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Solar Catch Up

Monday, February 27, 2012

As a result of the “boom to bust” cycle created by the poor introduction and administration of the Solar Bonus Scheme the solar industry looks very different to what it did 12 months ago. 

In line with our philosophy to educate our customers, I have provided some key information relating to Solar. Much of this relates to the “bust” side of things, but please read through as there is some good news in there as well.

Boom to Bust

Many businesses who were aggressively marketing this time last year have either closed shop, gone asunder or gone back interstate where they came from leaving their customers high and dry with no warranties nor after sales service. Clean N Free is already looking after several such individuals.

Businesses expanded rapidly to facilitate as many sales as possible, in some cases take as many deposits as possible and then they, either knowingly or unwittingly have had to sack staff, leave creditors hanging and disappear when the government incentives propping up the industry were removed.

Many of the “cheap” systems installed over the last few years, sold at ridiculous prices – (below production cost), are now failing and many poorly installed systems are not producing anywhere near what they should. Some are being decommissioned by the Energy Authority or being repaired at the customers cost. Many, as we have seen in the news, are downright dangerous!
Of course much of this was predictable. These sorts of happenings are inevitable when price is the major factor driving an industry that has copious government administered funds available.


A quality system consists of a quality installation as well as quality components. Note the number of fixing points included in this 2kw bp Solar system, the rubber insulation and strength of the rail.
Clean N Free has always positioned itself as a designer and installer of quality product. That is why we aligned ourselves with products like bp solar (over 30 years in solar in Australia), SMA (the world’s most recognisable inverter manufacturer) and the like. Our objective has been to provide our customers with the greatest return on investment in both the short and long term. Some of our customer’s systems are producing 20% more than their neighbours with “similar” but cheaper systems.

We are constantly rewarded with new referrals from satisfied customers and recommendations from other solar technicians who recognise the quality of our work. Perhaps that is why we are still here!

 

Feed in Tariffs

Essential Energy, formerly Country Energy are no longer providing generous Feed in Tariffs as with the NSW Solar Bonus Scheme ($.60 or $.20 Gross Metered). Their offering is currently $0.00 Nett Metered. This dramatically changes the return on your investment and hence the viability of installing solar at all. Energy Retailers such as Origin or AGL are offering a few cents to their customers – not a make or break amount. 
BEWARE OF DESPERATE SOLAR COMPANIES WHO DONT EXPLAIN THE SITUATION CLEARLY!! THEY ARE OUT THERE TARGETING OUR AREA TALKING PRICE AND TALKING DEALS – NOT WHAT IS IN IT FOR YOU.

However, this scenario will still suit some people. This is especially the case where individuals or businesses have consistently high day-time (daylight hours x 365 days) energy consumption. Nett HTML metering means that you first use the power you generate (you are not drawing from the grid) before exporting any excess. So if you are paying $0.29 per kilowatt for your power then you are actually saving that amount per kilowatt by generating your own. It is the excess that is lost. It is not used to credit or offset your night time usage except for the few cents per kilowatt that your retailer may give you.

For example: A 3kw system may produce 15kwhours per day but if you are not home to use it you may only draw 5kw to run a fridge, freezer and a few standbys. Therefore, @ $0.30c energy cost, you would save $1.50 (5kw x 30c). The other 10kwhours would only earn what your retailer offers, perhaps $0.60c - $0.80c (10kw x 6-8c).

While the percentage returns on original investment will never be what they were under the scheme, they are still far better than what the banks are offering. Remember as energy costs increase, the rate of return also increases.

It is important that you understand very clearly what benefit you will get from a Nett Metered installation with no Feed in Tariff.

Renewable Energy

RECs are now called STCs. Renewable Energy Certificates are now known as Small Technology Certificates or in the case of large scale installations LGCs. Not only has there been a change in name (I am sure this was done partly to confuse everyone) but there has also been a change in how the number of STCs a system is eligible for is calculated. Of course the number has fallen, meaning that you are able to claim back less as a discount on a system.Without going in to things too deeply, STC calculations for a PV system include a “Solar Multiplier” which until 30 June 2011 was a 5. This figure was reduced to 3 meaning that systems were eligible for roughly 62 less Certificates. If each STC was worth $30.00 that would mean that out of pocket costs would increase by about $1,860.00 across the board.  

This reduction was originally scheduled to take place in July 2012 but was brought forward. The timing for the next reduction of the Solar Multiplier is open for speculation and could be as soon as 30June 2012.

The dollar value of Certificates has also fluctuated greatly over the last 18 months due primarily to the huge number of solar installations in NSW under the Solar Bonus Scheme and a residual amount of those created Certificates that have yet to be traded. The daily STC value is dictated basically by supply and demand. STC prices peaked around $38.00 and then slumped to $17.00. They are currently around $29.00.

Clean N Free are happy to answer any questions you may have or explain things in greater detail. Rest assured we will not do the pressure sell. Feel free to give us a call, drop us an email or visit www.cleannfree.com.au. We finally completed enough of the website to put it out there. You will find several articles that will expand on this information on our News page.

Now for some good news...

The Next Scheme

It is anticipated that there will be some sort of new scheme introduced in NSW in 2012. Pricing options for solar power exported to the state’s grid are currently being reviewed by IPART. This is a process that commenced after the Solar Summit held in Newcastle in July 2011. Typically this process takes around 12 months before recommendations are put forward. The solar industry is hoping that a new Feed in Tariff will be in place later this year – fingers crossed. Such a scheme should bring NSW back in line with other states. 

Considering the marked increase in electricity prices incurred already and with more forecast, there should be another round of high demand for solar if/when a new scheme is introduced.


A 10kw installation with quality components could be as much as $1,000.00 per kilowatt cheaper than 18 months ago

Lower Prices

Pressure placed on manufacturers of solar panels and inverters due to the influx of cheap stocks from manufacturers who until recently were making sandshoes and T-shirts, has forced even the most reputable of companies to push their prices down just to remain in the market. 

These prices however, will not be sustainable. We are already seeing companies go into administration or simply exit the market. Production facilities are closing down. Once an inevitable upturn in the market takes place, manufacturers will be looking to recoup their losses and many of the cheap brands will no longer be available. 

When you factor reduced system costs with increased energy costs, perhaps, contrary to what I stated, returns on investment may reach previous highs. The attached article from January’s Herald Sun reinforces this argument. But don’t leave it too long as prices will go back up.

As a result, Clean N Free have updated pricing from February 2012. Quality bp Solar with SMA inverters, Australian made Silex solar modules, NESL modules, Samil inverters are all available.  If you have received a quote from us in the past we will amend it for you. If we are yet to do a site analysis and quote for you, now may be the time to get the ball rolling.

Clean N Free would like to keep you informed of further developments throughout the year. We anticipate putting an email together and updating our website every couple of months unless there is urgent news. We would as mentioned, be happy to hear from you in the meantime.