But the system itself isn’t the only cost that needs considering.
A reliable generator as a back-up is crucial. That came to $4100, including shipping and discounts. So far, we have not had to use it.
How much did the project cost?
12.5kW-h solar system (28 solar panels, modem, six 4kWh lithium batteries, inverter)
- Cost – $48,100
- Minus government rebate – $5800
- Total – $42,300
Additional required expenses:
- Hot water system upgrade – $2400
- Generator – $4100
All rounded to nearest $100
Costs that have not been included: Sub-$100 expenses (e.g. upfront mobile payment for monitoring the system), fuel for generator, ongoing insurance of the system (through building cover), interest costs if funded through mortgage.
To reduce the power load, the hot water system needed to be replaced with a heat pump. The total upgrade cost was about $2400, including plumbing, rebates (about $1000 through the STC Scheme) and a refund for the standard system.
A final unexpected cost was building a carport. Our home’s roof is not big enough for all the panels. A ground array (where the panels are mounted at ground level) could be used as an alternative, but we instead chose to stomach the $6800 expense in part because there are a lot of kangaroos who we thought might be curious about our set-up. The extra shelter has the added benefit of feeding more rain into our water tanks and will help protect the car, solar batteries and hot water heater. As a carport was on the list to eventually build, and not strictly necessary, it has been omitted from the final estimate.
The total cost to get the solar running was, therefore, $48,800. This is no small sum.
It really depends on your own circumstances as to whether such a big outlay is worthwhile.
Location is everything. Our block of land has access to power but connecting to the grid would have cost $33,900. This does not include allowances for rock excavation. Given the house is on acreage and located about 200 metres from the electricity pole, it’s highly likely additional works would have been required.
Those in Sydney and Melbourne who are building a new house would typically find the cost of connecting to the grid far lower, while those looking to convert an existing home to solar will not factor this into their calculations. This is where the sums too often fail to stack up and adding panels while staying connected can be more cost-effective.
For our house, the difference between going off-grid and on-grid was $14,900. If the smaller solar system was chosen, this would have been $5200.
As the home is new, we were able to afford the larger system by taking advantage of the federal government’s $25,000 HomeBuilder grant introduced during the coronavirus pandemic to help boost the economy. This more than covered the additional solar bill. Disregarding the grant, the question becomes: How long does it take for the difference to be recovered?
The average annual Australian electricity bill for our area, based on Essential Energy network usage, is $1550. Canstar Blue has an average electricity bill for a two-person household at $1221. Based on our previous Sydney bills and calculating some increased usage due to extra heating (on top of the wood fire) needed in the colder regional area and a fully electric stove and oven, an estimate of $1400 a year seems appropriate.
This means the system needs to run for about 10.6 years until it has paid for itself. It would take less than four years with the smaller system.
Inflation has not been included nor any changes in electricity prices or usage but these factors could have a dramatic effect on this basic calculation. Those working out their own savings would be wise to consider what they think is likely to happen to energy costs over time.
Using the 10-year figure, determining whether it’s financially worth the spend largely depends on how long the system ends up lasting. The battery and inverter have a 10-year warranty, while the panels have a 15-year standard and 25-year performance warranty.
As the system is high quality, we expect to get at least 15 years use out of most components. The industry standard for figuring out your return on investment is to expect the system to last for 25 years. Even at the conservative 15 year estimate this would provide us about $6500 worth of free power and plenty of stress relief from never receiving quarterly bills. If the system lasts the full 25 years and bills remain constant, we’ll save about $20,000 by 2046.
By the time we need to replace the components at our own expense, it’s likely the prices will have come down dramatically and the technology will have improved.
Only time will tell but let’s hope the sun keeps shining in that direction.