Free power, and the rest

The following article, by Mathew Cawood, appeared in the rural newspaper The Land on 20th of February 2010. It talks about a recent 10kW installation in country NSW that Solar Choice brokered. The installation earns the owner over $10,000 per year and will pay itself off in 4-5 years, banking profits thereafter.

Free power, and the rest

Written by Mathew Cawood

Solar power generation is coming of age, and anybody with acreage should take notice.
Household solar power was associated with dim 12-volt light bulbs for most of the past 30 years, but all that has changed in recent years, and a lot more besides.

Solar power can now run a 240-volt house, and all modern gadgetry, with no changes needed on wiring or light bulbs, and only minimal changes in electricity usage habits.

Today’s household solar power systems can also plug straight into the mains electricity grid. That has a couple of important implications:

* The power grid becomes a giant battery. Solar power trickled onto the grid during the day can be pulled off during peak usage periods at night, along with any top-up mains power that might be needed.

* Solar power trickled onto the grid can be bought by a power company, subsidising a household’s power use.

The latter scenario opens up new income possibilities for farms with some spare sunny ground or north-facing shed roofs.

Managing director of solar energy broker, Solar Choice, Angus Gemmell, says in NSW and ACT, which have recently introduced generous policies on renewable energy, payments to farmers may add up to quite a lot.

A landholder installing a 10 kilowatt solar array will spend $43,000 to $55,000, depending on installation.

Under current NSW/ACT rules, an array this size will generate nearly $10,000 in electricity a year on current prices, Mr Gemmell said, ensuring a constant return on investment and a payback period of four to five years.

The standard household system of 1.5kW has a payback period of about two years.

After payback, the array is delivering free electricity to the owner, and additional income if there is a surplus.

Most solar panels come with a 20 to 25 year guarantee, but the Australian Photo Voltaic Association’s Dr Muriel Watt said some 40-year-old panels were still going strong.

A roof mounted solar array capable of generating a kilowatt covers about eight square metres.

For large installations, space is a prerequisite, although States limit the power generation capacity of private renewable installations.

In NSW, the limit is 10kW per registered power line, but a farm with separate power lines to bore pumps or sheds can add 10kW/line.

However, whether solar power generation represents an opportunity to landholders depends a lot on the State and its policy on feed-in tariffs, or how credits on renewable energy fed onto the grid are calculated.

All tariff schemes value renewable energy higher than fossil fuel energy (sold at about 15 to 19 cents/kW hour), but the multiplier varies between States and power companies.

In NSW, Victoria and ACT, companies are offering feed-in tariff rates of 60 to 68c/kWh, but in SA and Qld prices fall to 44 to 52c/kWh.

Credits earned through tariffs can go towards the purchase of mains electricity, or, with many power companies, can be exchanged for cash.

NSW and the ACT offer gross feed-in tariffs: every kilowatt of energy exported onto the grid is credited, regardless of how much power is drawn back by the household or farm.

Returns are guaranteed for seven years in NSW and 20 years in the ACT, making them the best systems in the world, according to Mr Gemmell.

The inequity between the different States’ payment systems is causing renewables money to flow towards NSW and ACT, with interstate investors offering to lease land from NSW farmers to put in solar installations, Mr Gemmell said.

The farmer got free electricity and the investor got profits from the surplus.

NSW customers represented about 15 per cent of Solar Choice’s base in early 2009, but now represent 70pc.

The boom may, however, be short-lived: the NSW Government plans to review its gross feed-in tariff scheme when uptake represents 50 megawatts “ which could be in June.