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How does solar power save you money

by | May 7, 2024 | Solar Power

Solar power saves money

Solar power saves you money by producing electricity for you to use in your home.  The electricity produced by a solar system will automatically power your home first.  If there is too much energy being produced by the solar system the excess power will be exported to the grid for others to use.  Your electricity retailer will buy this excess energy from you, usually at a much lower rate than they sell electricity to you.  Electricity is bought and sold in kWh, also sometimes called units.  Typically a retailer will sell you electricity at around 40c a unit and buy it from you for around 11c.  These values vary so shop around.  Larger companies that offer great deals will need to recover their costs somehow so check all of the costs carefully.

Each unit of energy you are able to use from the solar system will save you buying a full unit of energy from the grid so the best saving is to try and use as much of the solar as you can.  As an example a 5kW solar inverter will produce approximately 25 units a day on average in Queensland.  If you were able to use all of this power then you would save approximately $3640 per year.  In reality it is unusual to use all of the solar because when the system is producing its maximum you might be out at work or you might use heavy loads at night such as the oven or air conditioning.  It’s pretty typical to use around 60% of the solar so you will be selling 40% to the grid and buying that back when the sun isn’t shining.  If you do the maths on using 60% then the same example would save you approximately $2584 per year.

One of the most important ways of measuring how much money a system will save is known as ‘the payback period’.  This is a calculation of how fast the system will pay for itself based on how much your bill will reduce.  You really want the payback period to be considerably less than the warranty period of the inverter.  Many inverters offer five years warranty so you would ideally like the payback period to be approximately 2 years.  So if your electricity bill is $1000 per quarter and the solar system reduces that down to say $400 then you are saving $600 per quarter or $2400 per year.  You should be expecting to pay around $4800 for this system to pay for itself within two years.