Solar Subsidies To Drop In 2019 – But Don’t Panic!

If you’ve been looking into installing solar, you’re probably seeing a load of advertisements stating to
Last Chance concept illustration in comic book style

“QUICK! BUY SOLAR BEFORE THE FEDERAL GOVERNMENTS’ SOLAR SUBSIDY IS REDUCED COME JANUARY 2019!”

And while it’s true the subsidy is scheduled to reduce, it’s no time to frantically purchase a solar system you weren’t ready to buy.

The solar subsidy officially known as the Small-scale Renewable Energy Scheme (SRES), entitles individuals and small businesses to large subsidies when installing eligible small-scale renewable energy systems (under 100kW) such as solar PV systems. The size of the system determines the number of small-scale technology certificates (STCs) it’ll receive. STC’s have a dollar value which fluctuates depending on industry demand (currently $36.05). The more STC’s the system is entitled to the larger the Government contribution will be when purchasing the system.

Each year since January 2018 the number of certificates a system is entitled to will reduce until 2030 when the scheme is set to finish.

Not To Be Confused With The Feed-in Tariff

It’s important to note that the SRES/STC subsidy and Feed-in Tariff (FIT) rate are completely different solar incentives. The FIT is essentially a reimbursement for the excess energy your system generates. It is fed into the grid to be used elsewhere and appears on your electricity bill as a credit. Read more on FIT here.

How Much Will The Subsidy Reduce Come 2019

Now while it’s true the subsidy is set to reduce come January 2019, is it enough to have you rushing into a purchase you weren’t quite ready for? Let’s look at the pricing difference between buying in December 2018 to January 2019 for a 6kW system, which is a common size for the regular residential home.

A 6kW system in 2018 is entitled to 107 STC’s. In 2019 the same system will be entitled to 99 STC’s.

To calculate the subsidy you’d then use the following formula;

Number of STC’s x STC value = Subsidy value

If the STC value was to stay at $36.05 you’d be left with the below subsidy values for each year;

  • 2018 Subsidy value= $3857.35
  • 2019 Subsidy value= $3568.95

That’s a difference of $288.40 in subsidies for a 6kW system.

The pricing gap will vary depending on the system size.

Find out how many STC’s the system size you’re looking into is entitled to here

Is it Worth Purchasing Before The Reduction In Subsidies?

Yes and no.

If you’ve done your research, compared quotes and were ready to install prior to the threat of subsidy reductions then yes. Installing a month or two earlier then you had planned will save you $300 or so, which will come in handy this holiday season!

If you were still on the fence, then no. Rushing into purchasing a system that you haven’t done your research on can end up costing you more than $300 in the long run.

The fact is that the solar system industry is quite competitive amongst brands, providers and installers. As the industry becomes more competitive and technology has advanced, we’ve watched solar system prices steadily drop since 2008. So, whilst you may miss out on a higher subsidy for waiting until 2019, by doing your research and comparing quotes you could find a more competitive price for the system size you want.

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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.