In this fact sheet we step through what you need to know about installing solar panels on your apartment building.
Is Solar Worth it?
In NSW since the cancelling of once generous feed-in tariff and the early closure of the Solar Credits program, installing solar panels typically have a return on investment > 5 years.
Solar panels are great for the site than can afford it… but before generating electricity first look at reducing your consumption. Usually upgrading lighting and other equipment can provide better returns on investment.
If are considering solar panels there are a few things you need to know to get the minimise your costs and maximise your savings.
Rebates and feed-in tariffs
The installation of a small scale PV system in NSW may achieve savings in 3 ways:
- Generate Small Scale Technology Certificate (STCs).
- Savings on electricity bills (through net metering).
- Feed-in tariff (i.e. selling electricity back to the grid).
Small Scale Technology Certificates
The installation of a PV system may receive a rebate by generating Small Scale Technology Certificates (STCs) through the Small-scale Renewable Energy Scheme (SRES). The number of STCs is dependent on the capacity of the installed system and location. The Australian Government Clean Energy Regulator provides an online calculator to estimate STCs.
The rebate that may be achieved by selling STCs can vary from $15 to $40. A price of $40 per STC is accessible via the voluntary clearing house however the ORER has advised of potential waiting periods of 18 months or more to sell STCs at this price. The Clean Energy Council (CEC) website provides the market spot prices for STCs. The STC spot price was $37 in mid 2013.
Note: Prior to January 2013 the number of STCs generated through installing a PV system may be increased under the Solar Credits program. For eligible grid connected systems Solar Credits worked by multiplying the STCs generated from the first 1.5kW of the system by a factor depending on the date installed. The Solar Credits program was due to run until July 2013 however it was closed early on the 1st of January 2013 and does not apply to PV systems installed after this date.
Reduce energy costs
Our energy audits identify the best options to reduce costs. Contact us now for a free quote.
Net metering vs Gross metering in NSW
Under net metering a customer with solar panels is only charged on the net electricity it consumes i.e. the extra electricity it draws from the grid. Under gross metering a customer with solar panels is charged on the total electricity it consumes at the normal retail rate, and then effectively feeds all the electricity it generates back to the grid for a (relatively low) feed-in tariff. The feed-in tariff is around 5 to 13c/kWh. Details of solar feed-in tariffs may be found on the IPART’s My Energy Offers website.
In NSW it is more cost effective to employ net metering. Under net metering, every kWh of energy generated and consumed onsite at the time of generation achieves savings equal to the retail cost of electricity of 20 to 50c/kWh compared to the 5 to 13c/kWh feed in tariff achieved through gross metering. Savings are achieved by consuming the electricity you generate onsite at the time you generate it (rather than exporting electricity to the grid). Therefore it is important to match the capacity of a PV system to the pattern of electricity consumption throughout the day and not simply total average kWh consumption.
Note The NSW Solar Bonus Scheme closed on the 28th April 2011. Under that scheme small eligible retail customers who export solar energy to the grid could receive a solar feed in tariff based on gross metering. The initial feed-in tariff of 60c/kWh was reduced to 20c/kWh for new connections after the 27th October 2010.
As discussed above, it is important to size the capacity of your solar array to meet the demand of your site. That is, only generate as much electricity as you can use (at the time you generate). As a general rule, the capacity of a solar system should be twice the average daily demand of your site. As an example if your daytime electricity demand is 2.5kW (say from interior and car park lighting) than a 5kW solar system should be the most cost-effective option. Installing a 5kW solar system would mean that you could consume all the electricity you generate during the day (and hence save big by not buying electricity from the grid). If you bought a bigger solar system then you would not be able to consume all the electricity you generate and you would export some electricity to the grid. This exported electricity would only generate small revenue due to the low feed-in tariff, which would not justify the added expense of the bigger system.
One thing many sites don’t realise is that their daytime demand may be very small. In some apartment buildings interior and car park lighting switches off during the day, while their night-time demand may be very high in these cases we do not recommend installing solar.
When determing what size system to get it’s important to also consider the physical size of solar panels, significant roof space is neccesary to hold the panels.
Worked Example – energy and cost savings
An apartment building has a day-time demand of around 3kW. The site decides to purchase a 5kW system (this way they ensure they consume all the electricity they generate). In Sydney a solar system generates around 1,425kWh pa of electricity per kW capacity. So a 5kW system would generate around 7,125kWh pa. The sites total annual electricity usage is 50,000kWh pa so the solar system can generate 14% of the sites electricity.
The site is on the LoadSmart time of use tariff, therefore the solar system will have different savings depending on the time of day (i.e. between 7am and 2pm and 2pm to 6pm).The average cost of electricity is 28c/kWh. Therefore the solar system will save $2,000 Ex GST per year. The cost of their system is $15,000, however the site can generate STCs worth $3,800 (based on a STC price of $37) so the final installation cost is $11,200. As the system will save $2,000 per year the system will pay itself off in 5.6 years (or lower if future electricity prices increase).
So in general, the solar system does not have an attractive payback, some suppliers may be offering solar systems significantly cheaper than others… but it is worth considering why their systems are cheaper? I.e. Are the solar panels and inverters of a high quality, from a reputable manufacturer with a long gaurantee.