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SUNDAY 19 SEPTEMBER, 2010 | RSS Feed

When Is The Right Time To Buy A Solar Power System?

 

by Energy Matters

Buying solar power
Australian business and households often ask themselves whether they should acquire a solar power system now or wait. The answer to the question of when is the best time to buy a solar power system is often "right now". That isn't just an empty sales pitch - here's why.
 
According to national solar energy solutions company Energy Matters; people often hold out on buying a system for various reasons, the most common being they may have heard a rumour better incentives are on the way. However, in Australia, incentives have had a tendency to become less generous once implemented and often there will be no warning before rebate programs and other schemes providing financial support are pulled, changed or placed under review.
  
Energy Matters co-founder cites a current example. "The New South Wales Solar Bonus Scheme - the State's very generous feed in tariff program - helps to illustrate this issue. We had quite a few customers state they would hold out from purchasing a system in the hope of better rebates in addition to the scheme after the election. While the Solar Bonus Scheme hasn't been pulled as such, it is now under a review period. The review was always on the cards, but there was no real warning the milestone that would trigger the review had been reached."
 
"If the review finds that the feed in tariff rate in NSW should be decreased, then anyone signing up for the Solar Bonus Scheme since the review period started will receive the lower feed in tariff rate from the time the new conditions are applied."*
  
(*Editorial note: Update - the situation has changed. After recent industry discussions with the NSW Minister For Energy, the Government's Solar Bonus scheme FAQ has been updated; a key point being:
   
"The Government has said that if changes are made to the Scheme, they will not affect existing participants. Under the legislation, an existing customer is one whose eligible generator has been connected to the electricity grid.
   
If changes to the legislation are put to the Parliament, the Government would propose that an 'existing customer' is one who has purchased (or entered into an agreement that could result in a financial loss if terminated) an eligible generator and applied to connect it to the grid before the date changes to the legislation are enacted.")

  
"Even if the lower rate paid per kilowatt hour is offset or even more than offset by a longer program duration after the review, those who got in early and acquired a system will continue to be paid the 60c per kilowatt hour for 7 years, providing a more rapid return on their investment. Speed of return is sometimes key as to whether a system is purchased or not." 
 
Mr. Sylvester says "buy now" certainly isn't just sales spin. "Sure, we want to sell systems, but when we tell customers the best time to buy a solar power system is right now, we say that because we don't know what tomorrow brings. What's happening with the Solar Bonus Scheme is just one of many examples. The $8,000 SHCP rebate was ended early, the RRPGP rebate was ended without warning, the National Solar Schools Program was gutted.. the list goes on. All we can be certain of in terms of solar rebates and incentives is what is available at this minute."
 
Mr. Sylvester says while Energy Matters does its best to keep on top of the rapidly changing solar incentives in Australia and updates its web site at www.energymatters.com.au  daily, sometimes Government departments are not only sometimes unhelpful in this respect, but actively discourage the company from providing information.
 
"An example was an incentive scheme where we warned potential solar buyers that a review period could come up at any time soon and what the implications of that review could be. We received a "cease and desist" letter from what I consider to be a rather over-zealous government department manager demanding we remove the information - it was really over the top given the details we published were an accurate summary of the situation. Within a few weeks of having received the unwarranted rap on the knuckles, that incentive program went under review, creating uncertainty for buyers."
 
Mr. Sylvester says given solar power's affordability being closely tied to subsidies at this point means "Moore's Law" in relation to computers often being applied to the solar power industry can be a mistake. 
 
"Moore's Law loosely applied today just means that the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every couple of years. While solar power is seeing leaps and bounds in terms of improvements in efficiency coupled with decreased production costs; the fossil fuel sector still has a stranglehold on energy markets and is so heavily subsidised that rooftop solar power will still be comparatively more expensive for a few years to come. Renewable energy must be given equal solid footing as fossil fuel enjoyed in terms of support; which will encourage investment and drive prices down further. This flip flopping on rebates on solar incentives in Australia is slowing down our nation from achieving the much greener and cleaner supply scenario we could have ."
 
Another issue beyond the control of solar companies is the current instability of REC (renewable energy certificate) values. These form the basis of the national Solar Credits Scheme and their value is subject to market forces.
 
"A lower REC value means lower rebates for solar buyers," says Mr.Sylvester, "We've been lucky in that we hedged against the recent plummet in value in RECs, but those arrangements don't last forever and other companies are in the same boat. REC values are currently at around the $34 mark after having dropped to $31. Even at $34, the price is still down substantially from a while back. At the $31 value, if we hadn't hedged against this, it would have added around $1500 to the cost of a system."
  
The current REC situation has additional flow on effects according to Mr.Sylvester. "As more companies exhaust their hedging arrangements, prices could go up and that will push people away from higher quality components towards cheaper no-name type systems that have yet to demonstrate their robustness over the medium to long term."
  
"Again, it underlines the fact that in Australia, the best time to buy a solar power system, particularly a quality solar power system, will usually be right now."
    

 

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