which includes the battery, BMS and an inverter all in one unit.

  7. Warranty

    Length of time or cycles the battery system is under guarantee.

  8. Blackout Protection/Backup

    It’s important to note this is not a common feature of a battery system and could cost thousands of dollars to include. Blackout protection not only requires additional components but also a specialised installation and rewiring. For grid-connected homes, the cost for blackout protection can outweigh the benefit.

Additionally, if your purpose for adding battery is to go Off-Grid and become completely independent from the grid you will need to ensure your solar system can generate enough energy to power your home and your battery system is large enough to store this energy. For homes in metro areas going Off-grid is not cost effective and is only recommended for those in remote areas with limited access to the grid. Off-grid solar systems with battery start at approximately $30,000.

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