Will Battery Storage Pay Off Before Your Feed-in Tariff Expires? A SolarInsights Deep Dive
Are you one of the many Australian homeowners who installed solar panels years ago and have been enjoying the benefits of a Premium Feed-in Tariff (pFIT)? If so, you might be wondering whether to hold onto your current setup until the tariff expires, or if it’s time to consider adding battery storage to your system. The answer, like the Australian sun, isn’t always straightforward, but SolarInsights is here to help you navigate the changing solar landscape. Before diving in, check out our Complete Guide to adding batteries to your system!
The End of an Era: Premium Feed-in Tariffs
Back in the day, government-backed Premium Feed-in Tariffs were a golden ticket for early adopters of solar power. These tariffs offered significantly higher rates – sometimes as high as 40 to 60 cents per kilowatt-hour (kWh) – for excess solar energy exported back to the grid. This lucrative incentive spurred many Australians to embrace solar energy. However, these programs were always intended as temporary measures, and many are either ending or have already expired.
If you're still on a pFIT, congratulations! You're likely earning significantly more for your exported solar energy than the standard feed-in tariffs available today, which generally range from a measly 1 to 10 cents per kWh. This disparity has understandably made many hesitant to upgrade their systems. However, with pFIT expiration looming, your solar export earnings are about to take a serious hit.
The "Sun Tax" is Coming
To add insult to injury, some electricity providers are considering or implementing what's being dubbed a "solar export tariff," or a "sun tax." This would involve charging solar panel owners a small fee (around 1-3c/kWh) for exporting energy back to the grid, particularly during peak solar production times. This shift is largely driven by the oversupply of solar energy in some regions, especially during the middle of the day. This means if you don’t opt-out, and you continue to export energy to the grid, you may soon be charged for the privilege.
You basically have three options when facing the sun tax:
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Opt-in: Some retailers will offer a cheaper electricity rate at other times of the day as a trade off. But the complexity of working this out can be difficult to ascertain.
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Opt-out: Choose a plan without a solar FiT to guarantee you will avoid the sun tax.
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Self-Consumption Maximisation: This leads us neatly to battery storage!
Battery Storage: Your Shield Against Feed-in Tariff Expiry and the "Sun Tax"?
The expiration of pFITs and the potential introduction of solar export tariffs are prompting many homeowners to consider battery storage. A solar battery allows you to store excess solar energy generated during the day and use it later, when the sun isn't shining. This reduces your reliance on grid electricity (and associated costs) and minimizes the amount of energy you export, making you less vulnerable to low feed-in tariffs or even the "sun tax."
Instead of giving your power away for almost nothing, you get to use it yourself and power your home. This is called self-consumption.
So, will battery storage pay off before your feed-in tariff expires?
Here's what you need to consider:
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Your Current Energy Consumption: How much electricity do you use, and when do you use it? If you consume most of your energy during daylight hours, a battery might not be as beneficial. However, if you use a lot of energy in the evenings, when your solar panels aren't producing, a battery can be a game-changer.
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Your Feed-in Tariff Expiry Date: When does your premium feed-in tariff end? If it's only a few months away, the urgency to invest in battery storage is higher. If you have a few years left (for example, the NSW pFIT is due to end on the 30th of June 2028 for solar panel owners who applied to install solar panels before the 30th of September 2011), you have more time to weigh your options and potentially wait for battery prices to come down further.
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Battery Storage Costs: Battery prices have been decreasing in recent years, but they still represent a significant investment. Get quotes from reputable installers and factor in installation costs, maintenance, and the expected lifespan of the battery.
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Inverter Compatibility: Not all batteries are compatible with all solar inverters. You may need to upgrade your inverter as well, which will add to the overall cost.
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Degradation of Solar Panels: Keep in mind that older solar panels might not be performing as efficiently as they once did. If your system is more than 10 years old, it might be producing less energy than you think. Upgrading your panels and adding a battery simultaneously could be a more efficient approach.
Making the Decision
The decision of whether or not to invest in battery storage before your feed-in tariff expires is a personal one. It depends on your individual circumstances, energy consumption patterns, and financial situation.
Here are some actions to take to make an informed decision:
- Analyze your energy bills: Understand your energy consumption patterns and identify areas where you can reduce your reliance on the grid.
- Get quotes for battery storage systems: Compare prices, warranties, and features from different installers.
- Consider upgrading your solar panels: If your panels are old, upgrading them along with adding a battery can improve overall system performance.
- Investigate Virtual Power Plants (VPPs): Explore the possibility of connecting your battery to a VPP, which allows you to sell excess energy back to the grid when demand is high.
The solar landscape is constantly evolving. With the end of premium feed-in tariffs and the potential introduction of solar export tariffs, now is the time to assess your options and determine the best way to maximize the value of your solar investment. Battery storage may be the answer, but careful planning and consideration are essential.
