Solar PV system prices have hit all-time lows in Australia, according to Solar Choice’s team of Solar Energy Brokers. These solar price declines are due to a perfect storm of factors, including the strong Australian dollar, increased competition amongst installers and manufacturers due to withdrawn subsidies, and a flood of cheap solar system components from China, resulting in a global glut of solar PV system component supply. The price of solar systems has most likely ‘bottomed out’, and is expected to begin rising again over the next 3-6 months, as Chinese panel manufacturers close factories and global supply catches up with demand.

Falling solar price trend over in latter half of 2011

Solar Choice, as Australia’s Solar Energy Brokerage service, manages a network of over 70 installers Australia-wide, representing a broad cross-section of the solar PV installer market. This puts the company in a unique position with a ‘bird’s eye view’ of the industry and and its trends, including which components are used regularly, which ones are in greatest demand, and the cost of completed installations after the Federal Solar Credits rebate. According to the Solar Choice team, prices for most systems have dropped significantly since around June of 2011. The price drop followed the announcement of a reduction of the Federal solar power incentive, as well as the total withdrawal of the NSW Solar Bonus scheme, the program which drove NSW to become the largest solar PV market in the country.

Solar subsidies knocked back across the country

A number of solar industry trends have made themselves evident over the past year or so. The most obvious set of changes has been the steady withdrawal of solar PV incentives, which have been slashed across the board, both on the Federal and State levels. Earlier in the year, New South Wales and Western Australia scrapped their subsidisation schemes for small-scale solar PV. Similarly, Victoria and South Australia have recently reduced their small-scale solar subsidies significantly. The ACT has switched to a one-for-one tariff from a set rate. This makes Queensland the only state that still offers its original solar feed-in tariff rate. In addition to State-level cuts, Federal incentives have taken two major knocks–a sharp drop in the REC/STC price from $40 to as low as $16 (currently around $30) and a reduction of the REC multiplier, which incentivised small-scale solar systems.

1.5kW systems used to be the norm…

1kW and 1.5kW systems were once the staple installation sizes for residential customers. ”At one point in time, the average market price for a 1.5kW system was $2 -$3 thousand ($1.33 – $2.00/watt), after RECs [STCs],” said Henry Walcott, a member of Solar Choice brokerage the team. Following the cuts in the Solar Credits scheme and the drop in STC prices the cost of smaller solar systems jumped temporarily, to an average of $3 – $5 thousand. Prices have since recovered, however, with systems coming in at as low as $1700 [$1.30/watt].

…but the market has seen a shift in preferences towards 3kW – 5kW systems

There has been a general shift in preference towards larger systems, which generate more electricity and therefore offer better returns on investment and shorter payback periods, especially in light of rising electricity prices. ”After the REC multiplier was reduced, we started to see the price for 3kW-5kW systems crash,” said Tom Chapman, another Solar Choice Broker who has been with the company since mid-2010. “You couldn’t find a 5kW for much less than $17 thousand dollars (about $3.40/watt) a year ago–$16,500 at the lowest. Now the standard is about $10 to $12 thousand ($2.00 – $2.40/watt) for a system with good components–a European inverter and decent Chinese panels.”

Even systems as large as 10kW have become significantly more affordable, according to Walcott. “The average price for a 10kW system was $40 thousand [$4.00/watt] a year ago–minimum $30 thousand [$3.00/watt]. The prices were fairly consistent. Now we’re seeing a lot more variation in pricing among installers; highs are what they were before, but at the bottom of the range you can find 10kW systems for for as little as $20 to $25k [$2.00 - $2.50/watt].”

Full system price declines in line with solar panel price declines

The phenomenon of price decline observable even in unsubsidised solar PV prices. Solar Choice’s data are corroborated by research undertaken by Solar Business Services director Nigel Morris, who has been tracking solar panel factory gate prices since September 2009. According to his figures, the average cost per watt of solar panels (not including balance of system (BOS) components such as inverters and wiring) has fallen from about $2.75 to less than $1.00 since he began keeping records (see graph below).

Solar PV system factory gate price index. (Via Solar Business Services)

Why are solar system prices so low?

Competition among solar installers

The brokers attribute the drop in prices at least partially to the withdrawal of the subsidies that had been driving the industry and the stiff competition that ensued. “It’s turned into a buyer’s market. The market had been saturated with the subsidies in place, but once the work dried up, installers had to go looking for new customers,” said Chapman.

This competition has also resulted in a major shift in the components used by solar installers; installers who would at one point in time only offer high-end products have now also taken onboard less costly, lower-end components for their installations in order to remain competitive.

Cheap solar panels from China

Thanks to substantial Chinese government subsidisation (which has recently been the flashpoint in a trade row between US and Chinese solar PV manufacturers), a flood of cheap Chinese-made panels has also made its way onto the Australian market, bringing down the average price of systems significantly. Recharge Magazine recently estimated that global capacity for solar panels is currently approximately 41GW per year, whereas demand is only 28GW–a massive difference of 13GW.

There are literally hundreds of solar PV panel manufacturers in China, most of which are expected to fold in the next 5 years, and 50% of whom have reportedly already ceased production, according to a recent report from Digitimes Research, which quotes the Chinese-language Guanzhou Daily.  (Competition from Chinese installers was one of the reasons cited when Australia’s only solar panel manufacturer Silex Solar announced that it would close its Sydney assembly plant.) Once the Chinese manufacturer market slims down–and as China’s domestic demand for solar increases–decreased competition and elimination of the lower quality panels from the Australian market could mean a rise in the average cost per watt.

A glut of solar panel stock in Australia

The supply of as-of-yet uninstalled solar panel stock globally was approximately 10 gigawatts (GW) at the beginning of the year, according to Morris of Solar Business Services. This glut, like the increased competition, has arisen at least partially due to the withdrawal support schemes abroad. A drop in global demand has resulted in manufacturers selling components at slim margins or at losses, and often to Australia, just to keep inventory and cash flowing. Calculations by Morris estimate that the excess stock now sits at around 6GW. This number is still significant enough to drive down prices. The situation is temporary, however, and Morris expects that Australian prices have either already levelled out, will level out, or will begin to rise again in 3-6 months.

The strong Australian dollar

Underpinning all of the above is the strong Australian dollar, which has enabled the country’s solar industry to import solar PV system components at affordable prices (and is also ironically accused of being a major factor in Silex’s woes). Historically the exchange rate has fluctuated significantly, and it is not expected to maintain its current high indefinitely. A weakened Australian dollar, once the current oversupply of solar component stock has been exhausted, will mean that new components will have to be purchased at higher cost, which will be passed on to end users.

According to Morris, who emphasised the important role that the exchange rate plays in the Australian solar industry, “It is entirely possible that the exchange rate could lead to price increases. If I was a betting man, I would say that the value of Australian dollar will fall again. Historically, it has always been 72c to the US dollar when averaged over a 10 year period. Right now it at an historic high.”

How long will solar PV system prices remain low?

It is difficult to say how long solar system prices will stay at their current levels, but the factors above indicate that the solar installation market is in a temporary ‘sweet spot’, from which it will inevitably dislodge itself–at least for the interim. Payback periods, which based on the current prices available are approximately 5-7 years in states with no or small feed-in tariff incentives, would grow longer with an increase in solar system purchase price, although this may be offset to some degree by the rising price of electricity in Australia. A solar power system is an investment whose value increases with the price of retail electricity, provided the power it produces is used directly by the home.

A note about cheap products

Although it is true that the cost of solar PV systems has been declining rapidly, and that the primary consideration for many who are considering going solar is the up-front cost, it is very important to to carefully consider which components are included in a system. Purchasing a solar system is a decision that a household will only make once, so the longevity and bankability of its components are factors that should should be cautiously weighed against costs by anyone in the market for a system.

Solar still has a bright future

Looking into the long-term future, solar PV will continue to grow and is expected to become an increasingly important part of the world’s energy framework. Even the International Energy Agency (IEA) has speculated that 60% of the world’s energy could be sourced from solar power (both solar PV and concentrating solar power) by the year 2060.

© 2011 Solar Choice Pty Ltd

Sustainable House Day (SHD) has taken place every September since 2001. 2010 saw a record 272 homes open their doors to SHD volunteers and over 40,000 local community members with an interest in learning more about how sustainability can be practicably implemented in day-to-day living. Solar Choice will be taking part in the Sustainable House Day 2011 event, for which over 300 homes across Australia are expected to be available for public viewing. A number of informative events at community centres are also planned, including an Info Fest at the Redfern Town Hall, where Solar Choice will have a stand.

(Get a free comparison of solar quotes from installers in your area, anywhere in Australia.)

What is Sustainable House Day?

Sustainable House Day is an initiative of the Australian Solar Energy Society (AuSES), a not-for-profit solar industry peak organisation that is a vocal advocate of residential and commercial solar power throughout Australia. It is a free event–there is no cost to participate.

The original intention of SHD, however, was to promote solar power as one important aspect of the whole panoply that need attention in any holistic and practical approach to sustainability: all types of renewable energy, recycling, efficient water use, and the overall reduction of a home’s environmental impact. Houses on display include actual residences as well as demo/display houses; this year one sustainable strata block will also be taking part.

The SHD experience for households, volunteers, and visitors alike is meant to be fun and informative, and contribute to local community awareness of sustainable living. SHD gives people the opportunity to have a peek inside households that have been designed, built, or fitted specifically with sustainability in mind–whether this means solar panels, low-impact building materials, grey and blackwater recycling, or home food production.

Solar Choice stall at Sustainable House Day Info Fest, Redfern Town Hall

Solar Choice Commercial Tenders Manager and other staff will be giving a presentation around 1pm at Redfern Town Hall for the SHD Info Fest. We would be happy to have a chat with you about options for solar power in your area.

Sustainable House Day participants and events in your area

Sustainable House Day 2011 will take place on 11 September from 10am-4pm in households and centres throughout Australia. The SHD website has a list of the homes on display as well as a list of SHD-day related events, searchable by region.

Promotions for Sustainable House Day 2011 are being handled by sustainability social networking and directory site Shmeco.

Written by James Martin

Analyst

© 2011 Solar Choice Pty Ltd

Solar Choice Commercial Tenders Manager Iain McGregor has been gearing up over the past six 6 months in preparation for a swim across the English Channel, to take place between 21 and 25 August, 2011, depending on weather conditions. He expects the crossing to span anywhere from 35-40 kilometers and take between 12-16 hours, depending on currents and tides.

His decision to span the icy waters, which has inspired Solar Choice staff, yesterday earned him an impressive photo shoot in the Manly Daily.

“Life certainly shrinks or expands in proportion to one’s courage, and this bold venture befits your approach to life generally, and the pioneering drive by which you take on the Australian solar industry,” said Angus Gemmell, Solar Choice Managing Director, about Iain’s challenge.

In a disclaimer about the photos, McGregor commented, “Please note I had to bulk up for this swim and the extra weight will keep me warm in the cold channel waters.”

His plan to cross the waters are not merely for the sake of self-challenge; his swim will raise funds and awareness for the Fragile X Association of Australia, a not-for profit organisation that supports people with fragile X syndrom and their families.

There will be no goodbye drinks for Iain, who is under a strict training regimen that prohibits him from drinking alcohol. Instead, the celebrations will have to take place upon his triumphant return.

In the meantime, the Solar Choice staff will certainly feel his absence from the office.

Written by James Martin

Analyst

© 2011 Solar Choice Pty Ltd

Our job here at Solar Choice is to offer quote comparisons on solar installers and help you find the system and company most appropriate to your project and preferences. If you are Net- and bargain-savvy, you may have come across several sites in the solar industry and others that offer advice and experiences to aid people with their consumer decisions. Whilst being entirely subjective and therefore completely different from Solar Choice, these comparative feedback and blog sites are useful avenues for your research and education on product and service comparisons. One of Australia’s most popular sites for this kind of customer service research is Whirlpool.net.au, and this article will outline how best to utilise this particular resource.

Whirlpool has been around since 1998, and currently has over 350,000 registered users. Its original claim to fame is its “Broadband Choice” section, which contains a comprehensive database of Australia’s internet service providers (ISPs) and an interface that lets users filter through the information and choose the ISP that best suits them.

Its discussion forum, a large part of which focuses on technology, is also a huge draw for the site. There are hundreds of threads on the topic of solar power systems in particular, and that is what this article aims to discuss primarily.  You can access and view all of these without registering, but if you want to ask questions of your own or post replies then you’ll have to register.

To search for information about solar power system components or installer reviews:

1.  Go to whirlpool.net.au

2. Scroll down to the ‘lounges’ section

3. Click on ‘gadgets’ or ‘home’ (both contain posts about solar power)

4. From here you can either browse the most recent threads, or you can scroll down to the bottom and search for a term like ‘pv’, ‘photovoltaics’, the name of a solar power system installer, or even a panel or component manufacturer

Once you’ve performed a search, you’ll see the results and you’ll see the different options method options up the top.  These are ‘Google site search’, ‘threads titles’, and ‘full text’.  Try using the ‘Google search’ option to get a feeling for what’s available on the site.

The main piece of advice that we’d like to offer users of Whirlpool is to take all comments with a grain of salt. From glowing reviews to damning reports, each entry is a completely subjective experience. The ease of access allows suppliers and installers of specific brands and companies to anonymously  upload unqualified accounts of experiences to better their own means and especially discount those of their competitors. It is only through the complete reading of all responses and further discussions of the topic that one can begin to understand and appreciate the information given.

If you find that one person has written something particularly discouraging or encouraging about a topic, read as many other perspectives before coming to a conclusion on its validity. The sheer laboriousness and obviousness that the task is for a company to create dozens of profiles and elaborate accounts of a brands advantages or disadvantages will protect the conclusions driven towards. With this in mind and the search functions outline above, the usefulness of the site can become accessible.

A case in points: If you search with the term ‘Solar Choice’, you might find this thread asking about and reviewing our services. Certainly not starting out with the most positive reviews, the overall picture of the services and responsiveness provided eventually solidifies.

“I used Solar Choice to help compare installers and systems. I could not be happier with their service.
They were prompt in sending me comparative quotes. They followed up by email and by telephone.”

and (about the day of Solar Chaos):

“Used them at 11.20pm tonight, called me back at 11.23pm, emailed comparison to me at 11.24. Accepted the quote at 11.28. Deposit paid at 11.33pm.
Busy night tonight in NSW. But it will be very quiet after midnight.
Good job NSW Government; great way to cause turmoil in this industry!
Anyway. I’m very happy with Solar Choice.”

Here at Solar Choice we fully encourage the use of public forums such as Whirpool.net.au, so long as the moniker of a few of our own business approaches is considered. Be patient, research widely, consider all options and arrive at an educated and informed decision.

Written by:

James Martin and Jarrah Harburn

Solar Energy Analysts

The following article, by Mathew Cawood, appeared in the rural newspaper The Land on 20th of February 2010. It talks about a recent 10kW installation in country NSW that Solar Choice brokered. The installation earns the owner over $10,000 per year and will pay itself off in 4-5 years, banking profits thereafter.

Free power, and the rest

Written by Mathew Cawood

Solar power generation is coming of age, and anybody with acreage should take notice.
Household solar power was associated with dim 12-volt light bulbs for most of the past 30 years, but all that has changed in recent years, and a lot more besides.

Solar power can now run a 240-volt house, and all modern gadgetry, with no changes needed on wiring or light bulbs, and only minimal changes in electricity usage habits.

Today’s household solar power systems can also plug straight into the mains electricity grid. That has a couple of important implications:

* The power grid becomes a giant battery. Solar power trickled onto the grid during the day can be pulled off during peak usage periods at night, along with any top-up mains power that might be needed.

* Solar power trickled onto the grid can be bought by a power company, subsidising a household’s power use.

The latter scenario opens up new income possibilities for farms with some spare sunny ground or north-facing shed roofs.

Managing director of solar energy broker, Solar Choice, Angus Gemmell, says in NSW and ACT, which have recently introduced generous policies on renewable energy, payments to farmers may add up to quite a lot.

A landholder installing a 10 kilowatt solar array will spend $43,000 to $55,000, depending on installation.

Under current NSW/ACT rules, an array this size will generate nearly $10,000 in electricity a year on current prices, Mr Gemmell said, ensuring a constant return on investment and a payback period of four to five years.

The standard household system of 1.5kW has a payback period of about two years.

After payback, the array is delivering free electricity to the owner, and additional income if there is a surplus.

Most solar panels come with a 20 to 25 year guarantee, but the Australian Photo Voltaic Association’s Dr Muriel Watt said some 40-year-old panels were still going strong.

A roof mounted solar array capable of generating a kilowatt covers about eight square metres.

For large installations, space is a prerequisite, although States limit the power generation capacity of private renewable installations.

In NSW, the limit is 10kW per registered power line, but a farm with separate power lines to bore pumps or sheds can add 10kW/line.

However, whether solar power generation represents an opportunity to landholders depends a lot on the State and its policy on œfeed-in tariffs, or how credits on renewable energy fed onto the grid are calculated.

All tariff schemes value renewable energy higher than fossil fuel energy (sold at about 15 to 19 cents/kW hour), but the multiplier varies between States and power companies.

In NSW, Victoria and ACT, companies are offering feed-in tariff rates of 60 to 68c/kWh, but in SA and Qld prices fall to 44 to 52c/kWh.

Credits earned through tariffs can go towards the purchase of mains electricity, or, with many power companies, can be exchanged for cash.

NSW and the ACT offer gross feed-in tariffs: every kilowatt of energy exported onto the grid is credited, regardless of how much power is drawn back by the household or farm.

Returns are guaranteed for seven years in NSW and 20 years in the ACT, making them the best systems in the world, according to Mr Gemmell.

The inequity between the different States’ payment systems is causing renewables money to flow towards NSW and ACT, with interstate investors offering to lease land from NSW farmers to put in solar installations, Mr Gemmell said.

The farmer got free electricity and the investor got profits from the surplus.

NSW customers represented about 15 per cent of Solar Choice’s base in early 2009, but now represent 70pc.

The boom may, however, be short-lived: the NSW Government plans to review its gross feed-in tariff scheme when uptake represents 50 megawatts “ which could be in June.

The following article, by Michael Salvatico, appeared in the Green Times. It talks about the service offering of Solar Choice and that fact that we are a carbon negative operation, through our partnership and status as a Climakind gold member.

Make the Right Solar Choice

Written by Michael Salvatico

Of all the green energy solutions solar stands out as an ideal choice. Capturing the energy of the sunrays is an environmentalist’s utopia. For a limited time generous Local and Federal Governments assistance packages make the choice even more appealing and accessible to everyone.

But going solar can be an involved purchase process. There are many different options, and the decisions you make will be with you for the next 20 years. Fortunately, there are experts who can advise you on how to make the right solar choice.

Solar energy is captured in two main ways, through solar hot water heating systems and through solar power generation. Using solar for hot water can reduce energy bills significantly, as 37% of a household’s energy consumption can be for hot water. The second way, solar power, is also very attractive. Installing a couple of solar power panels on your roof provides you with an independent source of electricity. Both methods help reduce your electricity demand from the main grid and therefore your electricity bill.

The current government subsidies add to the incentive to install solar panels. The subsidies vary based on the solar system and the state in which you live. For instance a $1,600 federal government rebate exists for solar hot water, while the Solar Credit scheme assists in reducing the overall cost of installing solar power panels.

These government assistance schemes will be available only for a limited time, so there is some urgency in choosing your solar solution. This is where the assistance of a solar broker can help you sift through all the details to make the right solar choice. Solar Choice is a solar broker that has an in-depth understanding of the solar market. They have provided independent advice to over 4,200 residential and commercial customers in 2009, have a network of more than 65 solar installers across Australia and are aware of the different solar choices and government assistance packages that apply to you. Their solar expertise comes free to callers and leaves installers to do what they do best “ install solar solutions!

Solar Choice does more than provide low-carbon solutions; they are also committed to reducing carbon emissions. They operate a paperless office and minimise their transport by mostly walking to work. In addition, through Climakind, Solar Choice has cancelled more carbon credits than tonnes of carbon dioxide for which they are annually responsible; they’re better than carbon neutral “ they’re carbon negative! As a Climakind Gold Member they are demonstrating that they are serious about making a difference to help stop damaging climate change.

Go solar while the government assistance lasts! It is a great way to help reduce your controllable carbon emissions. And save yourself some hard work by getting some free advice. It will help you make the right solar choice “ then you can’t go wrong!

The following article, by Louise Eddy, appeared in today’s Western Advocate. It talks about a major solar installation that Solar Choice brokered in Western NSW that will produce enough power to service 4 homes.

It’s worth noting that since Dr Fingleton’s installation was quoted in August 2009 prices for large solar installations have actually come down significantly, and a large 10kW system can be purchased for $45,000 – $55,000. At this initial cost the system will pay itself off in 4.5 to 5 years.

Dr Fingleton’s installation is also featured in our article on ground mounted solar PV systems.

Solar energy is lighting the way

BY LOUISE EDDY
14 Jan, 2010 07:54 AM

DOCTOR Larry Fingleton is so convinced solar farming is the way of the future he has invested $70,000 in a solar system for his Georges Plains property. The 10kW ground-mounted solar farm features 60 panels and will produce enough electricity to power three or four average houses.

Generating 45kW hours per day, it is the largest system the government will allow.

Dr Fingleton said from this month the government will pay 60 cents per kW hour for surplus clean energy fed back into the power grid. His 10kW system will yield approximately $27 per day or $9855 per year.

That’s a nice bonus, Dr Fingleton said.

At this rate it will have paid for itself in seven years.

The remainder will be the return on my investment.

Dr Fingleton used a broker, Solar Choice, to provide information and negotiate with installers to get him the best deal.

He said their service is free to the solar farmer, paid not by the customer, but by the successful installer.

Managing Director Angus Gemmell said this year alone the company has brokered for 4000 customers Australia-wide.

Since the NSW government’s Solar Bonus Scheme was announced, the number of new customers in NSW has grown to make up 60 per cent of their clientele.

Australsun won the contract and started installing the massive system on December 22. They finished the job on Christmas eve.

The company also supplies the panels and investigates the best place to install them.

Australsun’s owner John Young said the company, based in Perth, has been kept very, very busy.

We are getting a lot of work in Queensland, South Australia, Victoria, Western Australia and New South Wales, he said.

This is very big for a private job. Normally you would see this kind of set up on a school.

Dr Fingleton said he is also considering setting a system up on his bore as a further investment.

It’s quite possible the value of this project will increase as the cost of electricity goes up, he said.

We wanted to do the environmental thing “ but it’s also a sound investment.

It’s the government incentives that make it worthwhile.

Between $12,000 and $15,000 worth of incentives are available per unit in addition to the premium rate offered for electricity returned to the grid.