System Financial Benefits
One of the reasons customers consider installing a PV unit is the potential financial benefit it can deliver. However, the size of this benefit is difficult to predict, as it depends on many factors and varies for different customers. The sections below explain the key factors to help new PV customers assess their likely financial benefit.
What are the main sources of ongoing financial benefit for new PV customers?
Savings on retail electricity bills and potential revenue from unsubsidised Feed-in tariffs.
What should new PV customers consider when assessing their own likely financial benefit?
In considering the likely financial benefits of a PV unit, PV customers should think about:
- how much electricity they use, and how their electricity usage varies over a typical day
- what size unit is appropriate given their circumstances
- whether the location and orientation of their PV unit are most appropriate.
To illustrate the relationship between a PV customer’s financial benefit and the proportion of the energy that they export, the table below shows the estimated annual financial benefit for a typical customer with a 1.5 kW PV unit, who generates a total of around 1,900 kWh a year. pays $0.30 c/kWh for the electricity they import from the grid and receives an unsubsidised feed-in tariff of $0.06 c/kWh for the electricity they export.
The table on the left shows that for this customer, the financial benefit is highest when they use all the electricity they generate at the time of generation and export nothing, and this benefit decreases as their export ratio increases.
What should PV customers consider when assessing retailers’ market offers?
Like all customers, PV customers need to assess a retailer’s whole market offering- not just the solar feed-in tariff component - and compare it to other available offers.
As discussed above, for most PV customers, revenue from unsubsidised feed-in tariffs is not likely to be a major source of financial benefit for new PV customers. In addition, all PV customers will continue to receive electricity bills - at least for the electricity they use when the sun is not shining on their panels and their PV unit cannot generate. Therefore, it may well be that an offer that includes a lower feed-in tariff and a lower usage price provides a better deal than one with a higher feed-in tariff and a higher usage price
Note: Assumes annual generation of 1,882 kWh. retail tanff $0.30 c/kWh, unsubsidised feed-in tariff $0.06 c/kWh. The export ratio is the proportion of electricity produced by a PV unit that is exported to the grid. Only those few customers who install very large PV units (eg. over 5kW) and have very low consumption (eg. less than 2,000 kWh per annum) have the potential to earn enough income from unsubsidised feed-in tariffs to offset their total electricity bill.
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