This flyer landed on our front lawn recently - "carbon tax is designed to increase electricity bills". Regardless of where they got that quote from, this solar installation company is clearly trying to scare people into buying a solar power system.
The price is quite incredible - but you have to read the fine print.
For $1991, you get in (big print) and 5KW (and then in small print) Growatt inverter, along with 8 x 190W panels. That gives you a nominal 1.52KW.
I bet a lot of people get suckered into thinking they are getting a 5KW system for that price. And as we know, due to things like night time and cloudy days and winter, you'll be lucky to average 20% of 1.52KW over the course of a year. 20% of 1.52KW - that's about enough to run all the lightbulbs in our house.
Why is it that you can get a solar system for this price?
Simple - the government subsidises the installation via Solar Credits using "small-scale technology certificates", or STCs. Notice they never use the word "subsidy" or "cash handout" or "transfer from one taxpayer to another". You can read lots about this scheme at the Department of Climate Change. At the moment, a multiplier applies to the handout of these certificates - the Department deems an STC to be worth $40, and at present, the multiplier is 4. So for the installation of a 1.5KW system, you get 124 STCs, worth $4960. The installation contract requires you to hand over your STCs to the installer, who cashes them in.
So let's look at the total cost of this 1.5KW system.
The householder pays $1991.
The installer collects a subsidy of $4960 from other tax payers, courtesy of the government.
Total cost - $6951. Which works out at $4634 per installed MW.
The average household uses around 8000 kwh per year. This system will generate about 2600kwh - about 32% of total household requirements. For the householder, this might work out to be a pretty good deal - but would they buy it if they had to pay the full cost of $6951?
I doubt it. If it wasn't for a 71% subsidy, these things would never be installed in the metro area.
Here's a cracker from our local rag - "Beat the carbon tax". Apparently pergola prices are going to rise on 1 July because of the carbon tax. I wonder if the compensation we're getting from Wayne Swan will cover that increase?
3 comments:
Wrong, the multiplier is 3, only has been for 10 months now. The RECs are traded on a market and whilst the departments website was giving examples of rebates IF they were $40, in reality the current price us actually $24.50.
This means that this 1.5kw system garners 93 STC's at ~$25 or $2,325 as a rebate, nowhere near $4,960. It will drop to 2 on July 1st, depending on the STC market the rebate will then drop to ~$1,500.
So the total system cost is $4,316 not $6,951. This is $2,877 per Kw not $4,634, although compared to last year when you were claiming it was $10,000/kw unimported and uninstalled I guess you've come a long way.
As you point out the system will produce 2,600 kwh per year, at current retail tariffs of ~25c that will save $650 per year. So the system will pay for itsel in 3 years subsidised or 6 years unsubsidised and then go on to produce "free" power for a further 25 years. $650 per year return on a $1900 investment is equivalent to a 35% return on investment, but as it is money saved not money earnt it attracts no tax so it is equivalent to almost 50% return from any standard investment. Care to suggest any other investment with reliable 30-50% returns?
I realise I haven't factored in system degradation or finance but I also haven't factored in any retail power price rises including this years carbon tax rise so I think those factors come close enough to balance as to keep the maths simpler.
These prices have dramatically improved over the last few years and explain why the average growth rate in installation over the last 6 years is about 150% annually, that includes the GFC, show me another industry with growth like that during the same period? Most industries could only drem of growth like that.
REC prices: http://www.greenenergytrading.com.au/certificates/todays-pricing
Industry growth:
http://solarbusiness.com.au/solar/wp-content/uploads/2011/08/CEC_SolarPVIndustryReport_2011_V8.pdf
Companies will try anything for a little publicity.
I will remember when Rudd was handing out $900 bonus money to everyone, a dodgy music store in the wilds of Thornbury had a sign on its window - 'SPEND YOUR STIMULUS MONEY HERE!' Something like that anyway.
If it works it works!
BTW my brother works for a solar installer and after we got our house in Lalor we got one as a present from brother and parents... at the moment it's looking pretty good; we feed lots of electricity back into the system, and actually come out in credit on our electricity bills every month.
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