Over the last few years, we’ve seen gradual reductions in the subsidies offered by the federal government for people installing solar on their roofs.
This gradual reduction of the Solar Credits Multiplier was part of the initial design of the Solar Credits Scheme. In short, the Federal Government provided a multiple of the number of Small Technology Certificates that you’re entitled to for your first 1.5kW worth of system installed. STC’s and the Solar Credit Scheme are discussed in more detail here.
This reduction in isolation should have seen the prices of systems increase but massive over production of panels in China has caused a collapse in panel prices and therefore lower system prices.
Over the last 3 years, panel prices have fallen by over 75% and prices for other components such as inverters and mounting equipment by up to 50%.
This has meant that during the heady days of 60c feed in tariffs (now long gone and never to return) a 5kw system (25 panels) would have set you back up to $30,000. Nowadays, you can pick up a cheap $5kw for around $9,000 or a top of the range for around$15,000.
This decrease in prices has meant that the massive reduction in Feed in Tariffs hasn’t has that great an effect on investment returns. Yes, you’re now receiving less returns for what you export to the grid but at the same time, you’ve got a much smaller out of pocket investment to pay off. This means that payback periods and returns on investment are about the same as they were when everyone was trying to get in before the good times ended.
It’s widely believed that the current level of pricing can’t continue indefinitely due to the fact that many Chinese manufacturers are currently losing money. Once equilibrium between supply and demand returns to the market (many manufacturers are now cutting back on production), panel prices will inevitably rise again. Add to this the expectation that the Australian dollar will fall due to lower demand for our resources and lower interest rates, now may be the best time to invest in a system while prices are so low.
New York times – Glut of Solar Panels Poses a New Threat to China