Many of us dream of living “off grid” or as closely as possible to avoid the never ending increases in electricity price hikes and governments gouging profits from monopoly electricity generators, transmitters and distributors. Now the retail sector of the electricity market has been privatised they want to clip our ticket pretty hard as well.
So how do you know if it’s worth investing in a solar generation system and battery storage unit? Well The Local and Surrounds has crunched the numbers for you. A case study of the average usage of two people in our region can be a useful guide to making these decisions.
Such an average household consumes around 20 kilowatts per day at an average 23 cents per kilowatt or $4.60 per day. This creates quarterly bills of around $420 and a yearly bill of $1680. If you are an air conditioner user you can round this up to $2000 depending on the summer’s severity.
So the cost of a 6.5 kilowatt solar system is around $6500 installed and the average system this size will generate 27 kilowatts per day or 9855 kilowatts per annum. At an average 10 cents per kilowatt assuming you sell 20 kilowatts per day will nett you $2.00 per day or $730 per year. Assuming you save 23 cents per kilowatt on the remaining 7 kilowatts you use during the day you save $1.61 per day or $587 per year.
Assuming a 3% rise in electricity costs per year the total average yearly saving is $1633 meaning you will break even on your purchase in four years. Assuming the unit lasts 15 years you will go on to make 11 years of further profit totalling $17 963 in total profits. This is around $1197 a year. From this return you have to pay for the 13 kilowatts you use at night costing 23 cents each or $2.99 a day or $1091 per year. This means a profit of $106 per year or a 1.6% p.a. return on investment.
If you borrow money at 3% interest you are actually losing money investing in solar without battery storage. Alternatively if you’re not borrowing but earning 5% on this as part of your Super you are also behind.
If you add a Tesla Battery to the equation it changes the maths significantly as the unit costs a further $14000 to install making the total investment $20500. The average system this size will generate 27 kilowatts per day or 9855 kilowatts per annum. At an average 10 cents per kilowatt assuming you sell 13 kilowatts per day will nett you $1.30 per day or $474.50 per year. Assuming you save 23 cents per kilowatt on the 20 kilowatts you use of your own battery power you have stored you save $4.60 per day or $1679 per year.
Assuming a 3% rise in electricity costs per year the total average yearly saving is $2670 meaning you will break even on your purchase in seven and a half years. Assuming the unit lasts 15 years you will go on to make 7.5 years of further profit totalling $20025 in total profits. This is around $1335 a year or 6.5% p.a. return on investment and no power bills into the future for the full 15 years plus.
If you borrow money at 3% interest you are making money investing in solar with battery storage. Alternatively if you’re not borrowing but earning 5% on this as part of your Super you are also ahead of the game with this option. As always seek your own advice on this.
Of course if you sell your house before the break-even point you may lose unless the buyer pays more for the solar facility however this is always hard to gauge in the overall negotiation of a house sale. There is also risk of solar damage outside the warranty terms or a breakdown so be sure to buy from a reputable company who honours their 15 year warranty.
Please note that the equation for solar without a battery improves the more daytime power you use on things like washing, ironing, cooking and other high use activities. Alternatively the equation for a battery owner is the same whether the cooking, ironing or washing is done anytime of the day as its using power stored from the sun during the day rather than drawing from the grid at night.
Key Take Aways