PAYBACK PERIODS ON SOLAR INVESTMENT

The Alternative Technology Association has crunched the latest numbers on payback times for solar power systems across Australia. While prices for solar systems have continued to drop, feed-in tariffs and other incentives have also been falling in all states.


The ATA considered payback times in each state and within each state – taking into account the best and worst of the payback range within some states. Many rural areas in Queensland, WA and Victoria have faster payback times due to more sunshine and generally less shading and therefore increased eligibility for a higher number of Small Technology Certificates (STCs). It is also important you do not oversize your system to get the best out from your solar panels. see how to size a solar system.

Aside from the relevant STC (Govt. Incentives zones within each state, the ATA took into account the following current feed-in tariffs:

State Feed-in Tariff Rate
QLD 8 c/kWh (Net)
NSW 8 c/kWh (Net)
ACT 7.5 c/kWh (Net)
VIC 8 c/kWh (Net)
TAS 8 c/kWh (Net)
SA 7 c/kWh (Net)
WA 8 c/kWh (Net)
NT 27.8 c/kWh (Net)
* this figures are indicative only and may change time to time without notice. you should not consider this as a factor making any financail decisions.

The ATA stresses that you should aim for quality when buying a solar system for your home. This means obtaining good warranties for panels and inverter and a minimum of a five-year installation warranty from a supplier with a strong track record and evidence of good after-sales support and service. This typically means paying a little more than the lowest market rate.

For this exercise, we chose a 2kW system as the average size that consumers are installing. It should be noted that as there is no longer an STC multiplier for the first 1.5kW installed, paybacks are linear for different system sizes with the same percentage of energy exported to the electricity grid.



That means that if a 2kW system and a 3kW system send 40 per cent of their electricity back to the grid and have the same installed cost per watt, they will have the same payback period. A different export percentage will end up with a different payback outcome.



The ATA set the consumption tariff at 35 cents per kilowatt hour, and we have chosen not to include a projected tariff rate increase over time. Consumers should therefore be aware that any increase to their future retail tariff will slightly improve the payback times listed below.



The payback times for your solar investment is roughly between four and six years in all states and territories. However for those on net feed-in tariffs, this is when electricity export rate is down around 10 percent. This means that the clear majority of the solar-generated electricity is being consumed on-site – i.e. average to high energy users with small solar systems.



The key thing to consider is how much of the electricity generated by your solar system will be realistically consumed on-site at the time it is generated. For many people who are out all day at work and school, it is likely that not much more than the fridge and some stand-by loads will be running. And unless your fridge is ancient, it’s not likely to consume much more than a kilowatt hour or two over the course of a day.



It is common for households to export more than 50 per cent of their generated solar electricity, even with systems of 2kW and under. At 75 per cent export, the payback time for most systems is between 10 and 15 years.



You may also interested to learn about things to consider before going solar.