Grid Feeding with Solar Panels
A quick drive around the suburbs of any city or town in Australia (and in most of the world) will reveal that grid feed solar systems are becoming more and more popular and why not? With power prices skyrocketing and government subsidies available a grid feed solar system looks beneficial. But is it???
In most instances grid feed systems are a complete waste of money and of zero or negative benefit to the environment. Read on to find out why!
History
I have installed a heap of grid feed power systems, the first was in Tasmania, way back in 1996 when grid feed systems were just about unheard of. The folk at Aurora Energy (Tasmania) knew nothing about solar to grid systems back in 1996!
From about 2007 until the late 2009 you could get a rebate of $8000.00 to put a grid feed system in. This rebate has gone and the only current Federal Government rebate is based on a thing called a "Renewable Energy Credit" (REC). According to current politics the price of a renewable energy credit is subject to market demand but apparently this is about to change with fixed REC pricing coming in 2011. The REC completely rids all grid feed systems of any environmental benefits at all (more on REC's the end of this article). REC's are an environmental rip off!
With the advent of cheap Chinese solar panels it was possible to install a grid feed solar system in 2009 for $8000.00 and make a profit. Several companies started offering free (Government paid for) solar systems. As you could imagine these were extremely popular! I put a few in myself. Free solar systems for the masses was never the intent of this rebate and with the stroke of a politicians pen the $8000.00 rebate finished.
After some argument, a bit of lobbying from the rapidly expanding solar industry and a bit of feel good green politics a new REC based rebate replaced the 8K thing and the industry was away again.
I say the industry was away again because the solar industry would not survive in its current form without massive Government rebates. This fact alone should start your economic alarm bells ringing!
The economics of grid feed solar systems
Forget the solar salesman's bullshit, work this out for yourself! If a solar system is not financially viable why would you put one in? For the environment perhaps? We will look at the environment later, let's look at the economics first.
Power is sold in units. a unit is a kilowatt hour or the use of 1000 watts of energy for a period of one hour. You don't need to understand much more than this. A unit of electricity or kilowatt hour (kWh) is nothing more than a unit of measurement. Grab your power bill and find out how much you are paying per unit and how much you are using per month or billing period then convert this to an annual consumption. The 2009 Australian household average was around 20 kWh per day (source Hydro Tasmania). According to Hydro Tas this is growing by around 10% per annum as we buy more and more stuff that runs on electricity. 20 kWh in 2009 became 22 kWh in 2010 and will no doubt become 24.2 kWh in late 2011 as our penchant for things like plasma TV sets and air conditioners grows.
The price of electricity in 2010 was around 16 - 18 cents per kWh. for the purpose of this article and allowing for a price rise let's say electricity is costing you 20 cents per kWh but don't take my word for it, grab your power bill and find out exactly what you are paying.
The cost of a grid feed solar system after the rip off REC's have been paid to you or whoever is doing the installation will be around $3000.00 to $4000.00 for a 1.5 kW system. A 1.5 Kw system will generate around 6 kWh per day averaged over one year in a very good location. How good is your location? Do you even know?
Grab a calculator and look at the facts
For this example let's assume you have $3000.00 kicking around in a bank account and you have absolutely nothing else to do with it. You get lucky and the Ta Fong Solar Panel Co offers you a 1.5 kW grid feed system for your 3K. They strategically locate it facing perfectly to the north at the perfect angle and indeed it manages to produce an average of 6 kW per day. It is making you $1.20 per day.
At the end of year one you have saved 365 x $1.20 which equals $438.00
If you had left the $3000.00 in the bank and earned 6% interest, 1 year later you would have earned $185.00 odd in interest and would have around $3185.00 in the bank.
Let's now look at how things are going in 5 years. 5 x $438.00 = $2190.00. Your grid feed solar system would have saved you $2190.00
If you had left the $3000.00 in the bank and earned 6% per annum, at the end of 5 years you would have $4046.00 odd in the bank. The grid feed is catching up!
Let's now look at 10 years down the track. Your grid feed system has saved you $4380.00
If you had left the $3000.00 in the bank and earned 6% per annum, at the end of 10 years you would have $5458.00 in the bank. Financially, after 10 years you are still better off to the tune of $1078.00
Now let's look at a 10 year old grid feed solar system
The Ta Fong Solar Panel Company has gone, swallowed up in a takeover from the New Fong Renewable Energy Company. All your warranties have expired except for the "20 year limited output guarantee" that you got on the panels. The panel output has deteriorated by 10% as would be expected. One of the roof penetrations has started leaking and there is partial shade on one of the panels from a neighbors tree. The grid feed inverter needs servicing and you need to invest around $2000.00 to get it all put back in order. You are now averaging 1.1 kWh per day and your electricity consumption has doubled. As a little sweetener though, the price of electricity has also risen so your return is still about the same, but only if the system is still functioning correctly.
But the situation might be worse still, say one of the Ta Fong panels has failed totally. BUT ... you are lucky, The New Fong Renewable Energy company is feeling benevolent and offers a free replacement. You call up an installer who fronts up and goes to fit the new panel. Unfortunately it is a different size and does not fit where the old one came out. The installer fools around all day making things work then hits you with a bill of around $900.00.
It is my experience that somewhere between 1 in 100 and 1 in 20 solar panels will fail before the warranty on them has expired! After almost 20 years in the solar panel industry I have found that the manufacturers are anything but benevolent. You pay for the removal of the panel and freight back to the manufacturer or their representative. If you are lucky a replacement (usually of different dimensions) will turn up after up to 6 months wait. You then need to pay to have it fitted! If you are unlucky the solar panel company denies warranty and you get nothing. I have seen all this happen.
For my investment I would rather have $5458.00 in the bank!
OK you didn't have $3000.00 to begin with and borrowed the money on a mortgage or a low interest green loan? Pity you! You have "saved" even less and possibly nothing! It may even cost you to have a grid feed system!
If you are contemplating getting a grid feed solar system with someone else's finance then I would strongly suggest you think again!
Finally before you get a bit depressed, let's look at the renewable energy credit or REC
To get the above system fitted for $3000.00 you will have had to have accepted the Federal Government Rebate. This rebate is based on the price of a REC. In order to get your rebate you are required to sell the REC's that your solar system saves.
Some bean counter has calculated somewhere that a REC is a beautiful thing that will offset carbon emissions. The REC's that you have produced and have been required to sell to get your rebate will be used to offset the carbon produced by someone else. There is nothing you can do about this unless you want to pay the full price for you 1.5 kW grid feed system which would be around $8000.00.
Because the carbon savings on your grid feed system have been sold, the system is saving the environment nothing!
So why then are grid feed systems everywhere?
Blowed if I know? Certainly I fitted quite a few back in the days of the 8K rebate. These days I have better things to do. There is also a plethora of solar importers bring in container loads of cheap Chinese solar panels and an even greater amount of folk eager to fit solar systems to your house. Sadly a bit of truth has been lost along the way of making business. Climate change politics have also helped and all politicians try to look a bit green when required. Solar panels can make politicians feel good.
There are also folk out there who just want a grid feed solar system. Just wanting a grid feed solar system is about the only valid reason I can see for fitting one!
Some Australian States are also paying a multiplier for "green" electricity. You may earn several times the price of electricity from your solar system. If I can finish this article with just one bit of advice:
Please do the sums first if your reason for a grid feed solar system is economic! Do the sums yourself, work it out without a solar panel salesman present. Get all the data, like the price you are currently paying for electricity, the amount your electricity provider will pay you and the type of metering you are going to get. Remember, there are very few accountants with grid feed solar systems!
To understand how a grid feed solar system works click here for another article!