Wise Words Wednesday – Solar Power

It has been a while since I posted a question from a reader, so here goes.  Today’s question(s) come from Natalie, with her permission, hailing from somewhere in Australia.

Hi Gavin

My husband and I have been discussing the installation of solar panels for our home, but have a few concerns about what the electricity companies are up to. I know you are a big supporter of solar generation in homes, so I wanted to ask your opinion.

Due to the prohibitive cost, we cannot store the electricity generated for our own use, and must feed it back into the grid. Then when we use electricity, we are buying it from the electric company. They have already drastically cut the feed in tariffs, what do you think the long term situation will be? What if they stopped paying anything for the feed in?

Shouldn’t it be the electric companies responsibility to pay for installation of solar infrastructure? It will only reduce our personal power bills while they continue to pay a high feed in rate.

I don’t know a great deal about the mechanics of how it works, if you are home during the day when electricity is being generated are you using that or still feeding it into the grid and buying back?

We love the idea of being self sufficient and generating our electricity and using the sun’s natural energy, however we are starting to think this is only truly feasible if you can store what you generate for your own use.

I’d love to hear your thoughts on this as I’m sure you are much better informed than I am.  Thanks for continuing to publish such an informative and useful blog. I’ve been a reader for quite a long time, I’m sorry I don’t often comment!


Well Natalie, thanks for the questions.  I will try and answer them to the best of my knowledge.

Types of Solar Photovoltaic (PV)
Firstly lets talk about the mechanics or rather the electronics of it.  I am no expert but I have a basic understanding, which I hope my mate Mick may be able to expand upon.  I believe that you are referring to the three basic types of Solar PV, the grid tied, standalone and hybrid. 

Standalone Solar PV
The standalone system does indeed require large banks of batteries for storage, as it has no grid connection.  Many of these types of systems have either a wind turbine or diesel generator as a backup for when it is overcast for a few days and the current in your batteries becomes low.  You can be truly independent or in your words self sufficient with this type of system.  You will become master of your own domain, but the cost is sometimes prohibitive if you are a high energy user.

Grid Tied Solar PV
With the grid tied system there is no battery backup, with the electricity generated by the system fed into the main switchboard of your house.  The house electrical circuits draw upon this electricity first, and then any excess is fed back into your local grid.  You are usually paid what is known as a feed-in tariff for this excess electricity by you electricity retailer, which I believe in Victoria is $0.25 per kWh, which also happens to be about the same price you pay for electricity that you draw from the grid when your solar system is not generating enough to supply your household needs.
Think of the grid as a big battery that you pump extra kWh into during the day, and draw down on from during the night.  If you have generated a large enough buffer during the day, then you are essentially, in a round about way, self sufficient albeit with a dependency upon the reliability and stability of the national grid.  If you have a blackout, your grid inverter must disconnect as well (by law).  This is in case any power company linesmen are working in your area, which will protect them from electrocution from any potential electricity being fed into the grid by a local solar PV system.  

Hybrid Solar PV
Lately, some installers have been offering what is known as a hybrid system, which is both grid tied, with a small battery backup in case of blackout.  You can size your battery bank depending on your perception of grid stability in your area.  It will cost more than grid tied, but probably less than a standalone system (Mick, please confirm).

As you directly benefit from the installation of a solar PV system on your property, I do not understand you question regarding your proposal of the energy company should pay for the infrastructure.  Remember that your house uses the electricity the system generates first, before it is exported to the grid.  You get the benefit of the system before anyone else does.  If you had a hybrid, the batteries would take the excess into storage, then export to the grid, which is even more beneficial to the owner.

Feed-in Tariffs
I do not believe that governments are that stupid that they would drop feed-in tariffs completely.  You would be providing an important resource, which is subsidised far less than fossil fuel generated electricity, and with far less maintenance costs, especially in states where the electricity company is government owned.  At worst I believe that they will maintain the feed-in tariff at parity with the grid price per kWh.  Realistically this is the same situation I found myself in when I first had a grid tied solar PV system installed in September 2007.  There was no feed-in tariff, and I had an old electro-mechanical meter (the type with the clocks), whereby any excess just spun the wheels backwards.  I clocked up credits during the day, and drew from the grid at night.  By keeping my electricity consumption low during the daylight hours, we were able to significantly benefit from this non-arrangement.  Our electricity bill was even in credit a few times, years before a feed-in tariff became legislated in the state of Victoria.

Which ever solar PV system you eventually decide upon, just remember that it is one of the rare purchases that you make in your life that actually generates an income goes towards paying itself off, and is a planet friendly for of renewable energy.  Try doing that with a new car or boat which only depreciate in value as soon as they leave the showroom floor!  If interested in taking the next step, you can get an obligation free quote from Enviroshop at this link who I highly recommend.

Anyway, hopefully this post has gone some way to helping you decipher the ins and out of Solar PV.  On a side note, my PV system has generated over 18 Megawatt hours of electricity which is equivalent to abating 23.4 tonnes of CO2, in the five years I have owned it, which was about two years worth of grid supply that I would have used otherwise.  It has been well worth the investment, in my humble opinion.

Also to my readers, if you have made an error, or misstatement, please feel free to correct the assumptions above via comment.  If you have your own solar PV story to tell, also leave a comment.  The more knowledge shared, the better the understanding by all who are thinking of spending some capital on their own local renewable energy source.

Disclaimer: I will receive a AUD$25 referral fee if you proceed to click on the Enviroshop link and complete and submit the information request form.  This is regardless of whether a purchase is made or not.  However I would not recommend this company if they were shoddy or otherwise reflect badly upon my reputation.  I make this disclaimer because I blog with integrity.

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  1. says

    Hey Gav,

    Pretty good summary. Explains the situation well.

    The hybrid system will cost more than a grid connect system as the inverter is slightly different and is bit more expensive. There are are also batteries and a few other additional components to be installed. In a stand alone system the cost of the (much larger) battery bank significantly increases the cost.

    As you said, it is very unlikely that the feed in tarrif will drop below the retail price although there are industry players who a starting to try to push this. I don’t think they will get any traction. There would be too much back-lash.

    I agree that the Enviroshop is staffed by committed and ethical people who have been in the business for a long time. I know most of them and have done work for them in the past and I would have no hesitation recommending them. They can also provide a lot more detailed current information on the market and likely trends.

    Having said that, I always recommend that people get at least 3 quotes for any work they have done. There are a number of very professional and ethical people in the market and ReNew magazine is a good place to look for them. ReNew magazine is published by ATA (www.ata.org.au) a non-profit group, and is a great resource. You can talk to staff there about these kinds of topics as well so give them a call after 10:00am on 03-9639-1500.

    If you are really keen to go PV on a smaller budget there are a number of smaller self contained systems such as the one already described on this blog and other blogs and in ReNew.

    The key question to ask is, “What am I trying to acheive?” Once you answer that, sometimes, very difficult question, the solutions start to become clearer.

    Finally, if people want to discuss this and all things sustainable,

    (here comes the shameless plug)

    The ATA will be at the Building & Home Improvement Expo. in Melbourne this weekend providing expert advice on sustainable building and renovating. I will be there as part of the event on Saturday afternoon and Sunday morning. So check the details and come along for a chat.


  2. says

    Hi Gavin, we have just installed a solar system (NSW). At the moment we are only being paid 6 cents per kWh that is fed into the grid. When we first connected we were with Integral and they paid us zilch!
    We need to consume as much of our solar generated electricity as possible during peak times of production which is between 10 and 2pm this time of year. That is easy for us as we are at home most days and are able to do the washing, ironing etc then but for people who have to work outside the home I think they would not benefit greatly from installing a solar system connected to the grid. We installed one because we are trying to make a difference to the environment and to teach our children that we need to take care of our planet. So far, we are consuming about 4kwh per day from the grid which is mostly due to running our fridge and freezer etc during the night and exporting 1 to 2 kWh to the grid during the day which is our solar excess for which we are paid 6 cents per kWh. NSW government needs to lift their game when it comes to solar (and many other things of course!) and show people that they are also interested in doing the right thing for our environment!

  3. Natalie says

    Hi Gavin
    Thank you for taking the time to provide such a detailed answer. In qld where I live, the feed in tarrif has just been reduced from 44c to 8c, which is well below our retail price of 21c. This made me feel very skeptical! However I have now learned from your response that we do have access to our solar generated electricity before it goes into the grid so this alleviates my concerns a fair bit. I believe by planning whento do washing, showers etc we should be able to justify the initial outlay.

  4. says

    I have a comment and question too, Gavin. Here in Tasmania our power is hydro generated. Furthermore, there is a fabulous new idea from a former hydro engineer of harnessing local, small waterways as small-scale hydro schemes to power a few thousand homes etc. With this scheme, the waterways are left entirely intact. It works by syphoning off some of the flow, allowing it to go through a generator, then allowing it to rejoin the river only a short distance from where it was diverted. This man has done this on his own land and makes enough electricity for his local town!

    The Huon Valley Council is looking at using this system and this could provide local jobs and local power in an area that has enormous rainfall now and is forecast to have even more, into the future.

    Taking this into consideration, I think that solar panels are a bad idea for Tasmania as they do require considerable power and materials to build and install, and everything has to come from so far away from here.

    I’d love your thoughts on this.

  5. says

    Linn, Natalie,
    I stand corrected on the feed-in tarrifs in NSW and QLD but it would still worthwhile to look around for a better deal. Definitely contact the ATA and let them know about your experiences as they are actively fighting these sorts of issues and always appreciate comments and stories from people who have been impacted.

    Tasmania is in a unique situation having abundant water supply and streams suitable for micro-hydro. Micro-hydro can be very low impact, (in ideal situations probably the lowest of all renewables) and is a great choice when available. It is simple, usually needs no batteries, and just continually generates clean 240VAC energy. However, micro-hydro still has an impact that needs to be evaluated on a site-by-site basis.

    As hydro schemes get larger the impacts grow rapidly. Mini or small scale hydro schemes that can power thousands of homes will definitely have larger impacts that need to looked at critically. It is not such a clear cut case.

    Solar PV has an energy payback that ranges from about 1 year to 3 years. There are some other environmental impacts that still have to be addressed but, overall, PV is much better for (or less impact on) the environment than just about any other form of electicity generation.

    But, given the option, I would still go for microhydro when available.


  6. Monique says

    I’m in Victoria and got my solar grid connected just before they dropped the Premium feed in tariff of 66c per kWh down to the 24c. I was told that because I got it connected in time, I would retain that premium rate permanently. Certainly, my bills so far are reflecting that.

    But does anybody know for sure if I will have that higher rate permanently? I am worried that one day they will just drop it dramatically and that would mess up my entire budget, which is very much dependant on the solar completely negating my power bills.


  7. Anonymous says

    I believe that a state govt can decide to reduce the rate. In Victoria, I also believe the indications are that solar is a significant contribution to the grid, and I have seen comments that may suggest future opt ins may be stopped (after all money-profit-shareholders are far more important than sustainability!) We tried to get a system large enough that we would generate more than we use, thus hopefully not having to pay more than the general charges. Certainly at the moment, we are saving money and not having to pay bills.

  8. says

    We purchased a 4.5kw grid fixed solar system about 2 months ago. It should, in theory, wipe out our electricity bills when averaged out over 12 months. At the moment we get 8 cents buy back from our power supplier (I presume it will always be this number)and pay them 26 cents for what we take from the grid.

    So we have to ‘make hay while the sun shines’ so to speak – do as much as possible that requires electricity during the day in order to reduce out bill to zero. Mind you we have had to pay around $160 to get our smart meter reprogrammed. Took the guy about 5 minutes to do it – he must be on surgeon pay rates.

    Oh, we are in Melbourne.

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