Electricity price rises make energy from the sun more attractive

Every electricity price rise boosts the attractiveness of solar panels and batteries, but homeowners may need to change behaviours.

Michael Desmyth with wife Jordana and their daughters Skylar, 8 and Indiana, 5. Picture: Tim Hunter

Surging electricity prices are prompting more people to consider installing rooftop solar systems, but shrinking feed-in tariffs and concerns around a future “sun tax” mean it’s wise to crunch the numbers first.

While the price of solar panels has more than halved in a decade, battery storage costs have remained uncomfortably high and some analysts say they still do not add value for most households.

However, each increase in retail electricity prices – such as the looming July 1 surge of up to 23.7 per cent – makes solar panels and batteries stack up better financially.

Solar Analytics CEO Stefan Jarnason says inquiries have boomed as people combat financial pressures, with the average household spends about $1800 a year on electricity.

“A typical solar system is now 8.5kW and costs around $8000, with the system fully paid back anywhere from three to six years,” he says.

Jarnason says waiting time for new systems is typically four-to-eight weeks and recommends seeking quotes from trusted sources “like Solar Quotes, Clean Energy Council or Solar Choice”.

“Solar panel prices have decreased dramatically over the past decade, with the cost of a now typical 8kW system falling from over $19,000 to about $8000 fully installed,” he says.

Solar Analytics CEO Stefan Jarnason says payback time can be three years. Picture: Supplied

“The cost of a solar home battery has stubbornly remained static for the past five years, at about $13,000 for a 10kWh battery.”

Electric vehicle demand swallowed battery supply, meaning batteries still did not make financial sense for many households, Jarnason says.

“Only about 12 per cent of new solar systems include a battery,” he says.

“However, we expect this to change over the next two years as battery prices decrease, and the difference between the cost of evening peak electricity and off-peak electricity increases.”

BEST DECISION

Michael Desmyth and his family installed rooftop solar two years ago and says it was “one of the best financial decision’s we’ve made”.

“I’d say we’re big energy users with both myself and wife working from home – and two young children,” he says.

“We have virtually no electricity bill in Spring and Autumn. Overall we’ve cut our bills in half from over $600 a quarter, and then half again once we installed a battery.

“It’s certainly helping at the moment as the cost-of-living crunch bites.”

Jarnason says electricity price rises make batteries more attractive.

“Solar Analytics analysed our 35,000 customers to show that currently less than 10 per cent would get a positive financial return from a battery,” he says.

“However, with this (latest) price rise and the recent declines in battery prices, this increases to more than one in three customers.”

Battery costs are not the only financial challenge. Government and retailer feed-in tariffs – paid to homeowners for sending energy back to the grid, have been falling in recent years.

There has also been controversy about moves to penalise people in some states for sending electricity back to the grid in the middle of the day. Dubbed a “sun tax”, it has led to online petitions and claims that the small initial increase in bills could be the starting point.

SMALL IMPACT

Jarnason says the change is “clumsy and unhelpful”.

“However it is also slow, late and largely irrelevant as the impact is relatively small.”

Michael Desmyth with wife Jordana and their daughters Skylar, 8 and Indiana, 5. Picture: Tim Hunter

Solar Quotes founder Finn Peacock says it is not a sun tax. “It reduces the feed-in tariff by a few cents in the day and increases it in the late afternoon,” he says.

Peacock says battery prices are finally falling “with Tesla starting to reduce Powerwall prices after raising them for many years”.

“The higher the electricity price, the better the payback of solar and batteries.,” he says.

“The lower the feed-in tariff the worse the payback of solar and the better the payback of batteries.

“So it all depends on your tariffs and when you use electricity. If you use lots of energy in the day solar only still makes a lot of sense. Mostly in the evening and have high evening peak chargers, batteries start looking good.”

“Solar-only households need to think about how they can shift electricity use to the day. Electric hot water heating and electric cars are great for soaking up daytime solar.”