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Payback periods for residential and commercial solar systems?

Powerful sunshine can provide energy for your home or business and reduce your utility bill. Solar systems provide significant savings without requiring a large investment. As a smart shopper, you want to know how long it takes to get a payback. The return may come sooner than you expect. A long life span of 25 to 30 years far exceeds the payback. Yet, it makes sense to want to know the facts before you buy.

Joining a Residential Trend

About 20 per cent of Australian homes use residential solar systems for power. High energy costs make buying an alternative source of power a smart move for a lot of residents. Small residential solar systems appeal to most homeowners. Several factors may affect how long it takes to repay your investment in technology. Calculations for the exact amount of time that you can expect for your payback vary.

• quality and cost of systems
• consumption of electricity patterns
• location
• energy tariffs
• solar feed-in tariffs (FiTs)
• the local price of electricity
• available hours of sunshine

Counting on the Sun to Shine

Hours of available sunshine can make a difference in your payback, as you may expect. Experts say that the bright rays from the sun can shorten your payback time.

1. Large amounts of sunshine generate more solar power to lower the cost of electricity.

2. A high potential for solar generation produces more small-scale renewable energy certificates (STCs). They bring down the out-of-pocket, upfront costs for your system.

You can shorten your payback period if you use your energy on-site and do not export it.

Influencing Factors under Your Control

You can make a choice that influences how long it takes you to pay off your solar system. The quality of your system can affect your payback time. A low level of quality in a system that you can pay for in five years may allow it to fail before then. A high-quality system may take an extra year to pay off, but you get a payback for the rest of its 20-plus years of service. You do not need to worry about a failed product that causes you to lose your investment. A residential solar system can produce a lifetime of lasting value. You can get the benefit of a durable system that enhances your payback.

Considering Payback Rates across the Country

Payback rates in Australia’s big cities show what you can expect from a small system. You can achieve savings by exporting about 75 per cent of generated solar energy back to the grid. Most Australians use the technique on weekdays when people do not need it at home. You can shorten your payback time if you use solar power and do not import expensive grid energy.

• Adelaide has abundant sunshine that produces a payback period of about three years.

• Brisbane and Sydney receive paybacks in about five years.

• Canberra systems produce a payback in about six years. Savings result from low FiTs, below-average energy prices and competitive system costs.

• Darwin, in a remote area, has high prices, but the FiT rates allow payback in about five or six years.

• Hobart takes seven years to pay back. High electricity rates and fewer hours of available sunshine extend the time.

• Melbourne payback occurs around six years with its low level of sunshine.

• Perth offers a payback within about five years with its low system costs.

Assessing Payback Periods for Commercial-scale Solar Systems
Researchers know that any Australian business can enjoy solar technology. Companies that use the most electricity during the daytime can benefit the most. Many of them have space to install solar panels. The payback time for commercial solar systems varies across the country as it does for homes. Important factors affect payback. The local prices of electricity can affect owners’ decisions. Energy usage patterns and business location exert influence as well. The savings that owners get by using on-site energy make them avoid exporting to the grid. Even with the influence of variables, businesses can get a payback within five to eight years.

Examining the Charges on Commercial Electricity Bills Commercial bills for electricity may vary in the components that providers can include.

• Demand Charges
Some business owners may not receive a demand charge. For those who do, the fee represents the largest load during a specific time.

• Network Charges
Networks need support for the transmission and distribution of energy, and the charges show up on commercial power bills. At a variable rate, it represents a levy by local electricity network companies that retailers pass through to customers. Both the networks and retailers can levy charges based on fees on a flat rate that remains the same around the clock. Some may base charges on time of use as well to adjust for consumption during peak demand times. Off-peak and shoulder periods provide a lower rate.

• Retailer Charges
Businesses can receive charges from retailers for each kilowatt-hour that they receive from the grid.

• Other Charges
Most of the charges for electricity come from network and retailer fees. Yet, business electricity bills may include other itemized fees.

Curtailing Business Expenses with Solar Energy
Almost every business can enjoy cost savings from solar energy. The benefits depend on three ways that solar can help reduce electricity expenses.

• Offsetting
Businesses can achieve cost-saving practices through offsetting without producing a revenue stream. It does not involve any tax Implications. Solar systems generate energy that companies can use to offset expenses. Financial benefits from solar systems can improve a company’s bottom line. They make sense to companies that pay a high rate for each kilowatt-hour of electricity. When you can use solar to power your business during the day, you can avoid purchasing it from the grid. Most enterprises use the most energy during daylight hours. Any amount of relief from importing expensive electricity makes sense to owners.

• Reduction in Demand Charge
Electricity providers can include a daily charge to commercial customers. The fee covers the highest power load during a specific and limited timeframe. Commercial solar systems let business owners reduce the demand charge. The period that provides the measurement may last for as much as a year and impose high costs on a business. Day to day changes in the weather make exact estimates impossible. Available sunshine hours prevent the prediction of how much savings may occur. Yet, business owners get a benefit every time a solar system provides energy. Occurrences of the cost-saving method may increase as commercial enterprises adopt battery storage.

• Solar Feed-in Credits
Businesses in some locations can earn credits for sending excess solar power to the grid. It reverses the process of paying for energy from a retailer. Feed-in credits do not offer the benefits of offsetting, but they do provide a good reason for businesses to install a solar system.

Choosing an Appropriate Capacity

Most small and medium businesses choose solar systems of less than 100kW for two reasons. The price makes them affordable and available for use right away. A business that occupies a small building needs to right-size the equipment. The government provides upfront incentives for companies to install systems. Companies can avoid large expenses while avoiding the rising costs of electricity. The greatest benefits come to business owners who choose equipment that meets a building’s requirements and not more. Bigger does not mean better, and the business offsets work better with right-sizing too. Systems larger than 100kW may provide a viable option for companies that have a high energy demand during the day. Payback may occur in about 5.3 years.

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