Being green and spending green - the trouble with rooftop solar

This is a guest post by kiashu, who also blogs at GWAG.

This article looks at domestic solar power in Australia, asking: is it worth it?

It does not talk about large-scale solar systems, but focuses on grid-connected solar photovoltaic cells on a home's rooftop. The article looks at it from the perspective of the one who actually decides whether or not to install it: the homeowner. It may or may not be worthwhile from the point of view of society as a whole, but at present the decision is up to the person who owns the house. This article came about from my own research as my household, here in Melbourne, considered getting a rooftop solar photovoltaic system. In the end we've decided not to.

There are several things to consider: vanity, society, systemic, security, environmental, and financial. But first some background.


Photovoltaic cells convert light to electricity. Obviously, they produce electricity only when there's sunlight, and more or less depending how high the sun is in the sky and how overcast it is.

Photovoltaics produce a direct current which can go straight to recharging batteries, or to devices which use direct current like any battery-driven device, some specially-designed refrigerators, etc. Most household appliances use alternating current. Thus, with the solar PV must come an inverter, which changes the direct current to alternating so that the household appliances can use it.

In a stand-alone system, such as is found in outback Australia, the house isn't connected to the electricity grid, and so they have banks of batteries to store the energy generated during the sunny days. In a grid-connected system, the house draws power from the grid normally, but the electricity from the cells goes to the grid, too. In practice, the cells generate more electricity than the household uses during hot afternoons, and the house draws from the grid the rest of the time. The standard installation for a grid-connected system includes the solar panels, the inverter, and a new electricity meter; it does not include batteries.

The major obstacle to widespread use of photovoltaics is the cost. A grid-connected 1kW system might be around A$17,000 all-up. Various federal and state governments have offered rebates and encouragement to lower this cost; these will be discussed in the "finances" section. Apart from ordinary politics, the purpose of these is to ease the peak load. If a region normally uses at most (say) 1,000MW of power, but then on a hot summer's afternoon uses 1,500MW, the region must have 1,500MW of capacity in its power plants, or buy the energy in from another region. As well as the expense of new power plants or energy importing, the various power lines have to be tougher, too, so this means more infrastructure and maintenance, etc. That's a lot of expense and hassle for what might only be 7 days a year when that peak capacity is needed. Enter photovoltaics - they produce the most power at the same time as the peak demand.

There are some rebates for wind and other forms of generation at the domestic level, but since most of Australia's population lives in relatively sunny and dry areas, the focus of efforts so far has been on solar.


If you're a person with a greenish tint around the edges, it'll feel good to have solar panels on your roof. What the SUV or iPhone is to the yuppie, solar panels are to the greenish middle-class. I don't see anything wrong with this, if we did nothing for ego and image, we'd be a much grubbier-looking people. It's a statement of who you are and what you believe is important, and it feels good. Part of making a statement is having somebody listen - society.


Between fossil fuels running short and their extraction and burning causing various kinds of harm to the world we live in, whether civil war in Nigeria and Iraq or global warming, it's plain that we can't keep burning so much of the stuff forever, and eventually we must burn none at all. However, people are reluctant to accept this. In physics, inertia is the tendency of an object to keep moving at the same speed and in the same direction as it was going unless it's acted on by an outside force. Societies have a kind of inertia, it can take quite a bit to make them change.

We ought not to overestimate this, however. As Solnit writes in "Revolutions per minute",

"Sex before marriage. Bob and his boyfriend. Madame Speaker. Do those words make your hair stand on end or your eyes widen? Their flatness is the register of successful revolution. Many of the changes are so incremental that you adjust without realizing something has changed until suddenly one day you realize everything is different. [...]

"Although we typically associate revolution with the sudden overthrow of a regime, the Industrial Revolution was an incremental change in everyday life and production that began a little over two centuries ago and never ended. [...]

"The fantasy of a revolution is that it will make everything different?and regime-changing revolutions generally make a difference, sometimes a significantly positive one?but the making of differences in everyday practices is a more protracted and incremental and ultimately more revolutionary process."

The idea that we must burn less fossil fuels today, and one day we will not burn any fossil fuels at all is a radical idea. It's so radical that many people say it's impossible, insisting that easy oil reserves are sitting around waiting to be discovered, that we must await some technological breakthrough to use renewables in any significant way, that we'd have to "live in caves" to do it, or that if we even try to do without fossil fuels there'll be a "dieoff", or that it can be done in principle but we don't have enough time and the attempt to build the infrastructure will be the final burst of carbon dioxide that pushes us over the edge into catastrophic global warming.

The social benefit of having solar panels on your roof thus becomes clear: it makes the radical seem ordinary. If you walk along a street and half the houses have the blue shiny panels on them, it's hard to keep thinking change is impossible. They start to seem rather mundane - boring, in fact. When the radical seems ordinary, we stop objecting to it and standing in its way, and usually claim we supported the idea all along. If I want to effect social change in the direction of let's burn less stuff, solar panels on my roof seems good.


As noted earlier, power generation and grid capacity must be kept at a level which can match the highest demand placed on it, even if that demand only shows up a few days a year and is normally much less than that. That's a lot of expense and hassle. Here in Melbourne we've experienced a failure of generation and grid capacity to meet demand, suffering blackouts of a few days as large supply lines or power substations went down from overheating, leading to mass train cancellations and many other disruptions.

In Australia, peak demand happens at the same time as peak generation of rooftop solar. Thus domestic rooftop solar seems a good solution to the problem of our hot days, as it lessens the demand on the large power stations and the grid as a whole. It has a systemic benefit - helping prevent the system from breaking. Of course there is a cost to this, but already we pay taxes to help the system as a whole avoid breaking, at least in this case we'd be choosing exactly what our money goes on.


In 1998 alone, Melbourne lost natural gas supplies for about two weeks, the Auckland CBD lost electricity for some five weeks, and Sydney's water supply became undrinkable. There are many other cases of interruptions to supply due to poor maintenance of infrastructure in our region. It seems reasonable to expect that in a decade of living in a home, we may lose supply of a single utility for up to 28 days, and of all three utilities for 2-7 days. Thus, it seems prudent to have your own gas bottles, water tanks and electricity supply that can keep you going for one to four weeks, though obviously at much reduced consumption.

Unfortunately, a grid-connected system on its own does not improve our electricity security. We have to have a battery system for that, and it's not a standard installation, costing about another $2,000. More in the "finances" system.


The greenish Westerner wants to live relatively lightly on the Earth, to have the least impact they can while still having a decent standard of living. Here in Victoria, we have the dubious distinction of having the dirtiest power station in the industrialised world at Hazelwood, built from 1959 onwards. ; it emits about 1.58kg CO2e per kWh [source: Hazelwood West Field EES La Trobe Planning Scheme Amendment C32, Independent Planning Panel (2005)], compared to more typical numbers of 0.8-1.3 kg CO2e/kWh for other coal-fired stations. In Melbourne in 2003 the average household consumed about 6,265 kWh of electricity, which would thus cause about 9.9t of emissions if all got from Hazelwood.

However, we're not obliged in our households to buy this power. We can put up solar panels, or we can buy renewably-generated electricity from our retailers.

The federal government has set up a Greenpower accreditation system. Basically, any renewable power created since 1997, and not involving the burning of native forest or reduction of environmental flows to rivers is counted. We have a privatised electricity system - one company will own a power station, another will buy wholesale electricity from it, and a third will retail sell that electricity to industry, commerce and households. Households can ask their electricity retailer for renewable electricity.

Now, if the household buys renewable energy, that does not mean the company sets up a special power line from the wind turbine to the home. It just means that if during the year the household buys (say) 6,000kWh of electricity from the retailer, the retailer must buy 6,000kWh of electricity from the owners of the wind turbine. The particular electrons you get may have come from Hazelwood, from the Snowy hydroelectric project, from your neighbour's rooftop solar, or some mixture of those; but your money goes to support the renewable energy generation.

Naturally, if more people ask for renewable than is being produced, the price of renewably-generated electricity will rise, and more companies will build renewable energy. That is, if say 20% of generation is renewable but 25% of consumption is from people buying GreenPower, they'd have to build another 5% of generation. Currently, this is not the case; demand for GreenPower is less than supply, as I wrote in green states and brown. The most recent Greenpower report [2Mb pdf of 2008-Q4] tells us that there were 476,762MWh of GreenPower sales in 2008-Q4; if this were annual, it would be 1,907,048MWh, or 1.9 billion kWh. The federal government's Mandatory Renewable Energy Target includes 9.5 billion kWh generated by 2010 and 45 billion kWh by 2020, compared to total 2007 consumption of about 240 billion kWh. So the household demand is considerably less than the current supply of renewable energy; this is probably because it costs more.

On the other hand, household electricity consumption as of 2006-7 is only about 231 PJ, or 64 billion kWh, and 2008-Q4's GreenPower consumption was a 37% rise on 2007-Q4.

The GreenPower-buying households are subsidising the non-green majority, but the GreenPower buyers are increasing rapidly. If renewables are installed quickly enough to meet the 2010 and 2020 targets (about 25% rise annually), and if demand continues rising as quickly as in the past few years (about 35% annually), demand for GreenPower will exceed supply in 2020. That is, government regulation and subsidy drive the growth in renewables to 2020, and the market drives it afterwards. I don't know if this is a fair assumption, but it seems to be the government assumption.

It's clear that either buying GreenPower or installing solar panels on your roof will have less environmental impact than simply buy standard coal-generated electricity. But it's not clear that having solar panels on your roof is any more or less environmentally-friendly than simply buying GreenPower from your retailer. In general, economies of scale will mean that a single large power station, whatever its power source, will have less emissions per kWh than many smaller power stations - for example on your roof. Would 1,000 1kW rooftop solar units have more or less impact than a single 1MW unit out in the countryside somewhere? Logically, they'd have more impact, needing more wires and inverters and maintenance and so on per kWh generated. However, I know of no formal study examining this in detail.

In sum, the environmental case for GreenPower or rooftop solar against conventional power is clear; which of the first two is better isn't clear.


We have established that a greenish person will want to get their electricity renewably, and will contribute to grid stability by having a rooftop solar photovoltaic installation, with the environmental case being strong for abandoning coal, but undecided for GreenPower, and that security of supply can't be had with a standard installation as it lacks batteries. But how much does all this stuff cost, and will it pay for itself?

Buying electricity retail

Conventional electricity retails at (including sales tax) A$0.18469/kWh, and wind-generated electricity adds a tariff to bring it to $A0.23969/kWh. There's also an A$174.90 service charge which we have to pay regardless of how much or little we use, so we can set it aside as a cost for the moment. The retail figures thus give us a baseline to judge the worth of the solar systems - how long before they generate enough electricity to pay for themselves?

If you have a rooftop solar system, each quarter they add up all the electricity you imported from the grid, and subtract all you exported into it. If you used more than you generated, you pay the same retail rate for the rest. In Victoria there exists a net feed-in tariff, so that if you generate more than you consume over a quarter, you are paid A$0.60/kWh for it.

A third consideration is that with fossil fuels peaking, countries considering various kinds of climate change avoiding/mitigating treaties, and a water shortage in Australia, we can expect that electricity will only get more expensive. Generating your own insures against retail consumption price rises, though does not insure against service charge rises.

The system and its retail cost
A typical household will be able to fit 1k-3kW of panels on the rooftop; a typical 175W panel is 1.3 x 1m and weighs about 16kg. Obviously a north-facing roof is needed to get a good output of power, and with the typical pitched roof this means only a quarter the area is available to use, so few people will be putting 5kW systems up there. I don't want to be seen as endorsing any particular company, but a websearch will show that the retail cost of solar panels in Australia is $10-$15 per Watt once you're in the kW range. So you're looking at $10,000 to $45,000 for the 1-3kW.

The inverter comes next; the larger the capacity of the panels, the tougher the inverter needs to be. This is not very big, around 60cm x 30cm x 20cm and a few kilograms, though bigger if it must be outside and waterproofed, or inside and silenced (they give out a "hum" like transformers in the street) and is usually another $2,000 or so.

Lastly there's the meter: conventional electricity meters are designed only to measure power going one way, so a "smart meter" must be installed. Typically the solar panel company has nothing to do with this, and the customer must get their electricity retailer to do it. Enquiries with my own retailer told me,

"The cost of a new electricity meter is approx $180 for single phase or $315 for poly phase meter. This is charged directly by your electricity distributor. There will also be a truck fee of $290. This will be passed through to you on your electricity bill from the electricity distributor. If your electricity box is not up to relevant electricity standards [ie is more than 25 years old], there will be a cost to upgrade. This cost could be up to $1500."

Thus, $500-$2,000 for the meter. It's notable that unless you spend $250 on a "site inspection fee", you cannot know exactly what it'll cost to change your meter over. It's a gamble.

If you want a stand-alone system, you'll want some batteries. A battery holding 5-10kWh worth of energy will retail for around $2,000.

Labour is typically folded into the retail costs. There are other expenses to push things up. For example, if you have a tiled roof, the panels require extra supports, which adds $150-$400 to the cost.

In all, taking we could be looking at $15,900 for a grid-connected 1kW solar system without rebates, or $17,900 for the same with battery backup for security.

The rebates and retail cost

The federal government offers $8/W as a rebate, with a minimum of 450W and maximum of 1,000W. In practice, nobody bothers installing anything less than 1kW. Essentially it's $8,000 off your 1kW system.

There also exist renewable energy certificates. For each 1,000kWh of electricity expected to be generated over 15 years, a certificate is issued. This REC may be bought and sold, and companies buy them to fulfill their renewable energy targets. For example, Hazelwood power station can be considered 20% renewable if it buys enough RECs. When installing rooftop solar PV, typically the householder surrenders their RECs to the installer who then sells them. This drops another couple of thousand off the price of a system.

Thus the panels and inverter cost of around $14,500 drops to about $4,000; the cost of meter and any extras remain unchanged. The capping of the rebate at 1kW means a big jump in price from a 1kW to a 1.5kW or larger system. Thus 1kW systems appear to make up the bulk of the market.

Last year the rebate system was too successful, with the federal government having to pay out more rebates than it had budgeted for. In response they put a means test on it; if the household earned more than $100,000, they couldn't get a rebate. In practice this removed a good chunk of the rooftop solar market, as even with all the rebates and RECs, it was still several thousand, and households with an income of less than $100,000 aren't likely to have several thousand to blow in one go. After June 30 2009 the rebate will be abolished entirely, and a higher price put on the RECs instead. It's expected that this will cause the cost of a typical 1kW system to rise about $2,000-$3,000 (see the website of any rooftop solar installer for quotes before and after 30/06/09.)

"Buy now!"

This imminent price rise has caused a surge in demand as people who were humming and hawing over getting the system in a rush to do it before it gets too expensive. Companies have responded to this by buying solar photovoltaic systems in bulk from China and Germany. The bulk buying has let them get the things cheap.

A typical offer from a long-established power company is $4,000 for panels and inverter for a 1kW system. New companies have offered systems of $2,500, and there is even one offering it for free. Generally, you pay the listed price, with the $8,000 rebate and the RECs being paid directly to the company. In the case of the "free" offer, you pay $8,000 and then the federal government pays you back later; so even though it's "free" you still have to have $8,000 spare for a few months.

While researching this I was of course initially quite attracted to the cheaper companies. However, I noted that no history could be found for these companies; they appear to be quite new. What happens to them once the big rebate ends and their market shrinks? A consideration in any large purchase is the warranty. Most companies offer a 25 year warranty for rooftop solar. If my $20 toaster conks out after month, I simply swear a lot and buy another one. If my $4,000 rooftop solar fries out after a couple of years, it could cost in the thousands to get fixed, so I want them around to honour their warranty.

Thus, for the price today, the smaller and new companies look good, but it could end up costing us more in the long run with repairs after a dishonoured warranty. It could be worth the extra $2,000 or so to know that they'll still be around ten years from now.

Payback time

A 1kW system in the Melbourne latitude and climate we can expect to generate around 1,825kWh a year, or 5kWh/day on average. around 3kWh/day in winter and 8kWh/day in summer. The average Melbourne household with its 6,265kWh of consumption, or 17kWh/day (generally about 14kWh/day for households with gas hot water and cooking, and 21kWh/day for all-electric households), will almost never generate more than it consumes; the net feed-in tariff of A$0.60/kWh can be forgotten.

However, it's possible for a household to reduce this consumption. We can use cool drinks and fans not airconditioning, jumpers and hot drinks not heating, hang washing out to dry, change to CFLs and pull plugs out on appliances not in use, and in this way get it down to about 5kWh/day (as my own household has done). But the net feed-in tariff is still a non-issue. With a standard 5kWh/day consumption, the 2kWh bought from the grid in winter (at conventional rates) would cost some $33, and the 3kWh/day exported in summer would earn $162, leaving $129 profit annually, which is not nothing, but not huge, and that level of export is easily wiped out by some airconditioning use. In usefulness, the net feed-in tariff is really for larger installations of 3kW and up.

In practice, we must simply calculate the dollar value of the electricity generated by a system.

1kW system, 1,825kWh/yr
Eq. conventional $0.18469 $337
Eq. wind $0.23969 $437

We can then divide its cost into the savings made to find the payback time. For the savings made I choose a middle figure of $400 annually; over the next decade we can expect the price of conventional electricity to rise by that sort of amount, and some people may prefer to compare rooftop renewables with retail renewables.

Below a table shows the initial cost of the 1kW system, and the resulting payback period. The minimum solar panel and inverter cost is zero, as I described above, but another $1,000 for reinforcing frames and meter changeover seems to be the minimum.

1kW system costs and payback
$1,000 2.5 years
$2,000 5 years
$3,000 7.5 years
$4,000 10 years
$5,000 12.5 years
$6,000 15 years
$7,000 17.5 years

I am told that in business a payback period of under 5 years is considered a certain thing, while more than 10 years it's dismissed without thought, since anything could happen in ten years, and that could change everything. Thus 5 to 10 years is where people become uncertain.

The $1,000 and $2,000 systems have payback periods of 5 years or under, but can only be got from companies we're not certain will be around in ten years. I don't know how much it costs to repair a typical solar panel fault, but when we had a blackout in February the bill was $275 just for the callout, so it seems safe to assume $1,000 or more is plausible.

About the cheapest you could hope for with a reputable and established company is $5,000 - $4,000 for the system, and another $1,000 for rooftop reinforcement, meter changeover and so on; as noted earlier, you usually won't know the meter changeover cost until the solar panels are already installed.

Thus, if you want a rooftop solar photovoltaic system, you can have a short payback period but with risk of further costs, or a decade-plus payback period but with certain costs.

Every householder must weight up the different considerations of vanity, society, systemic, security, environmental, and finance. Each plays into the other. For example, a standard grid-connected system offers no batteries, and thus no security of supply; adding batteries adds to the cost and the payback period.

For our household, our vanity was already satisfied by the other greenish things we did, and we felt they also made a social contribution. The systemic contribution would be small, and since we didn't plan on having batteries we'd have no security of supply. As for the environment, we already buy GreenPower, so it was not an issue for us. That left only the financial aspect - would we be financially better off?

The system may or may not repay itself in increased real estate value. Too few households in the country have solar panels for us to be able to tell; it seems reasonable to assume that every extra thousand on improving a house adds a thousand to its value; it could be more but we don't know. In any case we expect to be living in our house, not selling it, nor will we use our mortgage as a low-interest-credit-card, so whether it's worth more or less doesn't matter to us.

Taking the expected cost of $3,000-$5,000, a return of $400 annually on that is a decent rate of 8-13%. However, we are halfway through our mortgage, so we had to consider what $3,000-$5,000 now could do in avoided interest payments. The net gain is thus 2-5%, depending how interest rates go over the next decade. That's not much on inflation, and so we expected effectively zero financial gain from installing rooftop solar.

As the other considerations were for us not issues, and as we expected zero financial gain over the next decade from installing them, we decided not to. We'll continue buying GreenPower, and leave building renewable energy generation to big companies.

A good breakdown of the pros and cons.I think the idea of domestic PV and feed-in tarrifs is good but,with the current and projected subsidies,it is just not economic.I doubt whether current governments have the commitment to GHG reduction to do something meaningful in this line.

There is a very strong case for large subsidies for homesteads and the like in remote,off the grid locations.This would not cost all that much,probably a lot less than current spending on CCS,and would result in significant savings on imported diesel fuel.

Realisticly,I don't expect that to happen either.Too sensible,by far.

There do exist large subsidies for remote installations, it's called the Renewable Remote Power Generation Program

"Rebates of up to 50 per cent of the capital cost of renewable generation and essential enabling equipment are available to applicants that fully comply with the eligibility requirements and procedures outlined in the RM sub-program guidelines. The maximum rebate available is $200,000."

WA, Tas and NT have their own state programmes administered separately to this federal one.

As I understand it, the RRPGP was budgeted with a certain amount of funds; when they run out, the thing is over. The Department of the Environment has privately stated that the programme has "only a matter of months" before it runs out of funds. First come, first served.

I think it's useful to know that when it comes to renewable energy, the government rebates are always going over-budget due to high demand. That tells us that there is a strong demand in the community for renewable energy, but that price is the major obstacle. If by public subsidy, carbon taxes, economies of scale or whatever we can get the prices of conventionally-generated and renewably-generated energy to match, people will take it up.

I don't see why we shouldn't. In the Western world we worked for a century on getting food prices down, taking them from one-third or even one-half the average household income to one-tenth. That was a deliberate effort by government, corporations and agriculture working together. It takes time but it can be done.

Woops, arithmetic mistake.

With a standard 5kWh/day consumption, the 2kWh bought from the grid in winter (at conventional rates) would cost some $33, and the 3kWh/day exported in summer would earn $50, leaving $17 profit annually. In usefulness, the net feed-in tariff is strictly for larger installations of 3kW and up.

should read instead,

With a standard 5kWh/day consumption, the 2kWh bought from the grid in winter (at conventional rates) would cost some $33, and the 3kWh/day exported in summer would earn $162, leaving $129 profit annually, which is not nothing, but not huge, and that level of export is easily wiped out by some airconditioning use. In usefulness, the net feed-in tariff is really for larger installations of 3kW and up.

Maybe Gav will be nice and edit the bolded portion for me ;)

I'm always nice...


Thanks for the great article Kiashu. I'm considering a rooftop grid connect PV system myself at the moment, but my decision will be based on security and financial grounds, mainly the former.

Just one point to make. You don't need a battery system for security. I already have a small generator, just big enough to run my fridge, lights and and other basics.

It's true that if you have a generator, you don't need batteries for security. But then for that you wouldn't need solar panels at all. I was thinking of things as a package, so to speak.

As a Sydney resident who went the PV cell route I was interested in your analysis. I did my sums before we decided and we quickly realised that at current rates we would never get our investment back. However, as we both had strong environmental philosophies we decided that for the sake of the environment alone it would be a good thing to do for basically the cost of a 2-3 week overseas holiday.
Our 1.8kW system after rebates and REC's cost us $10,440. The meter installation was $275 only, no further costs.
Our normal electricity consumption is around 2500 kWh/pa, water heating is solar and gas is not installed. In the 3 months since it was installed, the excess generated from the PV system has averaged around 2kWh per day and so each quarter we get a cheque from our electricity supplier. I would expect in summer the difference between what we use and what we generate to be greater and therefore this average should be higher on an annual basis.
The benefit: The psychological impact that the PV system has had on us surprised us both - the feel good factor is amazingly strong. Being very environmental citizens we have donated reasonable sums over time for various causes but you never new how effective that money was but with this installation you can see it delivering clean electricity every day.
Finally what I didn't really think much about was future electricity price increases. They have just announced that electricity prices in NSW will be increasing by around 20% in July - without never having to have an electricity bill again this sort of news also increases also has a nice sound to it!
This was one direct way we could do something about global warming - we long ago gave up on Governments doing anything significant about it.

Thanks for the numbers, C3827, actual experience beats the theory any day!

It's as I said: everyone has to weigh things up for themselves. From what you say, what I called "vanity" and "environment" were the biggest motivations, and they trumped the finances.

In our case, as I said, our vanity was already satisfied by other things, and we buy renewable energy from our retailer anyway, so the environmental part was already dealt with.

However, the vanity effect and the social considerations - wanting to make the radical seem ordinary and thus help effect positive change, combined with expecting electricity prices to rise in the future, these came very close to pushing over the financial issue. Perhaps if the $8,000 rebate were extended past June 30 we might have done it, the feeling of being rushed made our natural caution jump up.

I've done much the same analysis as C3827 and found rooftop PV to be personally more expensive (vastly so when I first did the anaysis back in the 90s) so I just go with 100% Greenpower to avoid any coal-black CO2 guilt, and invest in energy-saving measures inside the house.

Politically, I'd much rather see our taxpayer dollars going into subsidising the installation of the most efficient forms of alternative energy, and rooftop PV is not one of those forms.

Finally what I didn't really think much about was future electricity price increases. They have just announced that electricity prices in NSW will be increasing by around 20% in July - without never having to have an electricity bill again this sort of news also increases also has a nice sound to it!

An added bonus for you is that every time retail Grid prices increase, so does your cheque (provided the NFIT increases with Grid Prices). ;)

That which powers our civilization is derived from the sun, or our parental star, whose nova created the heavier elements that compose our planet.
At this time, we're consuming prodigious amounts of a finite, irreplaceable resource made of accretions of solar input, aka fossil fuels.
No matter which economic argument is advanced to justify it, there is no such things as "cheap and plentiful" fossil fuels. Consuming them to the point that they are no longer accessible, is patently short sighted, and irresponsible.
Once consumed, from that point onward, future generations will be deprived of them. Is that what we wish to endow our children's children with?

What does it take to persuade people to realize that it is inherently wiser to only use PRESENT solar input (light, wind, water, tidal, etc) for our source of power?

I think people in Australia are largely convinced that using renewables is wiser than using fossil or nuclear fuels. However, they're not convinced it's possible - that "intermittency" nonsense - nor are they convinced that change must be soon and quick - "haven't we got years of supply left, and isn't the climate slow to change?"

And our elected representatives don't do what they think wise, but a balance of what they think popular, and what their corporate sponsors want them to do. When it comes to elected representatives and the public, silence means consent. They don't change unless we loudly demand they change.

The public think renewables are wise, but they're not making a loud demand that we change to them.

Thanks, great post and valuable comments from C3827.
A third way of supporting renewable energy would be by investing in renewable companies.

Good article, although long and I can’t guarantee I read every line in my lunch break.

I recently installed a 1 KW system on my house. My net cost was about $2,500 (so $10,500 total) and that’s without selling my RECs. (There are some quite sound arguments why you might choose not to sell your RECs. A recent issue of ReNew magazine covered this.)

I bought my system as part of a buying collective of 150 households organised by Local Power in Brisbane. As far as I’m aware the components are all good quality.

With Green Power, as long as the aggregate usage by Green Power buyers is less than the mandated target, no extra renewable power will be generated.

By installing solar panels, and not selling my RECs I’m creating extra renewable energy production right now. (That is to say, more than would otherwise occur).

My system will definitely pay for itself over its lifetime, especially if recent mooted power price rises happen. Not a huge rate of return, but better than the share market recently.

Could you tell us some more about this buying collective? Is there a webpage or something?

I forgot to mention in the article that some local councils also offer rebates of (from what I saw) $100-$500. I forgot it because mine doesn't :(

Local Power's website is

There were also a few paragraphs about them in another recent ReNew magazine.

For reference, those ReNew magazine articles

#105 (Oct-Dec 2008), p34, Don’t wreck those RECs
#106 (Jan-Mar 2009), p36, Bulk buying: New ways for solar

We are presently in line to install a 1kW system and get the $8k rebate + the RECs bought back. It will total approx $4k from our local long established solar power supplier (we did look at a new company with a cheaper product). As luck would have it this little house has a north facing roof of exactly the right angle. (So this little house will run on sunshine if not always peace and love!)

We average 7kW a day so not sure if it's really worth it $$-wise. But we expect to be uploading quite a bit in the long tropical summers and with the cost of electricity rising, it seems a good time. The rebate made it possible, never mind if it's $$-wise, we could not afford it without the rebate.

I agree that setting an example to neighbours and passers-by is important in changing attitudes. It's akin to boiling the frog alive slowly, but in reverse.

I find your posts here and elsewhere interesting Kiashu, even though I disgaree strongly sometimes! This is excellent and a valuable resource but I guess yet again, it'll be the choir singing to itself.

Thanks Kiashu for a well delivered article!

It was very helpful to me as I am assisting my mother in getting 1Kw of PV on her house in SA, and your article helped me see all sides of the story more clearly.

I am taking advantage of the "free" offer - the company will get the $8K rebate and the RECS, and my mum pays for a new smart meter. I understand the concern with the longevity of these companies... but I think that in my mother's case, she can't lose because she has such a low upfront cost. As far as I am aware, after talking with these folk, she doesn't have to pay the $8K in cash first and wait for the rebate... but yes, there is a cash deposit of $2.5K, which she gets back after installation. So, even if the panals have a problem after 10 years or so and the 25yr warranty can't be honoured, it hasn't actually cost her anything up to that point. And she will still be grid connected, so can use the grid as a fall back.

She is now living alone, and is VERY old fashioned and conservative - no computers in the house, no widescreen TV, so with a little investment in insulation, and some heavier curtains and pelmets on the windows, etc, I reckon her average usage will be under 4kwh a day, i.e. she will generate more than she buys.

What I would really like for her is energy security, in the case of transmission failures, short or long term. So I hadn't thought about the cost of the battery back-up, and I am really pleased to know about it now. I think it is an essential part of the package, but I'll have to spend some more time discussing with my mother the importance of energy security.

Personally, I don't own a house, so I am buying Green Power.

Congratulations to the author on a balanced and meaningful article.

I'm a new contributor, but sometime reader of the content of this site, and for the record I design PV systems in Melbourne, for non-domestic installations across the country. I would like to add the following;

On security: agree that currently it is necessary to have a battery in order to keep power when the grid goes down. This 'anti-islanding' is a safety feature of grid-connect inverters to stop providing power to the grid during shutdown. We don't want the person working on the cables in the street to get fried by our PV. With distributed microgeneration the grid would stay on, and lines would need to be isolated locally. We are in a transitional phase, and if the growth in renewables continues there will come a point when ownership of generation is distributed, and with that the possibility that a distribution company might get upset.

On financial: It is worth noting that Victoria's Net Feed-In-Tariff (FIT) which pays a generous sum for your left-over energy is a very different thing to the Gross FIT which is taking hold in some other states, and which pays for all PV energy generated at a decent price. This impacts positively on the income figures.

The slight 'hum' from a typical inverter is a factor, although it's similar to the noise coming from my laptop right now. The very quiet transformerless inverters are now available in Australia - thankfully the AS/NZS wiring standards have now been updated to allow them to be installed here.

Smart meters. I'm aware that this article is referring to a decision on whether to install PV now, but changes are in the post. VIC and NSW (at least) are rolling out smart metering, with VIC due to finish in 2012 and NSW in 2015 from memory. If done now, I am told that the typical cost for a meter change is $110 - $280 all done. This is because the retailers benefit by not having to send a meter reader any longer. Not great if you are a meter reader!

Warranty. The warranty of 25 years as referred to in the article is correct (sometimes 20 years) but it should be understood. It is a 'limited power warranty' on the solar panels and is provided by the manufacturer, not the installer. A typical installer guarantee for the entire installation might be 2 years on workmanship. Standard inverter warranty is 5 years - extendable at a cost. Don't stick the inverter in a small unventilated cupboard. For anyone not bored to death by this long reply a couple of tips for system longevity... get the installer to run any cables in at least plastic, preferably metal, conduit. Protects the most vulnerable parts from UV. Get them to use rubber washers or butyl tape between all dissimilar metals, classic mistake is to use steel bolts on the aluminium frames. Corrosion will start soon. Make absolutely sure that any systems being ordered contain panels with IEC 61215 and 61730 certification for quality and safety. If the warranty on the panels is 25 years, and warranties are typically longer than expected lifespan, how long can they last? My feeling is that they will continue to produce useful amounts of power for 30 to 40 years.

Payback. Worth noting that the Aus-wide, Melbourne based, Business Council for Sustainable Energy (BCSE) which regulates PV technology and installers claims an average daily production of 3.15kWh over the year. Which increases the payback period in comparison with the figures in the article.

My conclusion: with population estimates suggesting 9 billion of us by 2050, and with traditional energy production reliant on dwindling resources, the cost of energy will rise sharply. The cost of PV is low historically and falling slowly. It is a fixed cost if designed well. It will continue to produce energy for decades. The rebates are set to fall over time. They are high this year in global terms. The RECs multiplier will kick in a few weeks from now and it will be possible for those above the means test threshold to get around $7000 or so towards their 1kW system.

kiashu has written a great article, the best I have seen on the web from an honest and diligent author. Sorry if I have gone on too long, but one question remains...

The author has stated her/his parameters and that should be respected. In my opinion a profit could be made by installing PV in Australia on the roof of a house or factory etc. If financial gain is the only driver, why not simply use coal or nuclear and damn the consequences?

I am in the wind industry and so am particularly aware of some of the benefits of PV at the small end of town (compared to wind). PV does not scale up as well as wind but it does supply power when (roughly) you want it and where you want.

It is also very expensive so it ought to be used to maximise itis particular advantages. To illustrate, the Fed government's idea of income testing PV rebate receipents enjoyed alot of publicity but it would be been much more fruitful if the rebate had been limited to those, say, 10km from the nearest substations ie for country folk and NOT city folk. Why? Think of both network support and reduction in line losses - a kWh generated on a roof in Fremantle will save about kWh having to be generated by the local peak plant, but a kWh saved in Lake Grace (where? my point!) will save 1.5KWh. We have some seriously skinny wires in the West.

I confess I prefer people to be paid for actual production rather than plain rebates upfront - I fear some very shoddy installations - ie facing west (south?) or under northern trees etc.

Actual production depends on angle with north and the horizon, and, of course, the amount of sunshine you get. Those in Walpole should not expect to match those living in Kalbarri.

Finally, anybody read the article on wind price, cost and value by Jerome a Paris on May 6, 2009? PV is also a price taker with zero marginal cost!

I'm going to float this idea here (again).

Why is it neccessary for every household at this point in the transition to have a full grid interactive system?

Why can't we make it mandatory for every new outer suburban development to have just lighting supplied by solar?

My reasoning is this.

If we put just enough panels to do household lighting nothing else... no inverters... then

1. we get a higher uptake ie more "converts"
2. by not requiring inverters and batteries the cost will be much lower.
3. having a whole "suburb" with at least a few hundred watts each... we can start to plant the infrastructure for that HVDC system.
4. the downside is less... eco aware installers will have been prepared for the shortcomings of solar... your average consumer faced with the steep learning curve and higher temporal investment (ie checking bateries etc...) of a big grid interact system may not.
5. it's not like this smaller system can't be upgraded to the full grid interact system later.... IE let's just get people used to the idea AT A SCALE THAT IS READILY ACHIEVABLE WITH A MUCH LOWER PROBABILITY OF DISSAPOINTMENT.
6. A small 12 V DC system can also be readily used for the many small gadgets/appliances that currently need step down transformers/rectifiers eg mobile phones, ipods etc etc.

IF everyone has them on their roof... they become "normal".
So long as solar systems are only on the roofs of the "rich" or the "green" ... are they a unifying icon?

Thoughts, Kiashu... Tim101...

It's more than just a technical challenge.

I also think that more public lighting (bus stops, traffic signals, etc) should be transferred to solar. Just so people can see it working.

Sounds reasonable to me... I suppose the key would be ensuring that it is for new development as you have pointed out.

There are a few gadgets out there that provide solar energy to a place where energy was not required previously - such as those garden lights that go in the ground (or even a solar powered wind turbine I saw on an interet auction site). Some of that stuff is just a waste of resources.

I like the idea of the 12V system in a home to run in addition to a 240V system. It will save a lot of money on power converters / transformers and the like. I am not sure on the saving in power as there are still voltage changes needed.

Back on the article installing PVs, assuming I was not living in a rental, would come after getting the house insulated, getting a nice woodburner and a solar hot water system. For me the cost is still prohibitive because someone has to pay for the $8000 subsidy even if it is not the homeowner.

$8000 from each Aussie household will go a long way towards energy independence instead of going to Chinese PV manufacturers.

Be fair! Not all of the panels are made in China.

Some are made in Germany.

And all of them are made with technology invented in Australia, but which we were too lazy and conservative to support, so we just sold it overseas instead.

You're probably one of those crazy people who think that we could base our economy on something other than "dig it up and sell it overseas." Commie.

Not really a Commie. I just don't like subsidising other people's follies. You think you spent only $1000 on your system! Try calculating the payback period on the REAL cost. I bet it is near to 70 years and not 7.

As someone who works in the "dig it up and sell it overseas." sector of the economy I am tired of subsidising the other 99% of people, including you most likely. Try to have a look at your own contribution to the economy and environment before speculating about others. I bet you have to drive 40k to get to the shops.

For $8000 you could get Aussie made insulation, An Aussie made woodfire and if you looked hard even an Aussie made well insulated fridge to shave 3.5KWh off your daily power consumption. You might even be able to buy an economics textbook with the change and learn about subsidies.

That miners and farmers subsidise the rest of us is news to me. I thought they took resources for only the cost of the labour of extracting them and sold them to the rest of us, often getting tax and investment breaks (ie, the public subsidise them) while doing so.

How much would you like to bet I drive 40km to the shops? Whatever it is, you just lost it - I walk 1km. Send no cheques, just cash please.

We already have insulation, and woodfire doesn't make much sense in an urban area.

I know all about subsidies in Australia. For example fossil fuels, encouraging extraction and consumption, $8.88 to $8.955 billion annually [source, 2001-2]. It'd be more now, what with $2 billion for CCS coal, and $500 million just for a new rail line in the Hunter valley. Renewables by contrast get a few hundred million. Nobody's building half-billion dollar railways to help us get up wind turbines, that industry is expected to do it itself.

Unsurprisingly, the areas with bigger subsidies are a bigger part of the economy. In Denmark they give big subsidies to wind, so what do you know, 6 billion Euro export industry with 25,000 jobs.

Chuck over $10 billion annually at any industry in Australia and no doubt they'll be congratulating themselves on how well they're doing. Miners and farmers are not especially bad or good in this respect.

The choice is not between only Aussie coal or Chinese solar. We could actually make something here in our country. We're innovators in the actual technology, we're just too lazy and conservative to actually build the things here. We used to manufacture things in this country, you know. We made undies and everything.

You want jobs for miners. Me, too. But if we dig it up as fast as possible, not too long from now those jobs will be gone. I want other jobs, too - jobs for miners, undies makers, turbine makers, solar panel makers, installers and maintenance workers, and so on. I'm a patriot, I don't want to just look after my own little corner of the country, I want to see it all doing well.

Where you spend money, you get results. We can spend money on something that'll run short one day, thus leaving us with no jobs or income; or we can spend money on something else that'll last much longer. Rich today, poor tomorrow; or rich today, and rich tomorrow. Hard choice, I know.

Thanks for the extra information. As always with renewables, more is happening some time in the future. Which is nice, but as you noted, I was writing about the decision being made on how things are now - not much else a person can do.

Payback. Worth noting that the Aus-wide, Melbourne based, Business Council for Sustainable Energy (BCSE) which regulates PV technology and installers claims an average daily production of 3.15kWh over the year. Which increases the payback period in comparison with the figures in the article.

I'm sorry to hear it's lower, and would have been disappointed and annoyed to only discover this once it'd been installed for a year or two.

I got my figure by going around to various sites offering solar panels. They ask for your location and then tell you the expected annual input. For Melbourne this comes out to around 1,825kWh/yr, it varied by +/-20% from one retailer to another. I took that figure at face value, since it'd be easy for them to be done for false advertising in that respect.

Presumably it varies by type of panel, etc.

The author has stated her/his parameters and that should be respected. In my opinion a profit could be made by installing PV in Australia on the roof of a house or factory etc. If financial gain is the only driver, why not simply use coal or nuclear and damn the consequences?

It depends on whose financial gain you're talking about.

In our case, we were looking at a "triple bottom line" of social, environmental and financial. Since we already bought GreenPower I was comparing it with that. I believe I said that if renewably-generated power wasn't available from the retailer, that might have knocked us over into buying the panels.

But this is a household sort of decision, which is different to a business or government decision. Most of us don't expect to profit from our homes, we expect to live in them.

A pure business decision, at first look whatever's cheapest is the best. However, one thing I didn't mention in the article applies here, too: we had conventional power and used 14kWh/day, but once we got GreenPower we got it down to 10, then 6 and now 5kWh/day. So the higher unit cost (about 25% higher) didn't harm us; GreenPower would have to cost three times as much to be more expensive than our conventional supply was.

A business can do this, too - combining renewable energy with conservation to lower overall bills.

Why wouldn't they just conserve with the cheaper power? Why bother with renewables? Goodwill. It's an important concept in business - the image of the company, how well people think of it and feel toward it. That's why companies do greenwashing - if it's worth faking, surely it's worth doing for real? Not for every company, of course, but for significant numbers of them.

The second point is that wise companies plan some years in the future. Between peak fossil fuels and whatever treaty they eventually make to deal with climate change, plus in Australia lack of water (making hydro, coal etc more difficult), energy is only going to get more expensive. It's what I mentioned about solar panels being insurance against future price rises. If this applies to us with our small $600 or so bill, what about companies with $60,000 bills?

But really companies rarely make these kinds of rational decisions. It's that "inertia" I was talking about in the article. "But this is the way we've always done things... leaving the lights on all night with nobody here, flushing with clean drinking water..."

Remember the corporate philosophy: if I do things a new way and fail, it's all my fault; if I do the things the old way and fail, well you can't blame me...


I should point out that the figure of 3.15kWh per day is an average for Melbourne, with some much higher figures for the rest of the country. And yes, some panels will be better than others.

And I agree with the general thrust of your article.

Where households are concerned, often the best measures are free or cost very little. Draughtproofing, energy efficient lighting, only boiling as much water in the kettle as needed, switching things off when not in use, etc. Not much point in buying green power or PV if the energy is wasted.

The figure of 5kWh per day consumption is a good result.

An excellent economic argument against PV. There is also an excellent economic argument for installing coal space heating in the eastern US. Purchasing coal electricity is by far cheaper than 'green power', and natural gas water heaters and furnaces are still far cheaper than solar space/water heating in most places.

As long as I do not consider the future beyond 3 years these arguments are sound.

I'm just not sure about the alternatives. If I lose all my income in a year a house that is survivable on 'free' inputs seems like a good idea. If the price of coal-fired electricity exceeds wind/PV there will be a massive ramp-up in demand (then you will really pay more for a company with no history...)

If the supply of natural gas is interrupted or priced out of reach the new 98% efficiency furnace won't be terribly helpful. Purchasing wind power won't do much good if the power company cuts me off for non-payment. But with some foresight you might have the ability to keep your freezer working off the roof power.

As one person said when asked about the solar thermal water system payback time - "it pays for itself the day I have a hot shower and the neighbour doesn't".

I'm willing to bet tens of thousands of dollars that a bit of 'renewable' energy will be useful in the net twenty years. Unfortunately as renters virtually all these options are closed to us right now.

Again, it was an economic argument because we had the option for renewables from the retailer. The future is neither better nor worse environmentally with my buying electricity from a wind turbine 100km away, or buying a solar panel for my roof.

Speaking from experience, when you go from renting to a mortgage you start to get an appreciation of what is a prudent purchase given long-term considerations such as likely price rises, loss of income and so on. You speak of being a year without income - few people could survive that, they'd lose something - their home, their car, their family, whatever.

Having the power cut off for non-payment - that's like being chucked out of your house for not paying the rent or mortgage. It's a risk you can guard against by a bit of thrift and savings today, but you can never truly eliminate it.

Good article.
However while I hate to be a wet blanket has anyone
heard of hail damage ?
Whole Lloyd's syndicates were wiped out by Sydney
hail storm damage to cars a few years back.

This would be very serious as I think once caught insurance companies would back out altogether.
For this reason I was considering ground mounted
panels which could have a cover pulled over them, if home.

Also ground mounted panels could be made sun tracking easily.

I don't know enough to know what sort of damage that'd do - whether just the glass cover, or the cells themselves, or what.

However, that's what we have insurance for. It's no different to your windows or back fence or whatever. Accidents happen, and you have to fix things.

I also find this kind of argument strange.
Especially when it is offered as some kind of ultimate argument.
We don't suddenly decide that roofs/cars/windows are a bad thing becuase they can be damaged by hail (etc).

Maintenance and replacement is how we renew things.

Imagine the level of economic activity if there was no entropy?

Under standard test conditions, PV modules are subjected to the equivalent force of 1-inch-diameter hailstones at a terminal velocity of 50 mph.

But also see