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How Solar Saves You Money: An Economic Perspective

How Solar Saves You Money

The next step in our journey of understanding solar in Australia is to learn the fundamentals of how solar saves you money.

We will discuss how your home solar system operates in conjunction with the electrical grid and with your electricity retailer to bring you savings and discuss the benefits of quality product choices and of battery systems.

Feed-in Tariff & Usage Tariff

When your home does not use all the electricity produced by your home solar system the extra electricity is exported to the electrical grid and you are paid by your electricity retailer for this export. Your smart meter keeps track of electricity export as electricity exported over time, which is measured as energy in kilowatt-hours (kWh).

Different energy retailers will provide different feed-in tariffs. These are paid as a number of cents per kilowatt-hour of energy exported to the grid. These tariffs may vary depending on the time of day as well.

Energy consumed from the grid is measured as usage, and a usage tariff is applied. This is the cost of electricity that shows up on any home electricity bill. Following July 1, 2023, the usage tariffs in Australia have risen as per the increase in the default market offer.

To read more about the July 1 changes in the default market offer, check out this blog! (Electrifying Your Home)

It is important when choosing an electricity retailer to consider both the feed-in and usage tariffs. Some retailers will provide both higher feed-in tariffs and higher usage tariffs, which can mean some risk if you consume a lot of electricity at nighttime and don’t have a battery.

Good solar installers will help you to choose the best electricity retailer for your needs.

Why quality means extra savings?

Quality home solar systems cost more upfront than cheap systems. What is the benefit of choosing quality? Quality solar panels are efficient and reliable. Quality solar inverters are better at converting the direct current (DC) electricity into alternating current (AC) electricity.

Quality products are made to last. They have good weatherproofing and resist degradation. They have good warranty terms.

To learn more about what goes into quality solar products, check out this blog! (RenewCo Solar’s Product Choices and Why)

Quality products guarantee long term solar production and are far more efficient than cheaper products. A quality solar installer will provide any and all maintenance required. Quality simply means that your home solar system will perform as expected, which mean long-term consistency in solar production and therefore consistency in savings.

Understanding Battery Systems

Solar panels output DC electricity, but the appliances in your home use AC electricity. A solar inverter converts DC to AC. 

Batteries charge and discharge DC electricity.

What is a hybrid inverter in solar?

A hybrid inverter can convert the DC output from solar panels into AC electricity to use in your home. A hybrid inverter also has an inbuilt battery inverter that can convert AC electricity taken from the grid to DC electricity to charge a battery.

A multi-mode inverter is another word for a hybrid inverter. However, there is a distinction. A multi-mode inverter functions the same as a hybrid inverter, with the added benefit of DC-to-DC conversion. This means a multi-mode inverter can convert the DC electricity output by solar panels into DC electricity used to charge the battery. This process is called DC coupling.

Here's a fun fact:

Any solar system can be connected to a battery thanks to AC coupling. AC coupling requires a second inverter, called a battery inverter. A battery inverter converts the AC electricity output by a solar inverter back into DC electricity, which is used to charge a battery.

The Tesla Powerwall II is an AC battery, meaning it has an integrated AC to DC inverter-charger. It has an in-built 5kW battery inverter. This means any solar system can be connected to a Tesla Powerwall II battery. However, the Tesla Powerwall II can only be AC coupled.

An important note:

Though you can retrofit any AC coupled battery to any existing solar inverter, DC to AC to DC, it’s a little less efficient than a DC coupled battery, using a multi-mode inverter, DC to DC. This is due to the added step of, as per any standard solar inverter, converting the DC from the panels into AC and then via a battery inverter back into DC electricity.

How does a battery system help save money?

A battery added to your home solar system will cost more upfront and will provide a slower return on investment due to this upfront cost. However, nighttime electricity costs can be erased depending on the size of the battery. This can mean minimal grid consumption, which means minimal usage costs.

A VPP allows the energy stored in individual batteries to be aggregated and used to support the grid during high-demand periods, while also providing benefits to the homeowners in terms of lower energy costs. A VPP creates a network, for sharing, selling and buying energy, between battery systems in the area. 

With the use of a VPP plan, savings can be maximised as you share stored energy in a network with other battery solar homes. A plan like Amber Energy’s VPP plan will provide further benefit as they offer wholesale prices on the electricity consumed from the grid.

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