How to Calculate Solar Savings

244. Solar Savings

“If you installed a 6.5kW solar system on my home, how much could I expect in savings?” I always ask this question when interviewing a prospective salesperson as a quick test to see if they have passed solar sales 101. I’ve seen all types of smoke and mirror mathematics and baffling pseudoscience explanations. Obviously, these calculations were designed to justify the exorbitant prices that some solar companies are still trying to charge. Solar done well, however, is easily justified without baffling mistruths. It is simple mathematics.

 Maximum Quarterly Production

The Clean Energy Council provides us with accurate average figures of solar production in different regions of Australia. In Brisbane, 1kW of panels facing north will produce on average 4.2kWh of power per day. This will be affected by factors such as orientation, shade and cropping but we’ll start our calculations with the best case scenario.

In this example, we’ll use our standard 6.5kW system.
4.2kWh x 6.5kW  = 27.3kWh per day
Multiplied by an average billing cycle of 91.25 days and you solar will pump out a huge:

2491kWh per quarter

Maximum Quarterly Savings

In a best case scenario, you would use 100 percent of the power that your solar system produces. I’m based in Brisbane, Queensland where Tariff 11 power prices at the time of writing are 24.4c/kWh. You can therefore save:

2491kwh x 24.4c =

$607.5 per quarter

Minimum Quarterly Savings

Let’s say your roof does not face north, it faces east. You would lose 10 percent of production. After you buy solar, you win the Lotto and go overseas and use zero power. It’s a moot point because you just won the lotto, but for what it’s worth you’ll get paid between 6 and 10 cents per kWh for the power you feed into the grid. We’ll use the common 8c/kWh to calculate how much you save:

2491kWh x 0.9 x .8c

$199.28 per quarter

Realistic Quarterly Savings

So the maximum you can save is $600 a quarter, the minimum is $200. Your savings will sit somewhere in between. If you use a lot of power during the day, you will save up to $600. Generally speaking, a well utilised 6.5 kW system would save about $500 a quarter, or $2000 a year.  A poorly utilised solar system might only save $300 a quarter or $1200 a year.

$300 to $500 per quarter

Realistic payback period

Clearly these are rough figures, but when someone tells you that you can pay a $13000 6kw system off in 3 years, “tell ’em their dreaming”. As shown above, it is possible to save $2000 a year with a 6.5kW solar system, So if you pay $7500 for a quality 6.5kW system, you can pay it off in:
3.5 years

But… there is so much more to a quality solar system than working out a simple payback period. Tier 1 panels, Inverter reliability, workmanship warranty, warranty reliability, company stability, mounting system, balance of supply, and of course: who are the blokes that will be working on your roof? If you’re looking for a quality solar system that will well outlast your investment period,
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We Know Solar.

Mark Cavanagh.

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Mark Cavanagh

Mark is the Owner and Manager of MC Solar & Electrical. He’s an Electrician, accredited solar installer/designer and an electrical contractor.

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