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Solar accounting 101: How to estimate the annual credit/deficit for your power bill, for a given solar system


A key reason that someone would get rooftop solar is because they would dearly love to never pay another power bill again. The problem is it is not immediately obvious which PV system will eliminate your bill as it depends on a number of factors.   If you are unfamiliar with solar it is difficult to know what questions to ask a solar retailer and how to distinguish valid claims from invalid claims. So how do know what your annual power bill is likely to be for a given solar system?  Here is a broad overview of how to work that out:

1.  Know how much power you are using for each season in kWh:

This is measured in kWh (or the energy it takes to power a 1000W vacuum cleaner for an hour) and will be on your bill.  You need to know how many kWh you are using each month (or quarter) you will tend to use different amounts of power depending season and on where you are in Australia.  Get rough idea of how much power you use per day in spring, summer, Autumn and Winter, it might be something like 10 kWh per day in winter and 20 kWh per day in summer if you live in a hot climate (and the reverse if you live in a cold climate).

2. Know how much power your solar system will produce in each season in kWh:

Your solar system will produce power at the maximum capacity of your inverter, that is, if your inverter is 6 KW then that is the maximum power you will produce from your solar system even if you have 8 KW worth of solar on your roof (which is a good idea) instead of 6 KW. 

To get a rough idea of how much your system will produce each year you can multiply the inverter capacity (6 KW in this example) by the peak solar hours for each month for your location (see the table below).  So if you live in Melbourne and it is Feb you will receive 6.4 peak solar hours (you will receive slightly more if your system is oversized but for simplicities sake I will ignore that).  Therefore, each day in Melbourne in Feb your 6 KW system will produce about 6 * 6.4 = 38.2 kWh (it will always be slightly less than this due to inefficiencies).   

Note: you can work out your production on a monthly, quarterly or yearly basis.  Monthly will be most accurate but a yearly estimate might be good enough if you have a predictable use pattern.  


3.  Know what time of day is best to use electricity

Your system will produce most of its power between about 10am and 4pm so you can maximise self consumption of your solar power (which saves you money) by:

  • Setting your hot water timer to run between 10 am and 4 pm
  • Putting on the washing machine
  • Putting the dishwasher on
  • Blasting your AC to cool your house
  • Using your electric oven etc

The reason self consumption saves you money is that importing power costs more (30c/kWh) than you get for your export of solar power to the grid (at best 20c/kWh).

4.  Learn about exporting power from the grid vs. importing power from the grid

For this example I'll assume you are on a "single payer rate" i.e. a single tariff per kWh; some people opt for "time-of-use" rates where you pay say 40c/kWh between 3pm and 9pm and 20 c/kWh at all other times.  If you are on a "time-of-use" rate you will need to incorporate this into the calculation.

It might be a shock for some people to learn that you are pay 50% more (keeping things in round terms) for power you import from the grid (30c/kWh) than you do for power you sell to the grid (20c/kWh). Note this is a best case scenario and varies from state-to-state (you can find the best tariffs by state here), solar owners used to only get 8c/kWh and later 11 c/kWh but 20 c/kWh is possible from some of the better retailers (so shop around).   

Which means if you import 1000 kWh from the grid each year, at best, you will need to export 1500 kWh  of power to the grid just to zero out your bill as 1000 * 30 c = 300 = 1500 * 20 c.  So it makes sense to import as little from the grid as possible, by doing the things described in point 3. above.

Other things to consider

You pay about $1 per day to have electricity supplied to your property whether you use it or not, this means to pay no bill you need to make more than about $365 from the power you export to the grid.

Let's take an example let's say you have a 10 kW system and you live in Melbourne on average you produce 16,790 kWh per year, let say you have an efficient all-electric home and use 12 kWh per day or 4,380 kWh per year but you import 1000 kWh from the grid how much can you expect to be in credit?

The amount you will be in credit will be*:

Exports i.e.  16,790 kWh (generated) - 3380 kWh (self consumption) * 20c = $2,682

Minus the cost of imports i.e. 1000 kWh (imports) - 30 c = $ 300

Minus the daily supply charge i.e. $1 * 365 days = $365

Therefore you can expect to be paid $2,682 - $300 -$365 = $2,017

*This uses an estimate of supply and use/export fees, use exact fees to get a more accurate final estimate.

In summary you can get a good idea of whether you will be in surplus on your bill by knowing the amount of power you use each month (or even each season) and by using the daily peak sunlight hours table multiplied by your inverter capacity to work out how much power you will produce each month/season.   It is a bit of accounting but it will make you immune to spurious claims by solar companies and give you the power to make a good choice when buying your solar system.

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