I am sitting on my couch on a beautiful sunny Autumn day in Melbourne writing this post with the background hum of my dishwasher and washing machine … as I reflect on how my solar panels are reducing my electricity bill.
One of the key proponents to achieving FIRE is to reduce your living expenses. The sage advice is to start with the big ones of housing and transportation then progress to food or grocery bill and utility bills such as electricity, gas and water. Plus the smaller recurring bills of subscription services, mobile phones and so on.
Before discovering FIRE, I had changed all my down lights into LED, taking advantage of a free service. I haven’t noticed a huge reduction in my electricity bill since then, probably because electricity prices have continuously risen over the last few years. But I have yet to change a single light globe in two years.
Earlier last year, I automated all my utility bill payments. I changed my electricity plan to one offering a 30% discount off electricity usage if I paid on time. All I did was ring the retailer and asked if there were a better deal and there was. How stupid I felt that I had been paying a higher rate all this time.
Then I went one step further and installed solar panels!
I live in Australia, the land of sunshine, right?
Maybe … if you live up north, or west or the centre of the country.
However, I live in Melbourne, in the south eastern corner of Australia.
Apparently, we only average a total of 46 sunny days and 139 partly sunny days, making it a grand total of 185 days with sun annually. Yes, out of 365 days. What a shockingly low number of sunny days!
Compare that to Perth in Western Australia which has an average of 265 days with sun per year.
These numbers are from https://www.currentresults.com/Weather/Australia/Cities/sunshine-annual-average.php
Regardless of these dismal numbers, I march on …
Many, many years ago I enquired about installing solar panels. The cost then was prohibitive even with various Federal or state government rebates. I was told it would take 15 years to recoup my money based on my electricity consumption.
At that stage, I had not paid off my mortgage so I felt the extra expense and long time line to recoup my money was not worth it. (Apologies to the environment!)
So I left it on the back burner until … November last year.
Before the looming state election in November 2018, the Victorian state government offered a rebate of $2225 per household for installing a new solar PV (photovoltaic) system. Alternatively, there was a rebate for a solar hot water system but you could only apply for one or the other rebate, not both. I chose the solar PV system ie rooftop solar panels.
The eligibility criteria is as follows:
1. Combined taxable income of less than $180 000 per annum (as evidenced by 2016/17 or 2017/18 tax assessment notices) for owners listed on council rates notice
2. Must own property
3. Property valued under $3 million
4. No current solar system or replacing one installed before 1 November 2009
Based on the above eligibility criteria, I definitely qualified to receive the rebate. Yay!!
The cost of solar panels and installation
My roofs are complicated and small – it was estimated that only 11 panels would fit. Due to the inverter used, solar panels could only be installed on roofs facing two different directions.
Based on how my house was situated, the best positions for the solar panels were on roofs facing the south and west. There was too much shade from trees on neighbouring properties on the east.
The quote for a total of 11 panels installed on the southern & western facing roofs plus a 3kWh inverter was $4500. With the rebate of $2225, I will be out of pocket for $2275. Therefore based on current electricity consumption, I would be in front after 3 years. I was pleasantly surprised by the significant drop in prices in the ensuing years since I last enquired about solar panels.
How it works
Full disclosure: I am not an engineer or electrician. This is my understanding of how my solar panels work. I have no idea if the same technology applies in different countries.
The sun’s rays hit the solar panel which contain photovoltaic cells. The cells convert light into electricity in the form of direct current (DC). This is then fed into an inverter. The inverter converts the direct current (DC) into alternate current (AC) which then powers my home in real time.
To state the obvious, solar panels work only when there is sunlight. So if I use electricity during the day when there is sun, the energy my home consumes will be directly from that generated by the solar panels. In other words, the home uses electricity generated from the solar panels first, BEFORE electricity is drawn from the grid.
Right now, I don’t have a battery to store any excess electricity generated by the solar panels during the day. (We live in hope that a rebate for batteries will be forthcoming soon. Maybe before the next election?) Therefore when I use electricity at night (when there is no sun), the electricity is drawn from the grid.
Any excess electricity generated by the solar panels during daylight hours (ie not consumed) will be fed back into the electricity grid. The electricity retailer then pays me for this excess electricity, called a feed in tariff. It will appear as a credit on my electricity bill. (This is the exciting bit!!)
The whole process from installation to claiming the rebate took forever – ok, a few months but it feels like forever. I was impatient and slightly anxious, to be honest – waiting to see savings, a reduction to electricity bill, anything!
Due to the surge in uptake of the rebate scheme, the solar panels originally quoted were out of stock on the day of instalment. Larger size panels were offered instead but 1) they were not delivered on site on the day of installation and 2) no one checked whether they would actually fit my roofs – they did not.
So I had to wait till the smaller panels were back in stock which was a good few weeks later.
Then a government electrical inspector had to sign off on the work – which required a wait of another few weeks as they were overwhelmed with the volume of work.
Without these documentation, I could not apply for the rebate.
3. Electrical retailer and distributor notification
In the meantime, paperwork must also be submitted to my electricity retailer, Origin Energy who then informs the electricity distributor in my area – United Energy.
United Energy then configures my electricity meter so that the excess electricity generated by the solar panels can be fed back into the grid.
Until this happens, any excess electricity generated is wasted. Which is so frustrating! But I was at the mercy of the efficiency or lack thereof of the solar installation company to submit this paperwork. It took another few weeks.
Then I was notified that paperwork submitted contained an inaccurate address ie instead of writing U1, 2 Blahblah St, the solar company had written 1/2 Blahblah St which is the conventional way of denoting unit numbers and street numbers. So paperwork had to be resubmitted.
However, this delay made me consider the best time to use electricity. Instead of running my dishwasher and washing machine at nights when I came home from work, I now do the reverse and run them during the day when there is sunlight.
This means I am using electricity generated from the solar panels and not from the grid ie I am not using electricity that I have to pay for.
So even though I was not getting the feed in tariff immediately from Origin Energy, I still benefitted from the solar panel installation.
4. Claiming the rebate
After paying the installation company the full amount of $4500, I am ready to claim the rebate from Solar Victoria.
A month later, I received an email from Solar Victoria that certain paperwork were not in order and that they must be resubmitted. The invoice and receipt were not in accordance with what Solar Victoria wanted. So once again, I had to wait for the correct paperwork. The solar company kept apologising that due to huge volume of work, they slipped up blah blah blah.
A whole month goes by before I receive an email informing me that paperwork is now in order. I am still waiting for the rebate …
I found the whole process to be very frustrating and clunky, bureaucratic and required a lot of follow up. Incidentally, a friend whose installation was around the same time has still not heard a peep from Solar Victoria. So I’m not alone in feeling frustrated.
What was the impact on my electricity bill?
Before I can answer that, I need to understand how electricity is charged in Victoria. I am ashamed to say until now, I always felt it was in the too hard basket.
So here goes … our electricity bill in Victoria has two components – 1) electricity usage and 2) supply charge.
There is a multitude of electricity retailers offering a confusing array of discounts and plans. The confusion and difficulty in comparing plans and companies arise because each company charges a different rate for usage; worse still, each plan seems to define peak usage times differently.
The supply charge is charged to every household for the privilege of being connected to the grid. Irrespective of how much electricity is used, this supply charge is non negotiable. Once again the unit cost of this supply charge (charged as an amount per day) varies depending on which plans you are on and which retailer you use.
And now enter the feed in tariff if you have solar panels ie the fee paid to households for their excess electricity being fed back into the grid. This fee of course varies from plan to plan and retailer to retailer.
So what did I do?
Once United Energy reconfigured my electricity meter, Origin Energy switched my plan to a solar plan. The default plan paid a feed in tariff of 13 cents per kWh with 30% discount off electricity usage only. If I wanted a higher feed in tariff, they offered 18 cents per kWh but the discount was significantly lower.
In the end, I signed up with Click Energy – who offered a higher feed in tariff of 20 cents per kWh plus 24% discount off both the electricity usage and the supply charge.
Click Energy’s unit cost for both usage and supply charge was lower than Origin’s so despite the lower discount offered, I was still ahead. But the real advantage was that the discount applied to the supply charge as well.
So did it reduce my electricity bill?
YES, it did!
To keep things simple, I am comparing Click Energy’s first bill to Origin Energy’s from a year ago.
Previously, in the same period last year, my average daily usage was 5.24kWh. In the same period this year, my average daily consumption reduced to 4.3kWh.
I believe this is due to me using my dishwasher and washing machine on sunny days as much as possible thereby only using electricity generated from the solar panels.
Working long hours on weekdays, I do not utilise much electricity during the day. The only constant use is the refrigerator. So, in theory, there should be some excess electricity being fed back into the grid.
In 30 days, the solar panels generated an excess of 381.6 kWh which is an average of 12.72kWh per day. This netted me a CREDIT of $76.32 which then offset my usage plus supply charge of $68.83. This means for the FIRST time ever, my electricity bill is in CREDIT!!! for the princely sum of $7.49! But hey, I will take a credit any day!
I can’t wait for the next bill to arrive. Fingers crossed, I will build up a sufficient credit during the summer months to offset the lesser amount of sunlight in the winter months.
Thank you very much if you have read thus far! It is not the most riveting subject matter.
Even though I always believed installing solar panels was good for the environment, I couldn’t justify the installation cost until prices came down significantly.
Installing solar panels and ultimately changing to a new retailer has by far the most impact in reducing my electricity bill. That is, compared to installing LED lights and looking for a better energy plan with the same retailer.
I can now also be proud that I am doing my bit for the environment.
And just because I have installed solar panels doesn’t mean I can use electricity unthinkingly. There is still work do to reduce my usage overall. My first step is to go to bed at a reasonable hour and not have lights turned on till 2am due to me falling asleep on the couch!
What about you? Does your household have solar panels? Has installing solar reduced your electricity bill?
25 Replies to “How I reduced my electricity bill – by installing solar panels”
Very interesting. I live in Victoria as well and need to make the time to have a look at whether installing a solar system would make sense for us or not. We already have a very low electricity bill (under $1,000 a year) due to a combination of having a pretty energy efficient house, my wife being a stickler for turning everything off if it’s not being used, and her shopping around for the best deals. We use less electricity than the average 1 person house despite having 2 adults and 2 kids.
So for us the aim wouldn’t really be to reduce the bill as it’s already quite low, it would be to turn the solar panels into a source of profit and get paid!
Did you do any calculations on how it might look for you in advance of getting solar installed?
The solar company used an average of 4 hours of sunshine per day to calculate whether or not it’d be worthwhile and just based on my current usage, it was. But for me, the cost was very affordable so I jumped at it as I’d been wanting one for years.
If you have a big expanse of roofs (unlike my unit), it’s worth looking into. Your initial cost would be greater than mine as my system is a small one but the profit! from selling back to the grid – definitely worth looking into.
Gosh, I really need to look at reducing my usage! Your cost for 4 persons is the same as my one person household. I already don’t spend much time at home …
We have a big roof and it’s north facing so we could probably put a decent number of panels on there.
We have gas as well as electricity which may be different to your setup, but a lot of it is due to having a pretty energy efficient house. We used the air conditioner a handul of times in summer, and in winter we turn the heater on for about 20 minutes in the morning if it’s particularly cold and after that the house is generally warm enough we don’t need it for the rest of the day.
I have gas too – for the stove, central heating and the hot water system. Ah … unfortunately, my house is not that energy efficient!
A friend of mine has installed solar panels and a Tesla battery.
In 6 months they haven’t paid a cent n electricity bills AND their company has sent them cheques for the electricity they’ve been able to sell back to the grid.
That’s a very tempting scenario – I have solar panels but no battery. (As yet…)
I know! I’m waiting for a rebate on batteries – rumour has it that will be offered next. It’s just a matter of waiting till prices reduce a la solar panels scenario.
I love that there are early adopters of clean energy like you! It’s because of your choice that the rest of the world will eventually see greener, more affordable options for our energy.
We live in Vancouver, BC, and your article got me curious about our average days of sunshine. Shockingly, we in Raincouver somehow get even more days of sunshine than Perth at 289 days!
I find that hard to believe… but I guess that means we’re pretty good candidates for solar panels! For now, we’ll stick to our relatively cheap hydro electricity and making changes like LED lighting as you’ve done. But it’s good to know solar could be an option one day!
I do love my LED light globes – they seem to last forever! I am definitely more interested in the weather forecast since installing solar – and on a particularly long sunny day, I think … ooohhh, how much electricity am I selling back to the grid? Can’t believe Vancouver has more sunshine days than Perth, haha! Must visit again one day ….
Thank you for sharing your experience on solar panels.
Something to think about down the track.
You are welcome! Definitely worth thinking about 🙂
I live in VIC too and have been thinking about installing solar. What put me off was the high prices – good to hear that they have come down.
How did you go about finding a reputable installer? If the government rebate was not offered would it have made a difference in your decision to go with solar?
My colleague was having hers installed – ended up with 3 of us using the same company – Sunline – the actual installation was very professional – it was just the paperwork and miscommunication about the out of stock panels; hard organising while working full time and taking time off for the installation.
Check out Solar Victoria for approved models/brands, eligibility criteria for rebate.
The government rebate made it a no brainer for me but even without it, I would have been very tempted as it would pay for itself in the long run. I was very happy for the price to be under $5000, considering it was more than $10000 when I first enquired many years ago. The rebate was a bonus, really.
Thanks for the article. Your last comment hit home, we paid around $10,000 for our panels about 9 years ago. Maybe it doesn’t pay to be an early adopter 😛 But we definitely see the benefit, and yes we also do the washing during the day! The next level is a battery. I’m not going to rush into that decision yet.
It may not have paid financially as an early adopter but you have helped the environment 🙂 And that’s got to count! Yes, can’t wait for battery too
Our household were early(ish) adopters. Being the spreadsheet geek I am I put every month for a year on excel. Interesting that Dec and Mar produced more Kw than the hotter Feb/Jan. Melbourne stats.
Our system was $3300@2Kw and our break-even point was 2yrs and 10mths. We got a feed in rate of .31 for about 4 years. Hope this helps
Wow, 31cents feed in tariff is very good – I can only get 20cents at the moment. So far, both my January & February bills are in credit and I have reduced usage despite using the air conditioner in February.
Thank you for sharing some details about your journey with solar energy. I learned a lot here because I never fully understood how certain times of the year could offset other times of the year or how you would work with a company in achieving this.
My husband and I think about waiting for the technology to get cheaper and cheaper (and the world to get wiser and wiser), but you’ve provided a pretty strong case here for considering getting started now…
I didn’t know much either until I installed the system 🙂 There is UV light even on cloudy days (in Australia) like today, so the panels should still be producing electricity. I’m excited to see if my winter electricity bill will be reduced.
Just start by checking if your state gives you any rebates then check if you can sell excess electricity back to the grid. Then enquire about cost of instalment.
Solar panels are good if you don’t want to reduce your consumption and you use most of your consumption during the day.
However the upfront cost is high, even with the rebates factored in.
If you can reduce your consumption via smarter energy usage strategies most people can avoid the cost of installing panels in the first place.
1. Install a programmable thermostat. Running your hot water full time is expensive on your water heater, set to 1hr before your regular shower time.
2. Ditch the dryer. Use a clothes horse or clothesline.
3. Ensure your residence is properly insulated (walls, floors, ceiling, doors and windows) or if you’re in the tropics your residence has high ceilings, shade and good airflow.
4. Install energy efficient lighting, or even get skylight.
Thanks for your suggestions, Peter!
I will look into point #1 – great idea. I don’t have a dryer, house is well insulated and all my lights are LED for many years.
I agree that solar is best for people who use energy during the day but I’m very happy so far with my feed in tariff. Plus I have reduced my electricity usage compared to similar months the year before. Somehow installing solar has made me more conscious of my overall energy consumption.
Great post and very informative. When we move back to Oz next year this is something I’d like to do too. Good for the environment and our finances – win/win!
Hi Mr Simple Life, solar rebates change all the time, state by state – hopefully when you are back in Oz, the rebates will still be available. There is an extra reason to smile when the suns shines 🙂