Installing Solar PV Panels – The Figures Don’t Add Up, BUT…

Many years ago, I heard it said that Aboriginal people tread lightly when they walk because they perceive the earth as their mother, and to stomp around on her would be disrespectful, insensitive. That awareness of the earth as mother has been with me ever since. I’m not claiming that I pick my way along like a water bird stalking the shallows, but I do recoil from the attitude that the planet and the creatures on it are ours to take for granted, to exploit and tread all over as we like. And like many others, I have grown ever more conscious of our desecration of the natural environment, and my personal responsibility to “do the right thing”.

I do my best, within reason, to minimise my carbon footprint. No aircon, no bar fridge or freezer, small shared 4-cylinder car, lawn replaced with waterwise natives and organic vege beds laid with sub-mulch drip irrigation, all vegetable waste composted or dispatched to the worm farm.

OK, “within reason” for me might seem extreme to some. It so happens that I find the sustainable living concept attractive, regardless of any climate change factor. I don’t like waste and excess. I do like picking herbs and veges from the back garden and cooking – and eating! – my own organic produce.

I do not seek to present myself as some sort of noble environmentalist making sacrifices for future generations. I enjoy living the way I do. It is no sacrifice. And my topic here is not myself or my lifestyle choices, but hard economics – specifically, in the context of installing solar photovoltaic (PV) panels. Yes, even for people like me, practising sustainable living as far as is practicable in an urban environment, choices come down to the bottom line at some point.

Last year, I decided to investigate the viability of installing solar PV panels on the roof. Since we qualified (sadly, very easily) for the Federal Government’s $8,000 rebate for households with incomes under $100K per annum, I assumed the PV panels would pay for themselves within a few years. It seemed a win-win, environmentally and personally – if we could afford the initial capital outlay, we could look forward to smaller energy bills not far down the track, perhaps even no bills at all! Perhaps Synergy would be paying us (such are the claims that are bandied about by some who have taken the plunge and installed solar panels).

Oh yeah? Do the homework and you’re in for a jolting reality check.

Detailed calculations follow, but to cut to the chase: installing the required minimum of 6 solar PV panels, it would take just over 21 years to break even! Yes, this is with the $8,000 rebate + cashing in the 21 RECs (Renewable Energy Certificates) you receive when you install 6 panels.

Calculations in detail

  • 1.05kW system with 6 x 175W Sharp Panels + large Fronius inverter (to allow future addition of up to 10 more panels): $13,660.00 including GST
  • Minus $8,000.00 government rebate
  • Minus $924.00 (21RECs x $44). Note: The REC rate is variable – it was $44 at the time these calculations were made)
  • Actual cost: $4,736.00 including GST
  • Synergy currently charges 13.94c per unit (incl. GST).

    A 1.05KW System of 6 x 175W panels produces estimated average energy of 4.4 units daily. @ 13.94c per unit, this represents a saving of 4.4 x 13.94 = 61.33c per day.

    Annually, this translates to a saving of $223.83 (that is, 61.33c x 365 days).

    Cost of the solar PV panels was $4,736.00. Therefore, breakeven point is 21 years (that is, $4,736.00 divided by $223.83).

    OK, the point should be made that there are cheaper solar PV panels around than the Sharps, and cheaper inverters than the Fronius expandable for which we were quoted. I figure you get what you pay for, and with a long-term investment like solar PV panels it makes sense to go for quality. Even if you chose the cheapest possible options, though, you’d still be looking at around $3,000 installed – and 14 years to break even! This is for bottom-range Chinese solar PV panels, which are less efficient than quality options like the Sharps and subject to more rapid deterioration over time, and a basic inverter that will not enable the addition of further panels in the future.

    We wanted solar PV panels. We really wanted them. We did the calculations once, sat back bemused, and did them again. Emailed our figures through to the guy who’d quoted us. He confirmed that our figures were correct. We scratched our heads, considered this and that future scenario, and came to a regretful conclusion that it was simply not economically sensible to install solar PV panels at this time. Only an environmental idealist with money to spare or someone who hasn’t done their sums properly could logically conclude otherwise!

    The government’s $8,000 rebate offer is clearly inadequate as a standalone incentive to encourage mass domestic installation of solar PV panels. If people like me, more committed than most to sustainable living practices, are not prepared to wait 21 years to break even, will yer average Joe be willing to fork out? I don’t think so.

    So, whaddayado? Well, for a start, wonder why sun-deprived countries like Germany should have a far greater domestic uptake of solar PV panels than Australia. It doesn’t take much research before the answer is staring you in the face. Their government has made a serious commitment to solar energy; ours hasn’t.

    The outstanding success of Germany’s solar PV uptake comes down to a simple policy: the feed-in tariff. The German government pays 4 x the market rate to anyone who generates electricity from solar PV, wind or hydro – and this payment is guaranteed for 20 years.

    Power is far more costly in Germany than in Australia (about 35p per unit, according to this report from The Guardian, or 78c Australian… 5.5 times the 14c per unit we’re being charged in Western Australia). If the Australian Government were to match the German feed-in tariff on a dollar-for-dollar basis, they would be paying solar PV panel households a feed-in tariff of about $3.12 per unit.

    The feed-in tariff currently being sought from the Federal Australian government by solar PV advocates is 80c per unit. This is about 5.7 x the current cost per unit (as opposed to the German 4 x), but factoring in the relative cheapness of power in Australia, an 80c per unit feed-in tariff here works out at only about 25% of the per unit contribution paid by the German government. Reasonable, surely?

    An 80c feed-in tariff would slash the breakeven period for the system we were quoted on from 21 years to 3.7 years (less, of course, for cheaper systems). And after that breakeven point, at current rates we’d be paid $1,284.80 per year for the electricity generated by the 6 solar PV panels. Add more panels down the track and it is quite conceivable that you could cover your household energy costs and make some carbon-free profit from the sun hitting your roof! Thus, with an 80c feed-in tariff, investing in domestic solar suddenly makes a whole lotta sense.

    The government is canning the means-tested $8,000 rebate mid-year and replacing it with a more complicated system. Even if the current rebate was halved to $4,000, add an 80c feed-in tariff to the equation and breakeven is only 6.8 years away. Still viable by most reckonings, I would think.

    Seems to me a no-brainer that our government should adopt a similar domestic renewable energy strategy to that which has been so successful in Germany. With a feed-in tariff of 80c, solar PV panels would become a compelling investment, both financially for the individual and environmentally for the community as a whole. Further, at a time when recessionary forces are threatening jobs, substantial employment would be created by increased demand for solar PV panels. This is not mere postulation. In Germany, the push for renewables has spawned a quarter of a million jobs and strengthened the economy (see here). With our climatic advantages, why are we dawdling so?

    The approach to feed-in tariffs here is a dog’s breakfast. Each State government has a different policy, ranging from 60c in Victoria to zilch in WA and NSW. See here for a good State-by-State summary.

    We need a simple nationalised feed-in tariffs program, based on the successful German model. Why reinvent the wheel? Both major parties went to the last Federal election promising feed-in tariffs – where’s the action to back up the rhetoric? Give them a poke!

    If the arguments presented here make sense to you – and why would they not? – TAKE ACTION NOW.

    Write to your local Federal Member of Parliament requesting they honour their pre-election commitment and move to introduce gross feed-in tariffs as soon as possible to increase solar power use in Australia. You may wish to direct your email to the Minister For the Environment, Peter Garrett. His email address is [email protected]

    Finally, help to build momentum by sending links to this post and/or the feed-in tariff petition to everyone in your address book. No matter how acute the selective deafness of politicians, the roar of the people will get through if it’s loud enough.

    83 thoughts on “Installing Solar PV Panels – The Figures Don’t Add Up, BUT…”

    1. Feed in tariffs are a great idea and would make a big difference. The problem is that electricity is way to cheap, and environmental costs are not reflected in the price.

      If its any consolation, WA electricity prices are slated to rise sharply in the next couple of years. The Office of Energy’s review of electricity tariffs recommends an increase of 50 percent next year, followed by 26 percent and 14 percent over the next two years. Crunch those numbers (1.5 * 1.26 * 1.14 = 2.1546) and you get a more than doubling of the residential K1/K2 tariff. The increases are to offset rising production costs expected with the introduction of the federal government’s Carbon Pollution Reduction Scheme. So the cost to the consumer becomes more like 30c per unit, which still seems quite cheap.

      Of course, its still all up for negotiation, but these things should make the solar option more attractive.

    2. Thanks for the additional info, Stewart.

      If consumer energy costs do rise to 30c per unit, applying the German model, a gross feed-in tarriff @ 4 x the unit cost would be in order. This would come to $1.20…which makes the current ask of 80c seem more than reasonable IF the govt’s purported commitment to renewable energy development is genuine. On the evidence to date, that’s a big IF…

    3. I’m not sure that you should be using Pay Back Time as the analysis method for a long-term asset. That method is more relevant for short-term assets. I suspect it would be more relevant to use Incremental DCF (Discounted Cash Flow) for a long-term asset.

      Regardless of the analysis method, there are a couple of extra points for thought. Firstly, we all have to make major assumptions about the cost of energy over more than a decade. Noone really knows – certainly not the economists, who are all wandering around aimlessly in their undies at the present minute. We know it is going up steeply, by up to double in 3 years for WA, as Stewart Greenhill points out above. Depending on what happens to the cost of energy, peak oil (thus also gas prices), and future climate restrictions on coal usage, energy costs could be much greater than this, later in the decade.

      Secondly, most of us tend to get all het up about $3000 to say $5000 for installed cost of a PV system, and whether we can make money from it as an investment. However, people think nothing of expensive home entertainment systems, plasma TVs, kitchen renovations costing $20,000 to $30,000 or more, and new cars costing similar amounts or more.

      Cars are depreciating assets, and people do not buy them on cost effectiveness basis alone. A lot of the purchase choice has to do with our personal self-image, and how we like to project ourselves. Maybe, having a green halo from owning a PV system should also be factored into the purchase decision for a PV system? πŸ˜‰

      We postponned getting a new car &/or new TV, and bought our solar PV system last year. We also like to do something for the environment, AND we like to support the development of new technology. We also wanted to test it’s effectiveness for a future sustainable home that we would like to build. We wanted to see what performance you could really expect in practice, if we invested in a larger system, say 2.6 kW, to become “electricity neutral”.

      Our 1.3 kW grid-connect system has performed like a charm, and our last electricity bill was about 75% LESS than the equivalent period last year. We get a feed-in tariff from Synergy (WA energy retailer) similar to our off-take tariff (less GST), and with SmartPower we get paid almost 4 times the rate for our daytime production as the cost of our nighttime consumption.

      I did a check on the Energy Rating of our house with our PV system, using the government-sponsored website NABERS ( and got 4.5 stars. If we come to sell the house, I imagine that will interest at least some future buyers, and act as a unique selling point.

      All told, we are less concerned about Pay Back Period, since we are deriving quite a bit of personal knowledge, interest and satisfaction from our little purchase. Worth every penny in entertainment value, from our perspective! If you can afford it, then there are many ways to assess the value of a purchase, not all purely financial. No regrets in this household! πŸ˜‰

    4. Good for you, Elise! I would love to be able to afford the luxury of your experience with solar PV panels – as I mentioned in my post, I walk the sustainable living walk in every way I can afford. However, with the current expense of solar PV panels, on a pretty meagre household income, the bottom line just cannot be ignored.

      New car, new tv? Way beyond my means! It’s really not a matter for some people to just prioritise purchases as you suggest.

      Philosophically, I share your position, although I think there is something to the charge that is thrown around that environmentalism has become the new hobby of the well-off. It shouldn’t be like that – which was the point of the plea for a feed-in tariff.

      BTW, making a profit out of solar PV panels is not a factor for me at all. In fact, if it meant the difference between a nationalised FIT and none, I would support the introduction of a feed-in tariff that cuts out as soon as capital outlay has been recovered.

      Finally – and perhaps I should have stated this – one of the main reasons I wrote the post above was to dispel some myths that are being disseminated at the moment. I have attended a couple of seminars in which the presenters are claiming that installing solar PV panels is a big cost saver – and, indeed, while I know they are earnest and sincere in spreading the sustainable living word, I believe they have not done their homework on the real current cost of solar PV panels. Sure, solar PV panels take the edge off your power bills, but if you look at the capital outlay and do the sort of analysis I’ve set out in my post, the reality is that it is not economically sensible at this time to install them. People need to understand that.

      One presenter even opened with the question “Anyone here still paying for electricity?”. That is just misleading, and undermines the credibility of an otherwise excellent awareness program.

    5. “The new hobby of the well off” – oh dear Rolan! Would you rather that it withered on the vine as a technology, and as a potential solution to climate change, than have widespread adoption by politically-incorrect types who have $3000 to spare? Is pale-green not an acceptable shade then? What is the objective – saving the planet (and incidentally Australians) from major climate change, or being holier than thou?

      Sorry Rolan, but I have a friend of a similar persuasion, and it frustrates me that she cannot appreciate any alignment less than 100%. Major change, as is needed for adoption of renewable energy technology, needs for the mainstream to adopt it as well. They may live differently, but they need to be on board as well, to make a real difference.

      The seminar presenters may well be overdoing the cost savings, as you say, in their enthusiasm to sell the systems. Such is the nature of marketing. I dislike marketeers excesses also.

      Nonetheless, our actual experience with our system has been much better than we expected. For example, we used an average of 18 kWh/day during summer (Nov-Jan) last year, and a net 4 kWh/day imported during the same period this year. Not bad, considering we had originally thought it would only halve our consumption of electricity, to say 9 kWh/day. And remember we are not politically correct types who never use an air conditioner. πŸ˜‰

      Actually, the presenter was not necessarily misleading by saying “Anyone here still paying for electricity”. Another row of 6 panels, and we would probably be in that position for most of the year, even winter.

      Before we committed to our solar purchase, we also did some sums using an Excel spreadsheet and Incremental NPV analysis. I learnt how to do this in my politically-incorrect past, for evaluating long-term technology projects. πŸ˜‰

      According to my calculations, solar PV actually DOES yield a positive Incremental NPV (i.e. is a value-adding proposition against “do-nothing” and just put the $3000 in the bank). I used rather modest assumptions about inflation, interest rates, increases in electricity pricing over time, etc. I did sensitivity analysis on changes in the main variables. And the calculation was done last year, before the RBA reduced interest rates, and made Term Deposits worthless investments.

      I wasn’t being overly generous to the solar PV system as an alternative investment, but it nonetheless was not a net negative proposition.

      As I suggested, Pay Back Period is not really the best way of assessing a long-term investment, if you are serious about it. The method is not used by the major resource companies for any serious analysis.

    6. One further thought. On reflection, we get 8-9 kWh/day from our PV system in summer, yet we only imported about 4 kWh/day. That does not add up to the previous 18 kWh/day.

      The rest of the saving would be due to our increased awareness, due to increased interest in conserving energy. We only use the bar fridge and towel heater intermittently now, turned the freezer setting up a bit, and have made various other small changes to our habits. Still only pale green, I’m sure you’d say!

      I’ve read that studies of people who buy PV systems have indicated they develop an increased awareness of energy consumption as a result. Umm… QED!! Must be true. πŸ˜‰

    7. Elise,

      You seem to have reacted rather defensively (and reflexively!) to my referring to “the charge that is thrown around that environmentalism has become the new hobby of the well-off.” I have to assume you thought I was directing that at you – I was not. However, it is fact, like it or not, that this view is now quite widespread. And if I am to be honest, I have to say I do think there is some substance to it.

      You have made another assumption: that I am one of the holier-than-thou purists who frustrate you so. Why do you assume this to be the case?

      It is true that I have adopted sustainable living principles to an extent that would probably be regarded as extreme by many, but it doesn’t automatically follow that the flipside of that is self-righteousness and a general possessiveness of environmentalism that seeks to exclude the yuppie and wealthy sectors. Green radicals irritate me, actually, as do indentikit lefties – I am neither. Things are always too complex for dogmatic politics in my view.

      If you are familiar with my blogs you will be well aware that I do, indeed, regard yuppie types with contempt. I acknowledge that. And I have plenty of reasons for my attitude, none of which are relevant to this thread.

      Yeah, of course “pale-green” is a hell of a lot better than – what? – the tinge of red that suffuses too many necks out there. It’s smugness that gets up my nose. That is, pale-green types who hold a fond image of themselves as being in the vanguard of the sustainable living movement, when scratching the surface of their lifestyles reveals a few fashionable token measures that don’t do a lot to compensate for an otherwise whacking great carbon footprint.

      I don’t know whether that applies to you or not – that’s for you to decide – and at no point did I assume so, or mean to imply so in my previous comment. Cheez!

      I really don’t agree with your assertion that “Pay Back Period is not really the best way of assessing a long-term investment, if you are serious about it.” I AM serious about solar and all varieties of renewable energy, and about doing what I can to further and popularise sustainable living principles – I simply can’t afford PV panels under the current circumstances. Perhaps that is not comprehensible to folk with good incomes and in financially stable positions, but I assure you it is so.

      Further, the fact that the Pay Back Period is not a method used by the major resource companies does not necessarily mean such a method is inapplicable to a non-corporate context. The respective economies of scale are not comparable, for a start.

      I have made an informed decision based on my budgetary limits – and these, with respect, you have no idea of. I put it to you that my decision is valid for my circumstance and is in no way reflective of any lack of commitment to solar power or the renewable energy cause. It is simply my economic reality that I can’t afford PV Panels, and that is outside any valid judgment on your part, or anyone else’s, as to my level of commitment to domestic solar.

      I can’t agree with your defence of the presenter’s “who’s still paying for electricity” comment. You’re talking semantics here. The presentation that followed was full of cost-saving assertions that my subsequent research has exposed as apocrpyhal. As I stated, I do not believe the seminar folk are wilfully misrepresenting the facts; rather, I think they have their information wrong and are giving an ideologically trammeled perspective that is not, IMO, in the best interests of their educative agenda.

      Hmmm, your “positive incremental NPV” intrigues me. I’d be interested in the details. Any chance of posting them up here?

      I’m going to check our past electricity bills (which we used in our analysis) to compare with some of those figures you mention from your bills, also. I’d be pretty sure we don’t have a lot of your costs, but we didn’t come close to a “positive incremental NPV” when assessing solar PV panels…I’m bewildered how you did! A matter of method and perspective, I suspect, but I’d still be interested to check out the nuts and bolts of your calculations.

      Finally, can we keep this discussion non-personal and respectful, please? The I’m right/you’re wrong merry-go-round leads nowhere, and I’m genuinely interested in informed views that do not coincide with my own. The most important thing here is to properly understand the facts from various angles. A slightly refined version of my post was published on Online Opinion last week, and with the exception of one ego-bloated turkey, the range of views that followed in the comments thread was illuminating, and brought me to the realisation that the feed-in tariff and domestic solar issues are far more complex than was previously evident to me.

      Check out the thread and you’ll see what I mean:

    8. Umm, Rolan, I think perhaps you are reacting a little defensively and reflexively here.

      You say the figures don’t add up, in your title and text. I responded to this with data and talking points, and you responded with emotion. I responded with more data and explanation, and a tease about green vs pale green. I’m not bothered by being less green than you. More power to you. Check the smileys, which were supposed to show I wasn’t all that serious.

      Incidentally we also X-ed our lawn (including our verge), planted natives, grow some of our own vegies, compost our vegetable waste, do recycling, installed energy-saving globes and water-saving toilets and shower roses, use biodiesel etc. However, we are not even pretending to be thoroughly green, just trying to make an effort.

      However, why denegrate these actions as being a game when “yuppies” do it? They could after all just say “To hell with conservation, I’ll be as wasteful as I like, because I can…” Not saying I’m a yuppy; just asking the question.

      I was trying to point out that, with the rebate of $8000 and the RECs as they stood, it DID “add up” by our calculations. Agreed, it is not a wildly profitable outcome, just marginally positive for a 1.3 kW system.

      A bigger system is certainly not profitable without better feed-in tariffs and higher energy costs, or a pro-rata rebate (i.e. double the rebate for double the size).

      Financially speaking, solar PV certainly DOES need the rebate and feed-in tariffs to make it viable. If the Government drops the rebate, then they will have to increase the feed-in tariffs to make it viable again. Totally agree with you on this point.

      I will not go into the nuts and bolts of the alternative financial analysis techniques. Your readers would be totally bored. Anyway there are many books that would cover the topic better than I could in an online blog.

      Rolan, I suspect we are more in agreement than disagreement. I would mainly question the claim that the figures cannot “add up”. Anyway, Cheers.

    9. You know, Elise, it’s hardly an emotional response on my part to refute your implication that I am not serious about domestic solar just because I am not prepared to take on an investment that is outside my budget, and is not economically sensible according to my research. Your implication was simply incorrect. It is reasonable that I address this and clarify my true position then, is it not?

      Why do you persist with this competitive stuff when I made it clear that I am not one of the holier-than-thou types that apparently frustrate you so much? I’ve already stated that I was not directing any slights at you. There is really no need to list all your green credentials – I was never questioning them! Sounds like you are practising sustainable living principles in much the same way I am. So where’s the problem? I don’t understand this point-scoring stuff or what I’ve written that prompts you to continue to respond in the way you have. I’ll leave you to ponder this, or not – I’ve already said all I can.

      I think it’s a pity that this point-scoring stuff has intruded on an otherwise very welcome series of comments from you. I’m far more interested in the substance of your claims about solar PV panels yielding a positive Incremental NPV, since this is in stark contrast to my research. Yes, we may, as you say, be more in agreement than disagreement, but I am most interested in exploring the differences in our perspectives in the interests of self-education and understanding the whole issue more fully.

      I assure you, I would not be bored by the details of your calculations. As for the readers, how about we leave it to them to decide whether they’re bored or not, rather than deciding for them?

      At the moment, I just can’t work out how you arrive at your conclusion that “solar PV actually DOES yield a positive Incremental NPV.” I’d really appreciate it if you could explain, with detailed reference to your figures, as I did in my post.

      By the way, I hope you do bother to follow up that OLO link I provided. I’d be surprised if, like me, you didn’t become aware of a whole lot of other factors in this solar PV panel equation that make the carbon efficiency of this energy source in a domestic situation quite a complex question. There are many more factors involved and things to consider than I initially realised. Domestic solar PV panels may not be carbon-efficient at all! Further, there are arguments that one’s money can be far more effectively spent on other carbon-reducing measures around the home. Before you jump at me, I should make it clear that these are not my contentions, but arose from quite a few points that people made in the OLO comments thread. Many of these points really do demand some serious investigation IMO. The issue is far from black and white, as I must admit I felt it to be when I wrote my post.

      Anyway, hope to hear back from you re your findings and the calculations you based them on.

    10. The problem with Pay Back Period is that it does not take into account the time value of money.

      Net Present Value (NPV) is the accepted method for comparing options for making large investments of capital and operational expense.

      This is because it takes into account the time value of money by using a discount rate based on the cost of capital (probably borrowing in a private individuals case) as well as inflation.

      The NPV method can be used in both the commercial and non-commercial world. All it really does is comes up with a figure which represents the money value of your projects future expenditures in todays value of money.

      The most positive NPV value (from a number of possible modelled scenarios) is the best one as it is the one that represents the best value for money.

    11. Thanks for your comments, St3v3.

      I was aware when I wrote my post that I was not including ALL relevant factors in my calculations. We had already privately considered, for instance, “opportunity cost” – ie: the interest that would be reasonably expected to accrue on the capital outlaid on the solar PV panels over time, if we had simply put the money in the bank (or similar). Also, we were aware that the calculations shown do not take into account rises in power costs, which are certain in the years ahead. One plus, one minus.

      The reason I confined my calculations as shown was really in the interests of simplicity. As stated in one of my previous Comments here, the claims being made at an energy seminar re the savings to be made from installing solar PV panels in a domestic situation I attended were not borne out once we’d done some basic calculations. In fact, our calculations showed them to be wildly exaggerated. While I have absolute faith that the seminar presenters believed the claims they were making, it disturbed me that they were ill-informed, and the purposes of my post were:
      1. To set out my calculations in as clear and concise a manner as possible as a service for people who might have been considering taking advantage of the Government rebate, but who had not done their homework on basic costs.

      2. To present the case for gross feed-in tariffs in as clear and compelling a manner as possible.

      Thus, confining my calculations to the Pay Back Period seemed the simplest strategy all round.

      In the meantime, I have had the benefits of the NPV pointed out to me by several parties, including on this thread.

      Perhaps because I do not fully understand the concept, it seems to me not necessarily a better or more valid means than my simple Pay Back Period method of calculating whether it is financially sensible, right now, to install solar PV panels in a domestic situation. It seems to me that both methods have advantages and disadvantages.

      Perhaps you can educate me on why NPV is a “better” method. (I am in earnest here, not speaking with any sense of sarcasm…I would like to be certain that I have made the correct decision in determining that solar PV panels are not financially viable for me at this time).

      The advantages of the Pay Back Period are that it is easily understood, and that the calculations can be done with certainty that the figures are correct right now.

      OTOH, the NPV method seems to me quite difficult to apply in that some of the crucial figures can only be guessed at and determined by projections based on, for example, assumed interest rates.

      The previous commenter went quiet at the point at which I asked her to demonstrate her argument by providing her exact figures, as I have done in my post.

      I would therefore be appreciative if you could kindly use the costings I have provided in my post as the basis for part of a public NPV calculation in this thread, and show your figures as you work through to an NPV final figure that actually talks to me in real terms. I need to see a figure, or set of figures, and to know how they are arrived at – hopefully, at that point, I will be in a position to properly assess for myself the claim that the NPV method is more valid as a means of determining whether installing solar PV panels right now does, indeed, make financial sense. 21 years to payback does, in itself, seem such a long time that I can’t imagine NPV or any other method of assessment showing a determination contrary to that I have reached. But I’m open to learning from someone better with figures than I (and that’s a lot of folk, no doubt including you!).

    12. Having PV panels has given me something to talk about at parties where as before I had nothing. We live a very similar life style to Rolan and at the moment use 7kw a day. I am hoping to get that down to 6Kw which I am hoping will be the daily average for our 1.4kw system on the south coast of Australia. We did the maths and could see it didn’t add up at todays electricity prices. However we had the money and didn’t want to spend it on a home entertainment system or a new and it was what we wanted and thats what we tell people. I’d like to see an enviromental lottery system where people win green dollars to purchase such items everyone knows the issues but very few people are prepared or feel financially able to act.

      Regards Michael

    13. Interesting series of posts on a topic dear to my heart. I’d also appreciate more details on the NPV method. Please do post them, Elise, Michael or anyone.
      Rolan, keep an eye on the Federal program currently being developed, Green Loans, which may be of use to you next financial year to cover the up front costs for a system. πŸ™‚
      My experience, as with Elise, is that the actual savings, especially with Synergy’s smart power, stack up much better in experience than I anticipated. The mix of solar energy and behaviour change means we have our net energy use down to a single unit a day on average and for the last 6 weeks have been net producers (yay!). Mainly, I must confess, not only to our PV, but also to my teenage son, who has completely changed his energy usage, saving nearly 30% of our average daily usage for this time of the year. He’s a hero! The transformation has been amazing and triggered changes in other aspects of our lives to improve our sustainability. Right now, the largest part of our carbon footprint is our food consumption, which includes red meat. Still working on that one!
      Also, keep an eye out for the State Government implementing its election promise for a gross feed in tariff in 2009/2010, though I suspect it will be used as an incentive for new owners (hopefully you, Rolan), rather than for us existing owners.
      Let’s hope the federal Gov does pick up the idea of a national gross feed-in tariff, however, I suspect that the practicalities may mean it’s a way off.

      Cheers, Lesley

    14. Hi Lesley, and thanks for your comments.

      Ta also for the tip on the Fed govt Green Loans – will keep an eye peeled for those.

      Interesting, your behavioural changes that have accompanied your installing solar PV panels! Maybe this is THE big plus for installing them?!

      Jeez, I haven’t come across anyone whose power use is less than ours (not that that means much – none of my friends are particularly environmentally-conscious). Getting yours down to a unit per day is a formidable effort.

      I have around zero belief that this State Govt will make good on their gross feed-in tariff promise this year, next year, or any year. But I suppose we should live in hope…

      BTW, did they specify what their gross feed-in tariff would be?


    15. No worries Rolan,

      The election promise is for 60c/kWhr. I have a more positive view on whether it will be brought in. It fits well with some other projects they have in development and that gives me confidence. Noting that the final yes/no rests as always with the pollies and that’s always an unknown.



    16. Hmm, you have more faith in Barnett’s mob than I do then, Lesley. Given their track record so far (I’m referring to the Kimberly gas hub), I don’t see them as terribly committed to environmental concerns. Still, I would be pleased to be positively surprised…

    17. The problem with this is that all these take materials to make. Let’s go back to their source. They are likely to be mined in Africa or the Caribbean. Much of the bauxite comes from there for example. Then they have to be turned into useful materials, and transported to where they are manufactured e.g. China. Then on to Australia or Germany. After you’ve done all this, it is nonsense to talk about energy savings. e..g the embodied energy can be up to 2000 KWh/m2 for crystalline PV. So you are doing something for the environment are you? Nonsense, you are all part of the exploitation of African and Chinese ‘virtually’ slave labour. The oil you use, the resources to make your car, the whitening in your shirts all drip with the blood,sweat and tears of the less fortunate. Remember, 80% of the world’s resources are owned an controlled by 20%. The West control it, and exploit the Africans who harvest it and the Chinese who manufacture it for a pittance. All these technologies are basically part of the problem, not the solution. Helping our atmosphere for future unknown generations and not taking care of those that are here and now is sheer hypocrisy.

    18. Actually, R Stribling, I tend to agree with you, at least in part.

      I have been exposed to a lot of information I was not aware of at the time I wrote this post, mostly in the very informative Online Opinion thread that followed the publication of a version of this blog post (see link in this thread, above).

      When you factor in materials and transport costs, the energy savings of domestic PV panels are likely a complete fallacy. I wouldn’t be surprised if the carbon footprint resulting from having PV panels installed in a single household isn’t larger than sticking with conventional electrical power. I do believe that solar PV panel “farms” on a large scale are a viable way of the future, though, and environmentally sound.

      I think your language is somewhat emotionally loaded, but that nothwithstanding, I suspect your points re exploitation of labour in places like Africa and China are valid ones.

      I do think it’s a bit unfair to level charges of hypocrisy at Westerners who think they are doing the right thing by installing PV panels. Most are probably ignorant of the exploitation issues you have raised here. That lets them off the ethical hook.

      Re your comment: “Helping our atmosphere for future unknown generations and not taking care of those that are here and now is sheer hypocrisy.” Surely, taking measures to protect the environment for ourselves and future generations and “taking care of those that are here and now” are not mutually exclusive ideals? With some will and effort, it should be possible to manage both.

      I have to say, though, the yuppie element who think fondly of themselves as hip leading-edge environmentalists when they install their solar PV panels do give me the shits. You’ve just given me further justification for this view.

      Thanks for your sobering post.

    19. Hi all,

      Just to let you know (if it hasn’t already been said here) that the new FIT for WA will be 60c gross (for every 1 kwh you generate, not what you generate over and above your use).

      I know, as I have governmnet contacts, that this is being actively developed in the Office of Energy and will come to fruition. There are always events that can over take these things, and I hope the Financial crisis isn’t one of them.

      This is until the system is paid off. I’m not sure how they will measure/know that, but there must be some method for it.

      It’s worth noting that energy costs will be going up and it’s worth looking at the IEA’s World Energy Outlook 2008 to give you an idea of the dire situation we are facing, and therefore the advantages of becoming as self-sufficient as possible. Just search for IEA and it will come up.

      I have to congratulate you on your efforts. I want to do all the things you are doing, and will do in our new house which we move into in a month. I also want chickens.

    20. That’s good news, PerthPom, about the State Govt FIT – if it eventuates. My attitude remains that I’ll believe it when it happens.

      As you’ll note in the comments thread above, I now have some doubts about the environmental benefits of individual households installing PV panels. I’d never seek to discourage anyone, since the carbon footprint equation is not clear, and I am no expert, but as I’ve learnt more I have been forced to question the unequivocal stance I had when I wrote the post.

      Thanks for your acknowledgment re “all the things” I am doing, and I wish you lots of satisfaction as you adopt sustainable living practices in your new home. The organic gardening, in particular, really is the most exciting use you can put a backyard to (well, almost!).

      And YES – chooks are a great idea. I would also love to have some, but there’s not enough room in the backyard without substantial alterations and sacrificing of vege space. The household two down from ours has 3 chooks, and it’s a comforting blast from the past to hear them clucking over the fences.

      During childhood, bantams were the only pets we had. They had real personality, as well as delivering nice little eggs for a few years. I’m sure you’re going to enjoy your feathered friends, not to mention those organic free range eggs, straight from your backyard. The bounty of a backyard put to good use is indeed a delight to behold.

      Sorry folks – warning spleen venting to follow – but i am assuming two things, 1. you have heard of other (less ostentatious) methods of reducing your carbon footprint and 2. you own a calculator.
      My rough back-of-the envelope calculation tells me that for any solar PV system to do better than the simple option of purchasing carbon offsets (at $25/tonne CO2) you will need to do the currently impossible and install your system for less than $1.50 per watt installed capacity and keep it running -without maintenance – for more than 20 years. Yep that’s a mere one dollar fifty per watt .
      Govt rebates exceed $7/W, therefore you can do MUCH more environmental good by eschewing solar PV and buying carbon offsets. The waste that Solar PV represents is so many multiples worse performance than other options, you would have money left over to build yourself a fake solar PV facing the street to show the neighbours, talk about at parties and keep your warm holier-than-thou glow. Please don’t expect that the government (read mug taxpayer) can just increase grants or feed-in tariff rates to fix this vastly inferior performance gap – its physics! I would prefer to be honestly robbed of $1000 at knife-point once, than to pour my tax $ into schemes as transparently wasteful as the ones advocated on this page.

      Face up to this one fact – if you had more moral integrity, you would take up a more honest job like mugging motorists for cash instead of asking us taxpayers to fund wasteful obsolete technology!

    22. Mark,

      Sorry to rain on your ego parade, but if you read the full comments string, you will find that you are not the only one to hold the views you so hamfistedly assert. You will also note that I have changed my position somewhat since my post. We live and learn.

      The crack about moral integrity is silly, needlessly confrontational bluster that undermines the credibility of your comments by distracting people from the points you are making – which may well be valid.

      You’ll go a long way further towards making your point if you provide an explanation of the source of the figures you quote, rather than attacking people who think they are doing the right thing environmentally by installing solar PV panels. I don’t think anyone is wilfully ripping off the taxpayer. It’s counterproductive – invalid, in fact – to attack people on moral grounds when their intentions are morally sound, even if, perhaps, misinformed.

      So, to the substance of your comment. The information I now have to hand, which I became aware of subsequent to my post, does indeed support the position you take.

      However, I would like a little more detail from you about your “rough back-of-the envelope calculation”. How do you arrive at your figures as quoted:

      1. “$1.50 per watt installed capacity and keep it running -without maintenance – for more than 20 years…”

      2. “Govt rebates exceed $7/W.”

      If your figures are sound, I wonder why the German government, for example, has put so much taxpayer booty into subsidising individual households installing solar PV panels. Are they so stupid, and you so bright, or is their situation/context different (and I am not being ironic with that last hypothesis…which may well be the case).

      Even if the German context is markedly different from ours, why are FITs even on the agenda with our governments, both State and Federal, if household solar PV is SO obviously uneconomical and environmentally counter-productive? Surely the “green” vote is not so important to them that they would be prepared to waste significant portions of taxpayers’ bucks on environmentally worthless spin?

      Some facts, please, sans the chest-thumping righteousness and judgments of those who perhaps are not privy to the information on which you base your stance.

      Finally, while your calculations may be valid (and may not – I simply don’t know), I’d suggest your solution – people purchasing carbon offsets – is never going to be practically viable.

      Why? Firstly, the very concept of carbon offsets is too confusing for many people to get their heads around, and few are going to put their hard-earned into something they don’t understand. Secondly, people are essentially selfish. Carbon offsets do not directly benefit investors (not speaking of those who might trade them for profit). Sadly, there are not so many folk who are prepared to back their ideology with their own cold hard.

      Solar PV panels carry the promise of personal economic benefit, even if the larger picture would indicate that the final equation is a loss in terms of carbon footprint.

      I share your contempt for those who wear their “environmentalism” like a badge, but really, I believe there are many, many folks who view the installation of solar PV panels as a win-win: that is, affording them lower power bills and reducing their carbon footprint. They/we may have the latter part wrong, but what is needed here is education and clarity, not castigation and derision.

      Perhaps you can re-post as an educator and share the details behind your calculations? I would certainly be vitally interested to understand why you are so adamant in your contentions.

    23. An PV installer told me that part of the reason for the rebate has nothing to do with begin green. It’s to do with reducing the load on the aging power grid.

      In recent years many households have bought cheap power hungry A/C systems. This is pushing the grid to capacity. Home solar will help buy time for it to be upgraded.

      I’m wonder if there is any truth to this?


    24. Hi Paul, and thanks for your comment.

      It’s an interesting point you raise, and not one anyone on this thread has brought up before. I don’t know the answer, but your point demonstrates that the issue is far from simple.

      Given the multiple factors involved, arrogance such as that displayed by people like Mark (above) is shown up as the folly it is. Whatever the assumptions of people like him, who seem to think they have ALL the relevant information as well as the logical and obvious conclusions, the facts are that the situation is complex and multi-factorial. It is not an easy task to determine the validity of installing solar PV panels on an individual household basis.

      The simple economics seem fairly clear, as per my post, but the more you investigate, the more complex it all becomes.

      My current position is that the technology is likely to be superseded or vastly improved in the relatively near future, and that the dollar costs are likely to decrease. When you add in the possibility that the panels may not appreciably decrease one’s carbon footprint (and may increase it in the final equation), adopting a wait-and-see approach seems most sensible to me. Then again, comments like yours raise new issues, and back on the merry-go-round of pros and cons we go!

    25. No worries Roland, your eruditely worded challenge deserves a measured response, so I did some research and came up with the following analysis that I will present without my characteristic bluff and bluster.

      On the surface of it, Solar PV does look like a win-win for householder and the environment , BUT where do you draw the boundary? Don’t forget the third party – mr. and mrs. mug taxpayer, then the story is win-win-LOSE. If you draw the boundary out further to include the installation and manufacturing of the solar PV cells, – well that’s another calculation!

      Anyway my analysis;
      THE HARDWARE refer to a current offer at
      Materials & Labour $9,850.00 +
      G.S.T. $985
      Sub Total $10,823
      Less PVRP Rebate -$8,000
      *Less REC buy back -$840
      TOTAL COST (GST Included): $1,983.00

      THE PERFORMANCE, refer to
      Brisbane Lat (deg N):, -27.38 Long (deg W):, 153.10
      (if solar PV is pointless in Brisbane – then what must it be in Sydney?)
      Weather Data:,IWEC
      PV System Specifications DC Rating: 1.0 kW
      Overall DC to AC derate factor 0.77
      AC Rating: 3.1 kW
      Array Tilt: Fixed 27.4 Array Azimuth: 0
      Cost of Electricity: $0.15 A$/kWh
      Solar Radiation (kWh/m^2/day)
      AC Energy (kWh/month)
      Energy Value ($/month)

      1 6.15 131 $19.65
      2 5.70 109 $16.35
      3 5.62 122 $18.30
      4 5.06 106 $15.90
      5 4.05 89 $13.35
      6 4.18 91 $13.65
      7 4.70 106 $15.90
      8 5.48 123 $18.45
      9 6.20 133 $19.95
      10 5.79 127 $19.05
      11 6.07 127 $19.05
      12 6.18 134 $20.10
      Year 5.43 1398 $209.70

      CARBON POLLUTION REDUCTION 1.40 tonnes per annum
      Carbon emissions per MWh, assume 1 t CO2 equivalent (actually is > in VIC).

      THE COST
      discount rate 8%
      period 10 years (arguable)
      Carbon Pollution reduction 14 tonnes
      net present value for householder -$429.01
      net present value for mug taxpayer -$6,778.08

      Cost of carbon pollution abatement per tonne CO2 equivalent
      for householder $30.69
      for taxpayer $484.84

      there is a real and viable option
      Offset permit cost $25 per tonne
      Offset permit value $34.95 per year !

      There are better ways to reduce your carbon footprint NOW! But throwing good money at soon-to-be obsolete technology will not make it more efficient! It reduces the incentives to develop!

      There are projects out there than can save more tonnes of carbon pollution in one hour than a household solar PV saves in 10 years, at prices hundreds of times cheaper than solar PV. I have worked on these personally. If you are serious about addressing climate change then only projects that PERFORM are worth the effort. To divert funds to feel-good , trivial projects that merely bleed the taxpayer, sorry to say, misses the opportunity by miles and delays the real work for future generations.

    26. Hi Mark, and welcome back! I suspected you were a hit-and-runner, but am glad you have returned and have bothered to support your previous assertions with clear evidence.

      Respect, too, for rising above matters of ego, and choosing not to respond to my finger-wagging at your arrogance and judgmentalism (as I perceived it). NOW, I’m listening!

      It’s obvious that your stance is a well-informed one. I am struggling to understand the performance part – I’m probably a bit dim with this sort of thing. Nevertheless, you have added further weight to the arguments against solar PV panels for households. I’m now in far too much doubt about the environmental status of the things to consider installing them (personal dollar cost aside).

      A couple of things I’d like to put to you:

      1. What is your response to Paul McCormick’s comment about solar PV panels taking some of the strain off the power grid as it labours under the power-draw of domestic air conditioners in summer?

      2. Are you prepared to identify the projects to which you refer that “can save more tonnes of carbon pollution in one hour than a household solar PV saves in 10 years, at prices hundreds of times cheaper than solar PV”? As someone who has actually worked on these projects, you are in a position to impart some crucial information. Would be most appreciative if you could do so here.


    27. Mark,

      Yes, considered in isolation, the figures are low. But what I’ve found if that the energy benefits from home solar go beyond the units of energy it produces.

      Since our solar went on the roof six months ago and I’ve been tracking our energy use and production daily since then, what I have found is that we have changed the way we use energy in the house. This means we have gone from an average of 13-16 units of energy a day, down to an average of 1 unit of energy a day.

      In Germany, I understand that they are starting to defer building new power stations, as an earlier post suggested. I’d suggest that that deferral comes in part from the solar energy generated and in part from the behaviour change. That goes with it, as other people also report similar experiences.

      Deferring new power stations is one thing that I believe will have an impact on the larger greenhouse footprint we all generate.

      We do still do all the normal stuff and don’t scurry around in the dark. But we do consciously think about the usage, and do basically do exactly what any list of 10 energy saving tips suggest.

      We were already using Natural POwer and thought we were reasonably energy conscious, but until we had the incentives (to maximise solar to the grid) and the data, benefits and penalties that came with smart power and smarter meters, we weren’t really doing much.

      For me that is one of the most powerful things, seeing how much we changed.

      That’s my two cents worth for now. I’m off to enjoy the rain and splash in a few puddles,


    28. Well, I said I’d believe it only when it actually happened – predictably, the Barnett government has backflipped on their 60c gross FIT election promise:,21598,25575624-5017320,00.html

      This just confirms my view that economically (at least), installing solar PV panels makes no sense at this time.

      As is evident in this Comments thread, with the benefit of more knowledge and research, I have changed my position on domestic solar PV, not only due to the economics, but also because I am now extremely doubtful of the environmental wisdom of individual households going the solar PV route. Further, I believe it likely that the current solar PV technology will be superseded within a few years – hopefully, this will swing the equation to reduce the total carbon footprint AND make the proposition of domestic solar economically viable…but this is a best case scenario.

      The above comments might appear to support Barnett’s backflip, but my perception is that the Libs (State and Fed) have very little genuine interest in environmentalism on any level, other than to appease an increasingly green-thinking electorate. The ALP also falls far short of their rhetoric, in my view.


      My stance and comments above notwithstanding, you are obviously benefiting on a personal level from your decision to install solar PV panels, and have clearly reduced your energy-use amazingly through your family behavioural changes. I have doubts that installing solar PV panels routinely has the behavioural effects you describe, but your purchase has evidently positively impacted on your well-being and enjoyment of life, so good on you. Your decision, your investment, your rewards! Enjoy them!

    29. Just to let you know we now deliver PV panels to Australia / Europe / USA @ USD 1.50 per watt. The prices have been coming down dramatically this year, you will probably see a stabilisation towards the end of this year @ USD 1.25 per watt. The driving force in this price reduction is competition for federal projects in the USA which are ultra competitive. This price only includes product and not installation or maintenance. Finally it is a goal of most large PV manufacturers to the price of PV become parity with coal (USD .50 – .75 per watt), all indications suggest this will happen with 3-5 years from now.


    31. Just to clarify back, Dick Casey, this is not an advertising site for private companies. It’s ok to let readers know of your products, since they are related to this post, but you’ve done that now.

      You’ve reached your limit of posts like these. Any more and I’ll mark your IP address as spam and delete the “comments” you’ve posted previously.

    32. Here is my proposal. If the government will install solar panels on my home at NO cost to me, after I am independent of the grid, they can take all the excess to feed the grid FREE!!
      Beats spending millions on infrastructure feed upgrade from the generators.

    33. Not a bad suggestion, john – on the face of it.

      However, there is still the question as to whether there really is any reduction in carbon footprint by the time ALL the energy and pollution costs are factored in, including the sourcing of the panel materials, the manufacturing of the panels, the transportation internationally and to the customer, and the installation on domestic roofs – one to which it seems very difficult to get a reliable answer.

      After initially being a strong advocate for domestic solar PV panels, I have realised that the situation is far from black and white in terms of carbon footprint…and really, that’s what it all comes down to. Those who see PV panels as some sort of fashion accessory or exhibitionistic proof of their own ‘green’ credentials will disagree, of course.

      I do wish someone could provide a reliable and authoritative answer to that carbon footprint question. Until this is clear, it is merely an assumption, unfortunately, that having the govt pay for your PV panels “beats spending millions on infrastructure feed upgrade from the generators.”

    34. Your a fool for investing in something without doing the numbers, plus you got ripped off on the panel and inverter install price. I did it 5yrs ago and it only cost me $6k out of pocket and items are heaps cheaper now. sorry. but compared to say the numbers on water it is a no brainer, power is the best option. you make no allowance for power price increases, plus did you not go onto smart meter to further the gains.

    35. Erm, Scott, YOU’RE the fool for not reading the post properly, the whole point of which was “doing the numbers” and sharing my findings with readers who might not have done so! I did not get “ripped off on the panel and inverter” because once I had done the numbers I realised it made no sense economically to go ahead with the installation. Repeat, I do not have PB panels! Next time, make sure you know what you’re talking about before you go around calling people “fools”, lest you end up making a nana of youself, as you have here!

      I have to say, I’m extremely sceptical about your claim to have had your panels installed for $6K all up 5 years ago. Frankly, I doubt that even now you can get a decent – or cheap and nasty – set of PV panels + inverter etc, including installation, for that kind of money. Perhaps you can post back with details about the brand and specs of PV panels and inverter you bought, and who your installer was. I’m sure there are others who would appreciate your sharing this information.

      I know about the smart metre stuff, but did not want to complicate an already detailed post with that. We did factor that into our private calculations, though, and it didn’t make a significant enough difference to justify the investment. In any case, you make no mention of the collapse in the price of RECS since my initial post, or the fact that the Fed Govt has now whittled down its rebate for PV panels – the expense of installing PV panels now is even more than when I posted, small reductions in PV panel and inverter costs notwithstanding.

      As for future power rises, sure, that’s a factor – but it’s impossible to calculate! Power costs would have to rise a hell of a lot, and fast, to make domestic PV panels economical right now, unless of course the state govt introduced a tariff as generous as that recently put into place by the NSW govt. If that were to happen, naturally, the economics would change drastically – which is the major point I was making in my post!

      However, as you would be aware if you bothered to actually read the rest of the comments thread above, economics aside, there are other factors that need to be taken into consideration if you are looking at domestic PV panels from an environmental POV. It is by no means clear that there is any reduction in a household’s carbon footprint as a result of installing PV panels – on the contrary, it may increase your footprint! Suggest you read through and think a bit about ALL the issues before going off so cocksure of yourself.

      Anyway, mate, let’s see some evidence that you are any more than a blowhard…awaiting your figures on your PV panel/inverter costs, along with source, brand, specs and installer, with interest.

    36. My view on the matter is similar to Mark. I try to live a more sustainable life as we only have one Earth but am very concern that people who claims to be sustainable often jump in (install PV) without doing the sums and thinking about the overall impact both in a financial sense and also in an environmental sense. If an item needs to be heavily subsidised by whomever, then that item is not sustainable, whether now or in the future and it only benefits certain sector of the economy and no one else. This subsidy also distort the market and takes vital resource away from other areas of the economy that may otherwise produce better benefits, like cheaper and cleaner energy. From my research, cheaper and greener solar energy may be around the corner, how cheap and how green we won’t know until the product is available in the market.

    37. I can’t believe the amount of belligerent accusations, defensiveness and “attitude” in this thread. Rolan and others need to learn to be not so touchy, and to be pleasant to discuss things with. Nice people have left the discussion because it became a silly contest.

      I have opinions on PV but wouldn’t bother airing them here. The angst is not worth it.


    38. Oi Naomi Paul,

      How do you know that people ‘have left the discussion because it became a silly contest’? Maybe they made their contribution and had nothing more to add. How do you know these folk who you assume ‘left’ are ‘nice people’? Pray tell, what does ‘nice’ actually mean? And what qualifies you to opine on what I and others ‘need to learn’?

      What’s the point of bothering to post this dim set of assumptions and judgments, yet not bothering to air your professed ‘opinions on PV’? Lame.

      If the prospect of someone perhaps disagreeing with your views on a blog comments thread causes you ‘angst’, could be you need to toughen up a little…? I would point out that any ‘belligerence’ on my part was in direct response to Scott’s unprovoked pronouncement that I was a ‘fool’ – which was based on a misreading of my post! Sometimes ‘defensiveness’ is actually just legitimate defence! The initially bristly encounter with mark ended up in the most educative and meaningful exchange of the thread, which was responsible for my reviewing my stance on PV panels! That’s open-mindedness, innit – not ‘belligerence’.

      But then, why would the facts interest you? I think there is something a little personal behind your ‘comment’, isn’t there Naomi Paul?


    39. All the above is just too confusing for this year 11 Dropout. So all im going to say is this: If your a single man like me, and you put 5 or more panels on your roof. You spend 7 days a week working your backside off. The money you save from solar panels will pay them off within a year or so, and you will get a bit of money from western power. HOWEVER
      Working the hours I do, means I dont have much time at home, and considering ive just upgraded the Car stereo to a TV/DVD/GPS/PC with an internet connection, you can imagine id spend a lot of time behind the wheel, which I do. Now I am going to bed, Ive had a long day and I have already forgotten what the post was about.

    40. Hi Rolan,

      Well, I have just spent the night reading through the above threads, still trying to understand the economics of solar panels. I was wondering if you have changed your view at all about whether the panels are viable or not. I am with you so far on most of your views. I have several friends who recently have had panels installed (each personally outlaying around $13000 OVER AND ABOVE the Govt grants they received!) I really can’t see how that amount of investment will pay itself back in anything less than 15yrs or more. And if I were to get panels – to finance them I would have to borrow money, which is then more interest I would have to pay in the long term. I know there are low interest green loans, but it is still money that has to be paid back, which would be better spent reducing my mortgage! In the case of one set of friends who installed their panels – they are in their mid 60’s – are they going to be around long enough reap the investment they have made? I know that sounds crass, but it is a fact of life. Also, another point that people need to consider, is, if they get the panels installed, are they going to stay in that same house for long enough to reap the investment they have made. Like you said in an earlier post, it is a complex issue, and because there are too many variables and unknowns, I am not prepared to outlay that kind of money on something that is not proven and still so new.

    41. Hi Sue

      No, I have not changed my mind on the economics aspect – and you have succinctly summed up the reasons in your comment!

      Also, as you’ll have noted in the comments thread above, I am far from sure that there is even any real ‘green’ value in domestic PV panels once all the factors are considered.

      One thing for sure: there is a lot more to the issue than many folk initially realise (and I say this as one of those folk at the time I wrote this post).


    42. Hi Sue,
      When I first looked into PV systems a few years ago I it did not add up in a green sense or economic one. Times have changed.

      If you live in a capital city then you should be able to get a 1.5kw system fully installed for about $2500.

      If you borrow the money from the bank at 7% the system should pay for its self in about 5yrs. That’s a rough estimate and everybodys circumstances will be different.

      From a green perspective the system should be carbon neutral after about 3-4 yrs. The loser is the tax payer who subsidies the installation costs.

    43. Hi all,
      just a quick one without all the exact figures, but I got the $8000 rebate, and my system cost about another $2500 on top (would have been less but I needed a new electricity box at $500). I’ve had it in a year and not had to pay for any electricity and the utility company now owes me nearly $300, so for me i’d say I’ll break even in less than 3 years. I was aware for 6 weeks of that year, and am a very frugal user and knowing that I get paid more for electricity out than I have to pay for electricity in (can’t recall the exact breakdown) means I really make an effort not to use it especially during the day (just got up to switch lights off now). So, for me, it works economically as well as green halo effect. Lucky me. I will also note I do not have solar hot water, as that I could not afford, it being more expensive than the solar electricity in my situatuion.

      HOWEVER, i am a one person household and I like cold showers in summer. So obviously the situation would be diffferent for most households.

    44. I just wished I had found this site two months ago as it would have saved me the effort of coming to the same conclusion.

      This I did only after I had researched the topic, including a comprehensive maths analysis for the amount of sun ‘we’ can actualy get on the pv panel (made worse under the cloudy skies of SW Qld), the paltry low feed-in tariff, the relatively high capital cost, and notwithstanding the prospect of even 20% tariff increases per year, it still didn’t pay back the capital (on a 1.5kW sysytem, let alone on anything above this) in less than five years but that’s assuming ‘you’ could sell every kWh into the grid. This of course, means that you can’t use your desktop pc or have your fridge on during the day, nor go to the toilet as living on rural-residential property means ‘you’ have to pump your own water, and can’t watch tv during the day. Utter nonesense! After allowing for the daily kWhs to live in the place during the day the payback period goes out beyond ten years.

      In today’s terms this is meaningless! The whole saga sounds to me like a ‘guvmen/biz’ con to get electricity users to subsidize their electricity production because it has become uneconomical to do so commercially, which is why the ‘guvmen’ did so in the first place but then they had to sell those assets to pay for other pork-barrelling projects.

    45. I am an engineer in Vermont, US.
      It is raining, already for three days. Lousy PV solar weather.

      We have some feel good PV Solar people as well. Volvo liberals, or is it Lexus liberals?

      Capital cost of 3 kW system installed is now about $18,000

      Capacity factor in Vermont, fixed-tilt, true-south-facing, correctly-angled = 0.143
      3 kW x 8,760 hr/yr x CF 0.143 = 3,758 kWh/yr, or equivalent to 1,253 KWh/installed kW
      Electricity rate = US$ 0.13/kWh
      Panels do age with time about 0.2-0.5%/yr, are warranteed for 25 years.

      Utilities use the levelized cost of energy, LCOE, method to compare various long-term assets. NPV is no longer used by most professionals since the advent of PC computers and spreadsheets.
      Below is a 25-year spreadsheet to calculate LCOE. It is self explanatory.

    46. Thanks for your post, Willem.

      Yeah, it does seem sometimes that the whole domestic eco movement has been hijacked by the well-monied. Annoying, especially that exhibitionist element – ie: ostentatiously displaying eco cred like some sort of suburban fashion accessory.

      That said, it’s a minor complaint in the scheme of things – except that business is obviously capitalising on the domestic eco movement, and the danger is that prices are going to be driven up such that the majority of folk are not going to be able to participate as they might like to.

      Interesting to have some figures from the States. I must admit, I’d have thought it might have been more economical having domestic PV panels in the US, but it seems not.

      And thank you for the link. I’ll have to have a good look at that LCOE comparison – I don’t really understand it.


    47. Hi Rolan,

      Interesting thread with thought provoking arguments.

      One area where I’m still in the dark (no pun intended) is in the overall environmental debit/credit audit of the panels themsleves. I understand broadly, the environmental impact of the mining, manufacture and transport of PV panels, although I’ve seen no actual figures.

      The point I’d like to raise, however, is that for a single PV panel, or an array, The environmental cost is a one off. Once the panel is on the roof, it no longer creates a carbon footprint.

      Given that, are these panels so environmentally unfriendly? I guess the question should be, How long does one panel take to generate sufficient energy to offset it’s own production?

      That number, I think, would be significant.


    48. Hi Brian.

      Yes, you raise a good point. I’ve more or less thrown my arms in the air over questions like this. It’s vital to have sufficient reliable data so that the full picture can be seen and a valid assessment made on the true environmental benefit or cost of domestic PV panels, but such data either doesn’t exist, or is bloody hard to get hold of.

      It’s a pity, because unless we can really do the sums properly, the entire issue seems too complex to work through. I’ve moved from believer to sceptic to confused! Seems the more research you do in this instance, the cloudier and more complicated it all becomes.

      Thanks for your post!


    49. Hi Brian,
      I believe that when everything is taken into account ( mining, processing, transportation etc) then it takes about 3-4 years for a home PV system to be carbon neutral. Sorry I don’t have the link to back up my claim. I read it about a year ago.

      Economic payback takes longer.


    50. Hi Rolan,

      Don’t be too discouraged. The information, as you say, is difficult to come by, but after x number of years, the system will definitely become carbon negative, and it will eventually pay for itself. I think that all the side issues of the manufacturing footprint are largely irrelevant because sooner or later, the panels will have a postive effect on CO2 emmisions, and the footprints will be erased. This is in sharp contrast to a hybrid car, for example, which can never, in two lifetimes, repay the CO2 already generated in it’s manufacture.



    51. Hi Paul,

      Thanks for that. I have no reason to not accept those numbers, but I must admit, I was somewhat surprised. My gut feeling (only) was that about 12 to 18 months would have paid it back.

      Why manufacturers of PV panels want to keep this information secret is beyond me. I would have thought it would have been a positive selling point.



    52. Have you re-calculated the economics since the 47c/KWH net export is taken into account?
      I have a 1KW system which has saved far in excess of $30 (not counting the avoided use of grid power) per bill (60 days), even with my wife at home during the day, doing housework, using the iron, computer, microwave, washing machine, TV, evaporative air conditioning, etc.
      This is over $180 pa and it only cost me $1000 to install last year with a 1KVA inverter. This would give a payback period of 5.5 years.
      We live on a semi rural property and need to pump water also for drinking, bathing, garden and an Aquaponics system. We made a conscious decision to not have a swimming pool.
      With little usage during weekdays on our current bill, we have a solar contribution of $71.00 (151KWH) If we were to average 60% of this, we would have a net export value (with feed in tariff) of $255pa.

      This would give a pay back time of less than 4 years.

    53. Hello Tony, and thanks for your comment.

      No, I have not factored in the 47c you refer to, but govt tariffs were never the main factor in the economics of it – the biggest drawback was the capital outlay on the panels, inverter and installation, which as you see in my calculations came in at a whopping $13,000+ at the time we chased down our quotes (minus the govt rebate, which no longer applies). How on earth did you get your panels and inverter for $1000 installed? Are you saying that is your all-up capital outlay?

      Please post the name of the company and the details of the system you bought. Either prices have dropped dramatically since I did my pricing, or you’ve scored the bargain of the century.

    54. Hi Rolan,

      What Tony refers to is the pricing for Western Australia. Yes, the prices have come down as well, on top of that our government is subsidizing the installation of solar panels, used to be based on the 1kW system but now up to 1.5kW system. For a 1.5kW system we pay a total of $2,000, the government subsidy to the installer is about $5,500 depending on the value of the green certificates which can be traded. Because of the subsidy, the benefits economic wise reduces substantially once you go above the 1.5kW system, eg you would have to pay close to $5,000 for a 2kW system.

      The feed in tarrif of $0.40(from the State government) and $0.07(which is the wholesale per unit buy back price from the utility company) is an additional incentive to get solar panels installed and last for 10 years.

      To get the maximum benefits, most people would then run their high powered devices when the panels are not producing.

    55. Good to hear from you again, Ronald.

      Can you just clarify: are you saying that whatever brand of PV panels and inverter the client chooses in WA (where I am, also, BTW), the State govt will subsidise a 1.5KW system so that the maximum capital outlay for the client is $2000 fully installed and with GST included?

      I remain extremely interested in hearing back from Tony re where he scored his system for $1000 all-up cost, and the details re the brand(s) of the components.

      If either of these claims, as I interpret them, are accurate, that changes the economics hugely from those that prevailed at the time I wrote my post – so please guys, get back when you have time.

    56. Yes Rolan that is correct. Maximum outley depends on the vendor/installer you go with but you can easily get a 1.5kW system at $1,999 actually all up and that includes GST. You may even get slightly better deal say $1,899 but it depends on the quality of the panels and inverters they supply to you. I got mine installed by Solargain and I pay $1,999 with Solarfun panels and Aerosharp inverters. Had it since September and I’m close to producing 1MW hr soon. The way I use electricity, I’ve calculated my payback is about 2-3 years.

    57. Thanks, Ronald. So, the maximum outlay is not capped at $2K, but you can get a system for less than that once the govt subsidy is applied. There has evidently been a radical price drop since I costed the system we were interested in.

      When I have time – after Xmas probably – I’ll see if I can price the same components now. If the prices have come down as much as you indicate, my findings as posted initially are no longer relevant.

      We were warned off cheaper systems, though, so I would want to see the price for top quality components before I make any major changes to my position re payback.

      The carbon footprint question remains, though. I’d like to accept Paul’s 3-4 year carbon neutral claim, but since my policy all along has been to accept nothing and make no assessment without seeing credible data first, I must stick to that.

      Tony – where are you?

    58. 1.5kW Systems with top tier components like Kyocera or Sharp panels cost about $5000 to $6000 after the rebates are applied.

      Yes, apart from the few top Chinese panels, you have to be careful with using the rest of them as they do not have much track records.

    59. I am installing a 3KW system in mid-January. The cost is $9500, excluding costs for Synergy metering, and including RECS certs assigned to installer as an upfront discount. The system comprises 16 Kyocera polycrystalline panels and an Aurora electronic inverter. I calculated payback in 5 years – that include lost opportunity cost for the $9.5K – and we will be way ahead in ten years. If you let me know your email address, I’ll mail you the spreadsheet and my summary of quotes from four companies that work in Perth.
      Have a good Christmas Rolan!

    60. Hi Karen

      It would be great if you could email me that info – thanks a lot. You can find my email contact details by clicking on the Contact tab at the top of the page.

      I’d really like you to post here, publicly, how you arrived at that 5 year payback calculation, in the sort of terms I used when I published my initial post. I confirmed my figures with the guy who was going to sell us our panels and install them – they were certainly accurate then, and he was honest enough to acknowledge that. Something must have changed radically since, apart from the price of PV panels, for a system costing $9500 to pay for itself in 5 years. Granted, yours is a 3kW system and I based my calculations on a 1.05kW one, but I would have thought the payback period would have been roughly comparable.

      If things have changed that much since my post, I feel a sense of obligation to make people aware of that. So if you could clarify here how you arrived at this calculation, would be much appreciated.

      Cheers and all the best to you for Christmas and the festive season, too!

    61. Hi Rolan. I looked on the contact page but there is no email address (that I can see) and no opportunity to attach a spreadsheet.
      I meant to say 7 years for payback. My calcs are for 5 years and 10 and show we are still paying back at five but way ahead by ten.
      The calculation assumes a simple interest rate of 5% per year, so a loss of income on the invest ment of $2375 over five years. You have to estimate your daytime/nighttime split of energy use and therefore the daytime surplus you can sell back to the grid at 47cents, while you are buying the rest at, say, 22 cents (19 cents is what I currently pay, but it is sure to rise significantly).
      Current usage of 16 units per day plus supply cost plus GST is $1552 (1 yr); $7764 (5 yrs); and $15528 (10 yrs). If we use 6 units in the daytime and have 7 surplus to sell at 47 cents, we are ahead by 72 cents each day. Gross up to yearly, five yearly, etc, figures, and compare with what we would have spent without the PV system, and we are some $2.8K behind at 5 yrs, but nearly $4K ahead at 10 yrs. Seriously, it’s easier to see on the spreadsheet, where you can fiddle with the input figures (size of system, cost, surplus generation, etc) and see the results change. I’m hoping to become the energy police and drastically reduce our drawdown to maximise credit and cut the payback period to 5 years or less. The children have been warned.

    62. Rolan, if you are looking at the best economic outcome and forget about how green or right you are going to be, you shouldn’t go beyond the current 1.5kW system as thats how the current rebate is structured. I have checked that even if I were to keep the 1.5kW system and just upgrade the inverter only to 2kw, you don’t get the best financial benefit. It is better cost wise to stick to 1.5kW and add a parallel system when future policy changes or if technology improves and prices comes down again. There are a few other alternative green technologies that are close to the marketing stage and promises better economics and efficiencies, we just have to see how those pans out.

    63. Thanks for your prompt response, Karen. I’ll have to get my head together to go over your figures so I fully understand them. Will post back once I’ve done that.

      Re my email address, please just use the online form on the Contact page to send me a message, which will end up in my email account. I will then email you back, and you can send me the Excel sheet then, at your convenience.


      OK, thanks for that tip on maximising the economics. Your point re alternative upcoming green energy technologies is one that is very valid IMO, and of which I am well aware. It’s one of the multiple reasons that I currently have doubts about the environmental and economic validity of domestic PV panels.

    64. Hi Rolan,

      One factor in considering the economics of installing PV panels, has not been mentioned so far. That is, the increase in property value. Although this is a very real added value, it is a bit subjective, and the numbers are hard to obtain.

      However, there are a couple of web sites (not retailers) that quote a factor of 10 in added value. That is, for every $1000 dollars of energy saved, the value of the property increases by $10,000

      If these figures are accurate, then we have a significant number of dollars floating around in the payback basket. A 1.5kW system costs about $2000 fully installed (NuEnergy/OriginEnergy/Auzion) and would generate approx 2800 kWhr per year, at 21 cents, value $588, not including any feed in credit. That would equate to a property value increase of $5,880.

      The above figures may be a bit fuzzy, but there is a value in there somewhere, and every time electricity charges rise, even more is added to the value of your real estate.

      You could argue, that the moment a PV array is installed, it has already paid for itself, even though the value has been moved into the future.


    65. Hi Brian

      However do the people who are claiming a factor of 10 in added value to property through the addition of PV panels arrive at that figure? “A bit fuzzy” is an understatement.

      Always interested in new angles on the issue, but this one would have more cred if there was some demonstrable substance to it. Thanks for raising the point, though. I imagine there is some added value to a property that has PV panels installed, but it would seem pretty difficult to quantify it.

      Zooming out, Karen has kindly sent me her Excel sheets (see above), and I’m looking forward to checking them out. Will report accordingly, perhaps with an adjustment to my initial post if indicated – and at the moment, this seems likely.

      Believe me, I am strongly pro-green-energy and my partner and I actively seek to reduce our household carbon footprint, and I suspect it’s minuscule compared with the average household. It goes without saying, then, that I want to be a believer in domestic PV panels…but for me, the figures have to be clear and from a credible source, and add up environmentally (most importantly) and economically. It irks me to have to add ‘economically’, because bottom line thinking is one of the reasons the planet is in such peril, but at the same time, the economics are an integral part of the equation. It’s always going to come down to a balancing act, whether for individuals, business or government.

      Cheers all.

    66. My wife and i invested in a 2kw system last year [10 pannels] will be adding more when i can.
      The positives outweigh the negatives, true some people thought that their bills would magically dissapear Not so? we found during the winter months there is a dropoff due to the strong lack of sunlight but in summer we have nothing but credits and that is with my useing the welder quite frequently and pumps for our water.
      To the people that expect it to be a stand alone, answer to our prayers system and are disapointed i can only say the only way you will get that is to load up your roof with pannels and add storage batteries to boot.
      Power dropouts will still effect you the same as they always did BUT for my money it’s all been worth it.
      I have since added a solar bore pump to my solar colection and am saving even more money.
      A friend of mine has recently gone through the same exercise and with carfull shoping around has reduced his initial outlay by almost half of what i paid for mine. with the rebates he paid less than most company’s are advertising.
      The savings are out there. You need to be sure of the reasons for changing before you go ahead.

    67. Last calculations on embodied energy was That in Sydney, PV would produce enough power to become carbon neutral in 6.8 years (ANU study) for a roof mounted system. However, this is manufacturing ONLY, so if your panels are from China, you have to add cost of transport (mostly diesel) as well. Note thsi is NOT economic payback, just when the panles actually become green ….

    68. Hi

      This thread has been quiet of late. I’m interested in what everyone’s current thinking on solar panels is . I’m just buying a house in Perth and I hope to have panels fitted (hopefully before the July deadline when rebates change). I’m only just starting to do my research but there are suddenly so many companies advertising (reminding us of the change in rebates), that it’s pretty confusing (especially to someone like me who knows close to zero on the subject!).

      Any info to share would be much appreciated.

    69. Donna, based on current rebates received during installation, you should be able to pick up a 1.5kW system from a reliable supplier for $2,000. If most people in your household is at work or school during the day, with the Feed in Tarrif, you should get a payback on the amount you invested in about 2-3 years. Be careful of what they offer at the budget end of the scale, ensure that the components supplied are well known and reliable and also that the company actually has its own service staff to provide warranty and not just subcontract the warranty as well!

    70. Recently, the NSW Labour gov. reduced its buyback amount as they are corrupt. Federal Labour which subsidises with taxpayer funds the installation should be overseeing this corrupt 3rd world dictatorial practice. The energy companies not only now have to pay back less, they charge max. ‘on peak’ rates when you buy power from them, ie at night. These tricks benefit all state gov because they are partial owners of the energy providers and on top of that they get the 10pct GST too! As a final insult, if you are connected tothe grid and they have a failure you are still susceptable to blackouts

    71. Donna,

      Thanks for you post, and sorry about this late response. I have not seen any reliable hard figures to allay the doubts I have expressed in this thread as to the environmental justification for installing solar panels domestically. Until there is clear reliable hard evidence to hand that clarifies the true all-up environmental cost of domestic PV panels, my stance will not change.

      As for the economics, things certainly seem to have improved since I wrote my initial post. The payback period has come down as the cost of the panels has dropped. Each state continues on with their different policies re tariffs, so that obviously affects economic viability from state to state.

      My only comment of relevance to you if you have decided to go ahead with purchasing solar PV panels is that, as with all things, you gets what you pays for. My costings were done on top quality panels and the best inverter available at the time. I think it’s almost always false economy to determine your buy on cost rather than quality.

      Re your comment: “based on current rebates received during installation, you should be able to pick up a 1.5kW system from a reliable supplier for $2,000.”

      Please provide some real-life evidence to back up your claims as quoted. ie: name a company or two and link to a deal that is currently available at $2000 including rebates and installation. That seems mighty cheap to me. I’ve just checked out current deals on quality 1.5KW systems and they are $5000+, not $2000. It seems you are privy to information I am not, so pls give us some specifics.

      Not sure about all that. But ta for your comments. I can say that I think this state-by-state variation in tariffs is less than optimal. It should be a Federal govt matter, so that there is uniformity across the country. Energy costs and the environment are massively important issues, too important to be left in the hands of the states and therefore subject to multiple different influences affecting decisions – which are not always in the national interest.

    72. Rolan,

      Our deal was through Solargain, and we did a company employee group buy with a lot of competitor clammering for our business. Their current deal is $2,490, so if you can get people together, you should be able to get them at $1,990. (Their regular price was $2,990 when we did the group buy)

      For the price we paid, we get the Solar Fun panels and Aerosharp invertors, the invertor comes with 10 years warranty. As per my previous post, not all Chinese panels are good, Solar Fun and Suntech being the better ones. Also if you opt for tier one European components, expect to pay about double.

      Our company decided to go with Solargain also because they are a bigger reputable company. I even got some of my friends and family into the deal even though it was only meant for our company social club members. Everyone is happy with their system so far. There are a small minority that have not as good experience from the installing contractors but our experience with the contractors was good.

    73. Thanks for the response, Ronald.

      So, your $2000 1.5KW system refers to a group-buy discount on low-end panels and inverter.

      My costings were done on a top quality system, which has obviously dropped in price considerably since my post – but going by your information, it would still be around $5K+. Just making that clear.


    74. Regarding the environmental payback, the US Department of Energy have studied the time to payback of the energy consumed in PV manufacture takes between 2-4 years depending on the type of panel in question.

      Now to economic payback, precise numbers are a little hard to pin down because most retailers don’t openly advertise prices or run with rolling specials. As an indicator though there are a few sites which do list their system prices including pre and post REC’s.
      Energybank based in Tasmania has 1.5kw systems for $5,360 pre RECs with a post REC retail price of $3,200.
      Solar Power Australia based in NSW has 1.56kw systems priced at $5,908 pre RECs and $2,994 post RECs.
      Energymatters WA division currently has an Easter system special of 3.2kw, priced at $9,125 pre REC and $6,249 post RECs giving a “1.6kw equivalent” of $4,560 pre RECs and $3,125 post rebates.

      So the average for 1.5kw is $5,276 pre rebates and $3,106 post rebates. A 1.5kw system will conservatively produce at least 2200Kwh per year, that’s the national average so WA wil almost certainly be better. Using the conservative figure of 2200kwh and the current average retail tariff of about 25c/kwh means the system will produce $550 worth of energy in its first year. Currently retail tariffs are rising around 7% annually with a 15-20% expected this year. Low balling that to 5% annual rise is pretty conservative, applying a 5% annual indexation then the annual production value will look like this
      Year 1 $550
      Year 2 $577
      Year 3 $605
      Year 4 $635
      Year 5 $666 Cumulative $3,033
      Year 6 $700
      Year 7 $735
      Year 8 $770 Cumulative $5,238

      So the average system pays for itself in just over 5 years with rebates and a little less then 8 years if you forego claiming your RECs to further boost the green advantage of the system by not selling a pollution permit to a big emitter. Remember these paybacks are purely based on standard tariffs and ignore local feed in tariffs and any state based incentives, it assumes a very conservative estimate of electricity price rises it assumes a very conservative production and doesn’t factor in the large jump that will occur with the start of the carbon tax, in short the reality will definitely better then this estimate. One of the interesting things is that solar costs are falling about 30% annually and as they do the rec multiplier is falling at a very similar rate so as the total pre REC price falls the out of pocket post REC has remained essentially the same for 2 or so years, regardless with tariffs rising the economics continues to improve steadily.

    75. Thanks for your comment and information, Robert – and especially for your link to the US Department of Energy environmental payback article. That’s the clearest summation I’ve seen. Your post is effectively a much-needed update of my now antiquated initial post.

      My calculations were based on prices that have since fallen markedly. Even without a govt feed-in tariff, it now appears to make good sense, both economically and environmentally, to have solar PV panels installed.

      I still suspect the technology is in its infancy and will become much more efficient and cost-effective in the not-so-distant future, but if you hung off waiting on that basis you’d be missing all the wondrous current benefits of today’s technological advances. From an advocate to a naysayer to an advocate, then – I’ve come full circle on solar PV panels. I say go for it.


    76. I did some calculations in 2009 and concluded that the break even time was a lot longer than the life of the installation. Even with the best of luck, the weather seals will rot and the mounting brackets rust away long before 21 years. Then there are hazards like hailstones, and the frightening thought of having a ton or so of glass on the roof. Fires from reflected sunshine?
      Recently I heard about flexible photovoltaic material which is about a tenth the weight of the familiar solar panels, and comes in rolls which can be laid out and cut to size. I have heard that this is more efficient, robust and durable than glass panels, and has the further advantage that it can be installed in conjunction with water heating.
      Unfortunately, all that is being peddled on the Web is the old stuff. Does anybody know where I can get up-to-date information?

    77. Hi Chris

      That 21 year payback period was my calculation based on solar PV prices back in Feb 2009. Prices have plummeted since then. I think you’ll find that your 2009 conclusion that ” the break even time was a lot longer than the life of the installation” is no longer true.

      However, I share your interest in advances in PV technology. Flexible material such as that you refer to has been around for a while. I saw it demonstrated on TV, I think on The New Inventors and/or Catalyst, a couple of years ago. Haven’t heard much about it since, but it’s surely only a matter of time before something more efficient and economical than current PV panels comes along. Commercial availability/viability is another matter.

      If your research turns up anything interesting, please re-post.


    78. With respect to pay back times, data from even 12 months ago is now out of date. We have recently installed a 5kW system, and are very pleased with the perfomance. We bought through a local solar firm with a firm reputation, and therefore we paid more than what you see advertised in the TV guide etc. We didn’t mind the extra cost, as our greatest concern was avoiding the cowboys, of which there are many.

      We sat down with the firm’s rep and went all through our usage figures. We also managed to just squeak in with the 44 cent feed in tariff. Bottom line is the PV system is generating more power than we use, and the 44 cents generates an income (under average conditions) of $900 per quarter. We paid $16,000 for the system, so the payback time is 4.5 years, or as the rep pointed out, that’s a return on investment of 22.5% pa. tax free. After 4.5 years, the system has paid for itself, and after 9 years it’s paid for a replacement. You’ve no idea what joy it gives me to see the meter spinning backwards as long as the sun is shining.


    79. Can feel your joy, Brian!

      You’re fortunate to have gotten in before the feed-in tariff was whipped away, though. Nowhere near as attractive a ROI now.

      Still, with the AUD up and prices of solar PV panels down, it’s probably still economically justifiable to go ahead and have them installed, as long as you intend to stay put for long enough. I reckon solar PV panels should be mandatory when building new houses.


    80. Another year down the track and a huge amount of progress has continued to occur. I in fact have just bought a 3kw system for the roof of my new home. Literally installed last week. Based on the prices I quoted last year a 3kw system would have been about $10,500 pre rebate, and $7,000 post rebates with ~$3,500 in REC rebates. I just paid $7,488 pre rebate and received a $1,988 rebate for an out of pocket cost of $5,500. A 3kw system will produce ~4,400Kwh per year, current tariffs here are 27c/Kwh. Applying the same conservative 5% indexation annual production will look like this:

      Year 1 $1,188
      Year 2 $1,247
      Year 3 $1,309
      Year 4 $1,374
      Year 5 $1,443 cumulative $6,561
      Year 6 $1,515 cumulative $8,076
      Year 7 $1,591

      So pre rebate payback has dropped to 5years ~4 months and post rebate price to 4 years 4months and the cost to the government has been cut nearly in half. They actually cut the RECs a system was eligible for 66% by reducing the solar multiplier from 3 to 1, however that has a deco dairy effect of significantly reducing REC supply in the market which then resulted in an increase in REC market value, the net result is the subsidy has fallen by a little under 50%. As installation rates continue to climb more RECs will be available in the market and prices will begin to fall again.

    81. Excellent update, Robert. Thanks!

      I’d just add that tariffs vary from state to state, so prospective buyers should check the specifics re tariffs where they live.


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