Nancy’s Notes

The evolution of solar energy in the home

A few years ago, Origin had a great ad on TV – a retired couple in a caravan ‘pinching’ sun from those who aren’t using it with solar panels that can be moved around with a long arm. It was witty, funny and entertaining but also fundamentally flawed. 

Firstly, why would the caravan owners need to move their arm over someone else’s roof?  Surely they could just leave it over their own caravan – how is it better to park it over someone else’s house?  Secondly, why does Origin need to run so many ads to encourage everyone to get solar energy? I mean, they sell us electricity so isn’t it common sense that they want to sell us more?

As investors into the solar world with 24 panels of our own, we’d like to point a few things to consider… Years ago, when our parents installed their solar panels, they would receive cheques in the mail from their energy provider because they used less power than they generated. This extra power was fed into the grid and the energy provider’s payment allowed them to occasionally achieve a small profit (boy were they happy!). The whole system made complete sense – they generated the electricity, used what they needed and the extra energy they produced was sold to someone else, by the energy provider, and the owners of the energy provision were fairly compensated. The home owner should profit from their infrastructure investment if someone else is benefiting, right? I mean, we don’t expect to rent houses for free? If you invested in a bigger internet bundle then gave your password to your neighbors, surely it would be fair to expect them to contribute to the costs right?

All good, all made sense and we had people going out in droves, investing in solar energy. With government incentives, it was a really good deal.  Until…

The energy providers drastically cut back how much they paid for energy fed into the grid by the home owners. Think about buying an investment property with a known rental return then the tenants deciding to cut their rental payment by about 80% – doesn’t sound like such a good investment anymore does it? What does all this mean? We now think long and hard before investing in solar panels. Perhaps this will change in the future but for now we don’t believe the investment pays off. For example, if you invest $7,000 in a large system that provides excessive energy which feeds the grid, you’ll continue to be responsible for the $7K investment but will receive very little financial benefit for passing on the extra energy.

An appropriate notice from your local energy provider:

We would like you, the home owner, to invest in infrastructure that produces more energy than you use so maximum volumes can be fed into our grid. We will compensate you for this energy at a fraction of the price we sell it to someone else and will take no responsibility for your investment costs or infrastructure maintenance. 

Key takeaway here is remember that currently there is no reasonable way to store the energy you produce so if you use it while it’s generating (when the sun is out) then great but be careful not to over invest in a system that feeds too much energy into the grid as you won’t get enough back to make the investment worth it.