Any regrets Dee Sauvarin had about missing out on generous solar panel offers were eclipsed by anxiety over soaring power prices.
“I didn’t want us to get to the point if we run the air-con during a heatwave, are we going to be able to pay the bill?,” Ms Sauvarin said, echoing thoughts many Melburnians would have had during the city’s record March hot spell.
The resident of Melton West in western Melbourne borrowed $6000 for two years for a 3.3 kilowatt solar photovoltaic unit and has “no doubt” it will be money well spent.
Victorian electricity retailers now offer a feed-in tariff of 8 cents per kilowatt-hour (kWh) for surplus power households with new PV produce, down from 60 cents two years ago. Even with the cut, though, panels make economic sense for many.
An explosion of PV production in China has slashed wholesale PV prices 80 per cent since 2008 – including about 65 per cent in the past two years alone. At home, grid power prices have risen nationally at 9.6 per cent a year for the past five years, according to IBIS, with more to come.
PV penetration rates are already approaching one-in-four homes in Brisbane and South Australia, and the number of rooftops nationwide with solar panels passed the one-million mark last month.
“It’s now an economic proposition for really anybody paying more than about 17.5 cents per kilowatt-hour,” said Rob Grant, chief executive of Mark Group Australia, which installed Ms Sauvarin’s panels. Most people pay between 20-30 cents per kWh.
The arrival of time-of-use pricing in Victoria from July may add to PV’s allure as families bet on the sun to serve their power needs during high-tariff periods and allow them to take advantage of lows tariffs at other times.
The spread of solar, though, has its critics, such as Grant King, chief executive of the largest retailer, Origin Energy. He said PV owners retain grid access but as they buy less power from it, costs will rise for everybody else.
“Once that free ride is over, they will have to pay their way,” Mr King said recently.
Others, such as Damien Moyse, energy policy manager at the Alternative Technology Association, say PV can pay for itself in as few as four years if owners use all the power they generate. Even then, solar may not be “the first answer” for families looking to zap power bills.
“Solar’s pretty good but LED lighting, insulation, draught sealing, outdoor screening will have 1-, 2-, 3- year payback times,” said Mr Moyse.
Still, consumers don’t expect a payback from most purchases, such as cars or phones, said Alan Pears, an energy expert at RMIT. Solar panels grant the owner “tax-free cash flow every month, and it goes up every time power prices rise.”
“Even with a 7 per cent mortgage, by using the savings from solar panels you cut your mortgage period by several years and get your costs back several times,’’ Mr Pears said. ‘‘It’s a lot better use of money than putting it in the bank.”
For Linda Stewart, soaring power prices also provided the spark to buy solar panels for her roof, providing her a form of insurance against further rises.
‘‘I’m covered for any increase,’’ Ms Stewart said. ‘‘I’ll reap the rewards in a number of years (and) it will reduce my bills.’’
The resident of Narraweena in Sydney’s northern suburbs saved for a year to buy her top-quality 3-kilowatt photovoltaic system costing $10,000 – although similar-sized units can be much cheaper – viewing the purchase as an ‘‘investment into the future.’’
NSW electricity retailers are no longer mandated to pay new PV owners a feed-in tariff for surplus power after the roll-back of generous schemes, although some offer 8 cents per kilowatt-hour.
And outlays don’t have to be large. Professor Ray Wills, an adjunct professor at the University of WA, calculates a 1.5kW system will cost about $2000 in Perth, taking into account remaining government aid.
Added to a standard mortgage of $100,000 repaid over 25 years, the panels will shave about $600 off annual power bills. A few caveats apply – such as the household uses all the power it generates and that all the savings go to mortgage repayments – but the owner can expect to cut three years off the repayment period.
Most regions with less sun that Perth would still reduce repayment periods by at least two years, he said.
“This is a better outcome than a 0.25 percentage point interest rate cut on the loan,” Professor Wills said.
Fellow new PV owner Ms Sauvarin said her purchase was not only about finances: “It’s one way we can assist with (carbon) emissions and save the planet a bit.”