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Top 5 mistakes Australians make when buying Solar

And how to fix them!

Two Million Four Hundred and Sixty Thousand

That's how many Solar PV installations are in Australia as of June 2020

Yet, every single day Australians are making the same mistakes when it comes to buying Solar for their home or business. In this guide and video, we cover off the top 5 mistakes Australians are making when buying Solar and how to fix them!

Everything we cover:

Mistake Number 1 - Not Getting Multiple Quotes

Solar Quotation

The Solar industry is no different to many other trade industries when it comes to prices. There are wide ranging prices on systems that can seem like the same thing.

From market research in September 2020, Teho has found prices for an average 6.6kW solar system range from $3,000 all the way up to $15,000.

So, what makes a solar system more expensive? 

There are a number of reasons why a solar system can be more expensive. Here are 3 of the most common:

  1. The solar company is using a premium solar panel. SunPower or LG for instance, these two brands are fantastic solar panels, some of the best money can buy – but they do come at a price.
     
  2. The solar company is using Micro Inverters OR DC Panel Optimisers. These two options allow individual panel monitoring and help a solar system work more efficiently in the shade. They increase the cost of a solar system due to the extra components that need to be installed and the labour associated. 

     

  3. The solar company is overcharging. This is common in the solar industry. Solar makes so much sense financially, that some solar companies feel like they can get away with charging more. Generally they will attempt to get customers to sign up on the day to ensure they don’t have the opportunity to get more quotes.

Now, 3 reasons why a solar system can be very cheap: 

  1. The solar company is running on a hyper low-cost model. Often in these solar business models some and commonly all of their operations are outsourced overseas, there is little to no customer support and they have very little presence in Australia. A lot of the ads on Google and TV showing these systems with a very low price are these types of businesses.

     

  2. The solar company is using low quality materials and cutting corners where they can. In solar, within reason, you get what you pay for. Paying very little for something that seems like a lot means there are corners being cut somewhere. A portion of the cost when buying a solar system is labour. When the labour costs are cut, often the workmanship follows.

     

  3. The solar company is not intending to hang around for a long time and does not intend to service the installations. The solar industry is full of solar companies who start a business on a low-cost model and work towards a high volume of installs. After a few years they close the business down leaving all liabilities behind.
Teho Tip

As a rule of thumb, expect to pay around $1,000 per kW on a good quality solar system installed in Australia in 2020. 

Mistake Number 2 - Getting The Warranties In Solar Confused

In solar there are four types of warranties .

  1. The solar panel performance warranty 
  2. The solar panel manufacturers product warranty 
  3. The inverter warranties 
  4. The solar companies’ installation warranty

1. The solar panel performance warranty to us is not worth the paper it is printed on. It is extremely hard to measure and nearly impossible to claim. 

2. The solar panel manufacturers product warranty is important. This is how long the solar panel manufacturer will warrant the product for a manufacturing fault or defect. This normally excludes external damage such as hail or something like a tree branch falling on the panel. These types of events can generally be directed to your insurer under home and contents insurance. 

Solar panel manufacturers’ product warranties are on average 10-15 years. There are some premium manufacturers who will warrant their panels for 25+ years, such as SunPower, LG, Winaico, REC and Hyundai. 

3. The inverter warranty is important to understand as this is what is changing the DC power created by  your solar panels and converting it into AC power which we use in our homes. The standard inverter warranty is 5 years with some manufacturers extending to 10 years. 

4. The solar companies installation warranty will cover the installation of the system, wiring, workmanship and other bits and pieces that the solar company did during the installation such as work on the roof. 

Teho Tip

When speaking with a solar company ask about the warranties. If a company advertises a very long warranty period e.g. 25 years on their panels, the first question you should ask is, is it a product or performance warranty? 

Mistake Number 3 - Incorrect Sizing Of A Solar System

Lots of new solar customers get excited by the idea of generating their own energy. Increasing their autonomy, future proofing their homes against the aggressive rise of energy costs and doing their part for the environment. We often get asked at Teho: “fill my roof with solar!”, while this is a great idea in theory, sometimes it is not practical. 

We also have customers who just want the system with the fastest payback period possible. 

So how do we size a solar system that will suit all parties? Well it is not always easy but there is a rule of thumb. 

If you have a look at your energy bill you’ll notice a daily average consumption in kWhs (kilowatt hours). Take this figure and divide it by four, then add 30% and that is the number we suggest you keep in the back of your mind when looking at solar. 

Why do we do this? On average a solar system will generate around four times it’s total capacity per day. This will depend on the orientation of the roof, the state of which the solar is installed and any other site-specific factors – however, again this is a rule of thumb.

We then suggest to increase this figure by 30% to ensure the system is meeting or exceeding your needs in all months of the year. In summer you will produce more and in winter you will produce less. The 30% acts as a reasonable buffer.

For example

30kWh's = 7.5 4 7.5 + 30% = 9.75

If you are using 30kWh’s per day, divide this figure by 4 which will equal 7.5, then add 30% which equals 9.75 so you should consider a system at around 9.75kW’s 

This is a good start to ensure you are sizing your solar system correctly.

To make sure you are sizing the system correctly, please have an energy bill or two ready with you when you speak with an Energy Expert at Teho

Mistake Number 4 - Getting The Solar Rebate Confused With The Solar Feed In Tariff

In Australia there is a federal based incentive to purchase solar, known as small-scale technology certificate, or STCs. On average a 6.6kW solar system will have $3,000 – $3,800 worth of STCs taken off the cost of a solar system – which is very generous. A solar system costing $5,000 – $7,000 for a 6.6kW solar system will already have the solar rebate taken off the total cost. Without the rebate the system can cost upwards of $10,000!

The solar feed in tariff is a credit applied to your energy bill from your energy retailer. This figure is 3c/kW – 20c/kW depending on who the retailer is and what distribution area you are in. The solar feed in tariff is only provided for excess power the home exports from the solar system to the grid.

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Mistake Number 5 - Thinking You Cannot Afford To Install Solar On Your Roof

We hear from people every day that they are going to wait until they can comfortably afford solar before they make a purchase. While in theory this makes perfect sense, it is a huge mistake. 

If you can afford to pay your energy bill each ¼ – you can generally afford solar. The cost of energy is already expensive, we have some of the highest power prices in the world. 

Electricity Bill Solar

If you do not have the capital to make the upfront purchase, there are a range of solar payment options which can still make the cost of ownership very achievable. 

One of the largest renewable energy financiers in Australia is Plenti, who were previously known as RateSetter. Plenti offers renewable specific low interest loans. Plenti are one of our partners at Teho and over the years we have seen Plenti as a true advocate for the renewable sector.

Did you know, Australians finance over $37 billion of cars each year. A car, while practical to get you from A to B is a depreciating asset with ongoing servicing costs. While solar is also a depreciating asset, it has very low to no servicing costs and it generates revenue in the form of energy savings for your home.

The cost of solar on finance each month can be similar or in a lot of cases cheaper than the cost of paying your energy bill each quarter, making solar a cash flow positive investment. This means more money in your back pocket.

On average you should see a return on your solar investment of between 3-5 years. 

Teho Tip

Be careful of any 0% payment options, there is no such thing as a free lunch. 0% finance also known as buy now pay later (BNPL) comes with a large merchant cost which means they have factored up to 26% of the total purchase price in the cost of the system. It can still be the right option however make sure you know all the fees and charges before you commit. 

If you are interested in solar for your home and want to ensure you get the right installation, for the right price with a reputable solar company – speak with an Energy Expert from Teho today. Teho completes an independent energy assessment of your home, we take this information out to market and return with the best offers for your home from three reputable businesses who we are partnered with.

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Man Installing Solar on Roof