Going Solar - The Financials and comparing Tariff Plans

Part III - The installation is taking for ever! May be a good time to publish the financials behind the whole thing and look at and compare some tariff plans.

I already have my hourly consumption as mentioned in previous blogs. To keep it relatively simple I am looking at it across seasons. The analysis looks like this.

I am comparing my current plan with no solar array, with a 5KW solar array optimally placed and a 10.72KW array in a less than optimum aspect. The last is, of course, the one I am getting installed.

The tariff I am on is a time of day tariff - meaning it varies during the day. The peak price of 59c applies between 2 PM and 8 PM. From 7 AM to 2 PM and 8 PM to 10 PM the should rate of 25c applies. The rest of the time it is the offpeak rate of 16c. I have assumed a feedin tariff of 11c. I have also factored in the daily usage cost of $1.056 and a discount of 14%. All these figures come from my current bill. These are the main charges that apply on a day-to-day basis. All rates include GST.

I also made the following assumptions:

• Cost of a solar array is $1600/KW. This works out very close to the few quotes I received.
• The array generates 4KWh over the whole day for each KW of the array
• The payback period is not compounded and does not use an IRR - I am a tech wanker, not a finance one
• I have assumed a solar profile over a day starting at 8 AM at 5%, peaking to 20% between 11 AM and 1 PM. It then subsides to 5% by 3 PM. It may be less during winter and more during summer. Ironically, I pulled these figures out from where the sun don't shine.

According to the analysis, my current bill of $1,150 (it is actually lower than that - is my power company undercharging me?) will drop to $555 once the array is in place. A smaller 5KW array would have brought it down to $718. The payback period for the array is 7.2 years. The smaller array would be paid back in 4.6 years.

Just out of interest, I tweaked the figures to get the size of a solar array that will give me the mythical $0 bill. For this I will need a 24.4KW array costing $40K! Still, the payback period is 8.7 years. Not gonna happen, but interesting, all the same.

OK, so getting a solar panel array makes sense. But now that you have it, what tariff plan should you go for? Go for a high feedin tariff? Time-of-day tariff or a flat one? For that, we have a second set of analysis to do.

This sheet allows you to enter the main charges for a tariff plan and look at the savings based on my own peculiar production and consumption profile. In the image above, I am comparing two specific plans from Energy Australia and AGL. Plans are listed on the Energy Made Easy website. The charges needed in the analysis are all displayed. Each plan seem to have a Plan ID which I plug in before taking a printout. So it now tells me that Energy Australia will be cheaper by $60 in a year.

Go with the AGL Solar Saver plan with an amazing 20c feedin tariff? Let us compare it with their normal plan with a more modest feedin tariff.

A bit of a surprise here, the highest feedin tariff still does not compensate for the high time-of-day rates. The Solar saver plan is actually $287 higher.

How about deciding between time-of-day and flat rate? Let us compare an example of each.

This is a more complex situation. Some of the really high peak period will be cut by the solar output. The shoulder and offpeak rates are lower than single use tariff. In this case, the single tariff is ahead with a saving of $218.

With a bit of behaviour change, a time-of-day tariff might still work. The peak period lasts from 2 PM to 8 PM. As the sun sets, you will start drawing power at the peak rate. You enter the VALLEY OF DEATH that is roughly between 6 PM and 8PM. If you can avoid consumption for these 2 hours, a time-of-day may still come out ahead.

You can 'discuss' your tariff plan with your provider and lean on them to give you discount. As long as all other rates are the same, plug in the discount they are offering and you will have your new answer. I intend to play this game in a few days (once my damn installer gets on with it) and will let you know the results. Also worth considering are the period of benefit and the cost of going to another provider during this period. Switch early and switch often seems to be the name of the game.