Economics of photovoltaic systems

From Dr. David King
Centre for General Practice, University of Queensland

I have recently installed a solar photovoltaic (PV) grid feed system and a solar hot water system. My out of pocket expenses after relevant rebates were $11,000 for the PV system and $1,500 for the solar hot water. Solar hot water is a more efficient use of sunlight, and will have a payback time on your investment in 4-9 years, depending on previous hot water usage - ie. payback in 25 - 33% of the 'payback' time on investment in solar electricity (PV). Thus solar power should be considered by all environmental activists as an affordable minimum step to aim for if your pre-existing system is nearing the end of its predicted lifespan, or sooner.

Comment from our expert, Monica Oliphant

I agree that with the current rebates available to solar water heaters they are much more cost effective in reducing CO2 emissions than installing PV.

In SA a 1.5 kW PV system and a solar water heater for about 3 people would save about the same amount of electricity per year but the difference in cost, using the costs below, is about $9500. However, many people do not do things for cost effectiveness.

From Anne Paizs, Tasmania

Monica Oliphant's information and comments on solar power were interesting. It appears that installing solar panels in South Australia is less cost effective than in Tasmania and it would be interesting to explore the reasons why

An article in Hobart's newspaper, The Mercury, on 25.5.02 gave an example of a family of four who installed solar panels in their home. Their savings on electricity appeared to about $1200 per year. The system cost $!9,000. With a Commonwealth grant of $7000, their initial outlay was $12,000. Therefore after 10 years the system will have paid for itself ( very different to the stastistics provided by Monica Oliphant) There is also a home at Mt Nelson in Hobart which is passive solar and has solar panels. Not only is this home self sufficient but it produces a surplus of electricity

Comment from our expert, Monica Oliphant

I assume that the PV system installed was a 1.5 kW array. This would produce ~2250 kWh/y (hope I gave the same value previously!) and with current AGL electricity tariffs, which have just gone up, would mean a saving of ~ $350/y. So pay back would not be in 10 years but 34 years.