Review of Solar Cost / Benefits
In our new house we hadn’t got solar so I thought I would review the financial advantages of installing a system.
I found a useful calculator on Solar Quotes a great site with lots of useful information.
Working through the Solar Quotes Solar Power Calculator I came up with the following for a 2kw system.
2kw system in Victoria
Expected use – 50% of output
Installation Cost $3900
Power generated 2628 kilowatt hours
Saving in first year $340
That’s around an 8.5% rate of return , better than I could get at the bank,
If we use more than 50% of the power the rate of return will be even better.
Is it worth upgrading?
An extra 1kw system would cost around $550 extra and generate an extra 1314 kilowatt hours
If the whole of the extra panels output went just to feed in tariff at $0.06/kw hour the figures it would save me $78,84.
That’s a 14% rate of return.
We decided to go with a 3 kw system with 12 Panels.
Eight panels facing North, and 4 panels facing west to maximise late afternoon and evening performance when we get in from work.
Expected saving from our $4,450 system = $340 + $78.84 = say $418 (a 9.4% rate of return)
Why Solar Makes More Sense for Retirees
Currently both my wife and I are semi retired and only working part time.
We currently have a considerable amount of money in Superannuation and other savings
In January 2017 as a result of government changes to pensions the amount payable to us when we reach pension age will be reduced by $3/fortnight ($78 per year) for every $1,000 of assets we have over $375,000.
Money spent on the house is excluded from the asset test.
Financial Situation in Retirement
So for us
By investing our $4,450 in solar rather than leaving it in the bank we have lost $133.50 interest (best bank deposit rates currently are around 3%)
We stand to gain $347.1 in extra pension payments ($78 x 4.45)
Net income gain = $347.10 – $133,50 = say $213.
Add to a the power savings identified above gives
Overall Annual Return = $213 + $418
= $631 (14% rate of return) . . . . and unlike money in the bank these benefits will keep up with inflation!