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.

Calculator Input

2kw system in Victoria

Expected use – 50% of output

Calculator 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.

Our System

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!

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