Does installing solar power reduce my electricity bills?

Solar power doesn't just help the environment. There are a lot of ways that it can reduce your costs, too. If you want to reduce your energy usage and your electricity bills, read on.

Self Consumption Savings

The greatest benefit you can recieve from a solar system is obtained when the generation is being consumed by the household and this is called self consumption.

The generation that is not consumed by the household is called export and you will receive a feed in credit from your retailer for this.

In South Australia on average we pay 36c/kWh+ for the power we purchase from the grid but only receive 6-20c/kWh for the power we export to the grid with the average being in the 10-15c/kWh range.

Therefore if the solar generation is self consumed it is saving you 36c/kWh+ compared to only receiving 10-15c/kWh on average if you do not self consume the generation.

This is why some lifestyle changes should be implemented when you have a solar system to try and maximise the self consumption ratio. 

Some tips that we can share to increase your households self consumption are as follows

• If you have a pool run the pool pumps/heating during the day and you can pretty much completely offset the electrical running costs.

• Are you like most people and after dinner you load and then run the dishwasher? Well you simply need to change this habit and wait till the following day to run the dishwasher. If you work or no one is home during the day you may think this is not possible. However most newish dishwashers have start delays/timers so simply get in the habit of setting it so that it will run during the day when you are at work!

• The same practice of using a start/delay timer also applies to other household appliances like the washing washine (another good tip is to make sure the times are staggered so they do not all run together and consume in total more than the solar system can generate!)

• Quite a lot of the work an air conditioner has to do occurs after the air conditioner is first turned on as it brings the house to set temperature. After the house has reached the set temperature it will usually just cycle on and off to maintain the set temperature. Therefore if you can have your solar system cover this first period of draw you can offset a chunk of the running costs before it gets dark. Once again you can plan ahead and set a timer for the air conditioner to come on later in the day before it gets dark and before you come home while the solar system still has the capacity to offset the load. If you have a new air conditioner with internet connectivity you may be able to access it and turn it on remotely!

Making Money With Excess Energy

A solar energy array will quite often produce more energy than your household actually is consuming at that moment in time. When you produce excess energy, you have no way of storing it on your own (unless you have a battery installed). Instead, it's fed into the grid and you receive a feed-in credit from your energy retailer. This feed in credit can be anywhere from 6c to 20c per kWh and helps offset the power you have purchased from the grid.

At Generate energy we have access to hundreds upon hundreds of monitored systems and from our own data we see that in general solar systems average 50-70% of the generation being exported (when a battery is not installed).

This may seem like a large number but it is mainly due to a solar systems performance following the seasons - the more sunlight the higher the performance. In general 1kW of solar panels average around 4kWh of generation for a 12 month period. But that is just the average over the year and in summer 1kW of solar panels will average 6kWh/day of generation compared to 2kWh/day in the depths of winter. Therefore in summer the amount of exported generation can be very high compared to winter and usually a credit is built up over the sunny months which helps ease the Winter bill when the performance of the solar system is lower.

Unfortunately the price you sell energy to the grid is far lower than the price you purchase that power from the grid and you usually need to sell 2-4 units to offset 1 unit purchased from the grid which is why it is important to maximise self consumption where possible rather than rely on feed in credits from exported energy.

Government Rebates

Through small-scale technology certificates, Australian citizens can get a government rebate just for getting a solar power installation. This is cash in hand, and it's something that can help you pay your electricity bills, even if it isn't directly for your electricity bills.

Government rebates can be sizeable, but they also change from year to year. Make sure to check with your solar installation company; they'll be able to tell you what's available now.

The Pay-Back Period

There's a certain point at which your savings are greater than the price of the system. This is also known as your break even point. When you first install a solar power system, you're going to need to invest some cash right away. And that means you're going to be "underwater" on your system, but this doesn't last for very long.

After a few years, you'll have paid of your system. From there (barring maintenance and repairs), any additional solar energy that you collect only saves you money. It can even make you money if you're feeding back to the grid consistently.

Don't want to pay for the solar system upfront? That's not necessarily a problem either. There are many financing options that make it possible to pay for your solar panel system over time.

Making More from Your Solar Power 

Solar systems are complex. There are peak times, off peak times, seasonal times, and so forth. If you want to increase the amount of energy that you're able to save, you need to look into your usage patterns first. Identify the times that you're most likely to use energy, and identify the times that you can avoid energy use altogether.

The energy consumption of your house and the size of your solar installation is going to impact how much electricity you produce. Consequently, it's also going to alter how much energy you have for your home, and how much you sell back to the grid. If you really want to save money, a larger system is generally better. You also want to save money on the cost of installation.

However, be aware: going with the cheapest bidder for a solar system is usually not a good idea. Not all bidders are made equal. For a solar installation, you should consider the upfront cost of installation.

Reducing Your Bills through Solar

Are you able to reduce your energy bills through solar power? Absolutely. Reduced energy bills is the primary reason most people switch to solar, and once it's installed, it requires virtually no work from you. 

Not only are you going to be able to save money on your energy bills, but you'll also be able to sell money off to the grid, or use it yourself later. If you want true energy independence, you can try to produce all your energy needs through your solar system, and invest in a battery to store your excess energy for future use.

The larger and cheaper your solar system is, the better your results — but within reason. You still don't want to sign up for working with a company that is the "cheapest in the business" or that doesn't produce high quality panels.

Download our Beginner’s Guide to Solar eBook for more information