Solar Panels and Tax

Smurf1976 said:

A more accurate "real world" basis would be to assume that annual savings from solar are compounded. Not necessarily into more solar panels, but into something (Eg cash deposit or more likely, repaying a mortgage).

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Good point.
Also what will be the real world cost of electricity in 10, 15 and 20 years?

Smurf1976 said:

A more accurate "real world" basis would be to assume that annual savings from solar are compounded. Not necessarily into more solar panels, but into something (Eg cash deposit or more likely, repaying a mortgage).

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Very true. In my last calculations I had a credit of $947.53 but the cheque arrived today for $1019.85. That money will be invested is shares and hopefully will be a ten bagger in the next twelve months. It will purchase a spec stock as I can afford to risk it. The spec bought will be QUR so watch this space.

Even invested in a blue chip it would compound faster than the asset on the solar power will depreciate. Actually even saved up in a normal account would beat depreciation.

Remember it also yielded free power for the period. Even that is a reasonable return on the investment.

Everyone should have on on commercial grounds and any enviromental benefit is a bonus.

nioka said:

Remember it also yielded free power for the period. Even that is a reasonable return on the investment.

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Nioka,
When did you sign up for a scheme? I've been on a NSW scheme since last August and get 66c/kW feed in, but I still pay separately for all I use at around 20c/kW.

Ferret said:

Nioka,
When did you sign up for a scheme? I've been on a NSW scheme since last August and get 66c/kW feed in, but I still pay separately for all I use at around 20c/kW.

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24/05/10 Looks like you have a better. We get a credit for all we produce @60c. We then pay for what we use, currently the rate is 22.122 as at today. The contract was with Country Energy but they have been taken over by Origin and Origin continue the contract.

When I said free power I mean over and above the cheque for the credit. The cheque is the nett result.

I have had my first Synergy (WA) bill today for a full period following the installation of a 3.4 KW system a few months ago. Bill was $3.50. This same period last year was about $400 and I believe that there was a tariff increase in the meantime. I'm pretty happy with that.

ggumpshots said:

My point was that there is an oppurtunity cost which is compounded at x% ( eg 7% in an offset account, which could reduce a mortgage) after 8 years at 7% your $8000 has become $13745.
So, have you saved $5745 in generated electricty or electcity fees?

After 20 years @ 7% your 8k has turned into $30957.
So thats an average $1547 a year you need to recoup in electricty charges to break even.
its not so straight forward anyway just food for thought.

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Thanks for expanding on it;
yes, I was aware of that and said in my first post that I did NOT bring the costs of capital to bear. I don't have a mortgage, so an offset or whatever didn't apply.
Yes, I could park the money in a term deposit and hope that the interest (6.5% of $8,000 = $520 p.a.) covers part of my power bill. It won't - not by a long shot.
Therefore I would need to apply a bi-monthly withdrawal strategy, reducing my initial $8,000 by the amount by which the (unreduced) power bill exceeded the (solar-reduced) charges, offsetting that against the interest.

Those what-if scenarios can become quite messy - that's why I ignored the entire complex and stated that I had

bellenuit said:

I have had my first Synergy (WA) bill today for a full period following the installation of a 3.4 KW system a few months ago. Bill was $3.50. This same period last year was about $400 and I believe that there was a tariff increase in the meantime. I'm pretty happy with that.

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What was your capital outlay, after the govt subsidy, bellenuit?

GumbyLearner said:

What's the cost of installing solar panels on say a 30sqm dwelling in Tassie Smurf?

And how much can the average joe blow get back in dollars if they feed it back into the grid?

If he uses more than he captures, can he still make a quid out of it?

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Since the import and export rates for small household solar systems are the same here in Tas, it won't make any difference how much power the house actually uses.

That is, the solar panels will generate power that has the same financial value whether exported to the grid ($ earned) or used within the home rather than buying power from the grid ($ saved).

A 1.5kW system would reduce power bills by about $450 a year and costs $2200 - $4000 installed depending on the supplier. The figures would generally look better in the other states, but it's still worth considering in Tas in my opinion - electricity sure isn't getting any cheaper...

An interesting article on the forces behind electricity price rises.

http://www.theaustralian.com.au/bus...olding-the-ashes/story-e6frg9p6-1226043486673

drsmith said:

An interesting article on the forces behind electricity price rises.

http://www.theaustralian.com.au/bus...olding-the-ashes/story-e6frg9p6-1226043486673

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I would certainly agree that network investment is a major reason behind the price spikes.

What is not mentioned however is exactly why this is occurring. The disaggregation of generation from transmission and distribution is itself one of the things that has contributed to the cost blow out.

Entire transmission lines and even power stations have been built for no reason other than that there is no co-operation between generation, transmission, distribution and retail these days. That goes as far as some parties deliberately imposing as much stress as possible (in a technical sense) on assets which belong to another, thus forcing upgrades or replacment. No prizes for guessing who ends up paying for all this...

I've said it before. We had the most efficient thermal (fuel based) generation in the OECD prior to the industry "reforms" which have sent prices through the roof. This so-called electricity market that puts an instantaneous price on electrons has a lot in common with those wanting to put a price on carbon. It creates financial trading opportunites for a few but doesn't serve the best interests of ordinary Australians.

Smurf1976 said:

..That is, the solar panels will generate power that has the same financial value whether exported to the grid ($ earned) or used within the home rather than buying power from the grid ($ saved).
A 1.5kW system would reduce power bills by about $450 a year and costs $2200 - $4000 installed depending on the supplier. The figures would generally look better in the other states, but it's still worth considering in Tas in my opinion - electricity sure isn't getting any cheaper...

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Smurf, silly question here, I'm assuming the panels are the default delivery to the house during the day, with any excess off to the grid, and the mains electr kicks in at night? I was thinking this would still make it worthwhile. If the only benefit was the 20c/kWhr for exporting to the grid, then not so attractive.

Logique said:

Smurf, silly question here, I'm assuming the panels are the default delivery to the house during the day, with any excess off to the grid, and the mains electr kicks in at night? I was thinking this would still make it worthwhile. If the only benefit was the 20c/kWhr for exporting to the grid, then not so attractive.

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What you have with solar is essentially just another power station (albeit a rather small one) on the grid in parallel with all other generators and loads.

In layman's terms....

Suppose that you are generating 1000 Watts at home, and your consumption is 400 W. That simply means that the remaining 600 W flows back into the grid and you are paid the relevant "feed in" rate for this.

Now suppose that your consumption jumps to 1700W. Now you are drawing 700W from the grid, and will be charged the appropriate rate for this.

Now suppose that the sun goes down and your consumption goes back to 400W. You are now drawing 400W from the grid, charged at the appropriate rate.

Every single kilowatt hour of energy produced by solar is of financial benefit, the only question being how it is measured by the electricity supplier. It will either reduce your consumption from the grid (thus saving you money) or will be surplus to your own use at the time and thus exported to the grid (thus earning you money).

If the feed in and purchase rates are the same, that is you don't have a "premium" feed-in rate, then the financial effect will be exactly the same whether you use the power yourself (saving $) or it is exported to the grid (earning $). Either way, you've generated a certain quantity of power that has a financial value - whether that's as a saving or earning is irrelevant except in an accounting sense.

If the feed-in rate is different from the purcahse rate, then it gets a bit more complicated exports to the grid have a different value to what you buy back.

Anecdotally, the general consumer experience here in Tas with small (1 - 1.5kW) systems is that they export about 60% of total generation to the grid, and that consumers draw most of their own consumption from the grid. In other words, solar generation typically occurs at a different time to consumption - but that has no practical effect on consumers given that the feed-in rate and purchase rate are exactly the same here.

Note with those figures that they may differ in the other states significantly. Hot water, heating and air-conditioning are normally separately metered in Tas (due to being charged at a different rate) which will lead to a different consumption profile to the other states where air-conditioning is more widely used due to climate and is usually connnected to the main household electricity meter.

An example using an electricity bill of mine from last Spring:

Light & Power (import from grid) = 645 kWh
Solar (export to grid) = 228 kWh
Net purchase from power supplier = (645 - 228) = 417 kWh.

Hidden in those figures is the solar power that was used within the house, since that is not recorded by the electricity supplier's meter. I would estimate this at 152 kWh.

Note that these consumption figures are fairly low and my household energy usage is not typical. They are sufficient to illustrate the point however...

Brilliant. Many thanks Smurf that clarifies it nicely.

My calculations for a 1.5kW system, based on a 47 cent/kWhr net feed in tariff and retail rate of 21 cents/kWhr with a 50/50 split between the two is $680 for 2000 kWhr of generation each year.

The 47 cent feed in tariff (WA) comprises a 7 cent wholesale electricity cost plut a 40 cent top up. For a 1.5kW system costing $7k (before claiming REC's of approx $4.5k), the return on investment based on the above wholesale rate is 2%pa.

Smurf1976 said:

I would certainly agree that network investment is a major reason behind the price spikes.

What is not mentioned however is exactly why this is occurring. The disaggregation of generation from transmission and distribution is itself one of the things that has contributed to the cost blow out.

Entire transmission lines and even power stations have been built for no reason other than that there is no co-operation between generation, transmission, distribution and retail these days. That goes as far as some parties deliberately imposing as much stress as possible (in a technical sense) on assets which belong to another, thus forcing upgrades or replacment. No prizes for guessing who ends up paying for all this...

I've said it before. We had the most efficient thermal (fuel based) generation in the OECD prior to the industry "reforms" which have sent prices through the roof. This so-called electricity market that puts an instantaneous price on electrons has a lot in common with those wanting to put a price on carbon. It creates financial trading opportunites for a few but doesn't serve the best interests of ordinary Australians.

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That article also gets stuck into solar panels,

"Green schemes have emerged as a new driver of price increases," warns IPART.

It's the result of federal and NSW incentives for households to install solar panels on their roofs. The bigger than expected take-up has overtones of Labor's disastrous home insulation program. It serves the yearning by higher-income environmentally aware consumers to save the planet by acting locally while getting other consumers to subsidise their power bills.

Sims slams the combination of federal and NSW solar panel incentives as "an expensive, cost-ineffective way of reducing carbon emissions". "Its cost will be borne either by consumers or taxpayers for many years to come," the IPART ruling says. Of course, the whole point of a carbon tax is to eliminate the need for such high-cost abatement. Yet the power price increases fuelled by high-cost green schemes are inflaming the catch-22 backlash against a lower-cost carbon price.

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The calculation in the post above based on Western Power's wholesale rate demonstrates how much of a fraud solar panel subsidies are on the taxpayer and electricity consumer.

The sad truth is that we are allready, in effect, paying a carbon tax on electricity.

My 1.5kW system is not yet installed, but I expect it to be shortly. This is very much a case of, "If you can't beat em, join em".

The upside is drsmith, when it finally is payed off. The generation from the panels offsets your usage no matter what the cost goes to. But I agree with you it really is a line ball decission. Depends if you are going to stay in the house.
It is open to being rorted because with the new meter they know what you export and import. Who says they have to pay anything later on for export?
At least with the inductive disc meter it went backwards when you were exporting, maybe in the long term we will wish we kept them.

Has some one work out the cost per KW and what is the life of the battries?
Are you better off putting power back into the grid and just run the meter left and right to save buying batteries, cables, controllers etc.

sptrawler said:

The upside is drsmith, when it finally is payed off.

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The calculation above that shows a 2% return is not from the perspective of individual households. This is substanitally higher due to the subsidies.

drsmith said:

My calculations for a 1.5kW system, based on a 47 cent/kWhr net feed in tariff and retail rate of 21 cents/kWhr with a 50/50 split between the two is $680 for 2000 kWhr of generation each year.

The 47 cent feed in tariff (WA) comprises a 7 cent wholesale electricity cost plut a 40 cent top up. For a 1.5kW system costing $7k (before claiming REC's of approx $4.5k), the return on investment based on the above wholesale rate is 2%pa.

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It doesn't pay to work on the generation potential that is given by salesmen. They quote the maximum potential, my 4kw unit produced a total of 1407 kwh in 84 days. My unit is ideally placed, has the right aspect with no shade whatsoever and an ideal roof pitch. We had a period of abnormal cloudy days and rain but even on good days there really is only an hour or two of top generation. 2000kwh may be achievable but I suggest it is optomistic.

drsmith said:

The calculation in the post above based on Western Power's wholesale rate demonstrates how much of a fraud solar panel subsidies are on the taxpayer and electricity consumer.

The sad truth is that we are allready, in effect, paying a carbon tax on electricity.

My 1.5kW system is not yet installed, but I expect it to be shortly. This is very much a case of, "If you can't beat em, join em".

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Strongly agreed. If you want cheap generation then coal, gas or hydro is the answer there. I have solar panels on the roof because doing so is profitable for me personally even though it is not profitable for society as a whole (ie your taxes are the major source of my profits).

To the best of my knowledge, Tasmania is the only place in Australia (and one of few in the world) that has ever attempted actual cost reflective electricity pricing. That is, you pay to be on the network separately from energy consumed, thus removing the financial reliance of the electricity utility on maximising sales (and hence removing any incentive for them to promote consumption).

Let's just say the experiment in Tas during the 1990's was an outright disaster politically and there is zero chance of it ever being revived. It was replaced with a complicated hydbrid system as a compromise, but that has slowly been transformed back toward the standard means of electricity pricing that historically prevailed. There's still a bit of the principle at work, but it's very much a political compromise certainly. The fixed costs of the network are once again being subsidised by energy unit rates.

Never underestimate the power of vested interests opposing change. Lesson learnt the hard way on that one.