Melbourne is currently considered one of the best states for solar panel system power. Although the state is not as sunny as those upper north such as New South Wales and Queensland, there are two factors that turn solar power into a great investment: the high local electricity rates increase the savings per kilowatt-hour generated, and there are great incentives such as rebates and tax exemptions.
Electricity rates in the state of Melbourne average at around 25 cents per kilowatt-hour, and are among the highest in the nation. Assuming the same energy consumption, a building owner in Melbourne pays higher bills that someone in a state with lower electricity prices; however, higher rates also mean that potential savings are increased.
Assume a solar panel installation system generates 10,000 kWh of energy per year. In a state where the electricity price is 12.5 cents per kWh, this translates into $1250 per year.
However, at 17 cents per kWh the savings are $1700 per year, which is 36% higher.
As a complement to higher yearly savings, the incentives available in Melbourne make solar power very affordable. With a low upfront cost and high yearly savings, photovoltaic systems in Melbourne can yield double-digit rates of return.
The growth of solar power in Melbourne has been driven in great part to the Victorian Solar Rebate program and the Federal STC solar rebates. Although all renewable sources are fair game, solar power is characterized by its versatility, adapting to a broad range of project conditions.
Cash Rebates for Solar Panel Installations in Melbourne
Most cash rebates in Melbourne are available from the Victorian Solar Rebate program, which grants rebates for residential systems up to to $1888 and a solar battery rebate up to $4838. Rebates are available to households with an income below $180,000 per year and an assessed property value of less than $3 million.
The Federal government also gives a cash rebate depending on the the number of STCs your new solar panels will generate over its lifetime. Furthermore the Federal government also provides an interest free loan for solar panel system installations in Victoria.
Taking into account all the rebates available, the interest free loans and the reduction in electricity bills, it usually takes 6 years to recoup your investment. Since top tier solar panels have an expected lifetime of 25 years, solar panels are a great economic investment.
Tax Credits - Tax Deductions for Solar Panel Installations in Melbourne
Home and business owners who invest in solar power in Melbourne also gain credits on both the state tax and the federal tax as well as low interest loans. It is important to note that tax credits are calculated based on the price after subtracting any cash rebates available.
Commercial installations are eligible for instant asset write offs for tax purposes, this means a further saving of up to 50%.
Before solar panels are installed, there are three important decisions to take:
Location: Ground-mounted or rooftop-mounted
Solar tracking:Fixed system, single-axis tracking or double-axis tracking
Solar Panel Type:Monocrystalline, polycrystalline or thin-film panels
Ground-mounted solar panel arrays have a lower cost because their installation is easier and less risky. However, the property must have the space availability, and the area must be free from objects capable of casting shadows on top of the panels. In Melbourne City, where high-rise construction is common, finding suitable spots for ground-mounted installations can be difficult.
Rooftop-mounted solar panel arrays have a higher installation cost, but suitable locations are much more abundant in urban settings. The fact that the solar panel array is on a rooftop also means less objects can cast shadows on it. The large majority of the solar panel installation power potential in Melbourne is for rooftop installations.
There are racking systems available for both mounting options, and they allow the solar panel installation to be simplified significantly.
Photovoltaic panels produce more energy when facing the sun directly, but the position of the sun in the sky changes throughout the day due to the Earth’s rotation. Solar panels can be equipped with a tracking mechanism to optimise their position throughout the day. Motors keep the solar panels facing the sun throughout the day, maximising electricity generated, although this comes at an extra cost. To make solar panels point towards the sun, it is necessary to adjust their tilt angle and orientation.
Single-axis trackers adjust either the tilt angle or the orientation, but not both.
Double-axis trackers control both variables to maximize solar panel output.
According to the US Department of Energy, single-axis tracking increases energy output by 24% on average with respect to a fixed installation, and double-axis tracking increases it by 40%. Getting a site assessment from qualified engineering professionals is the best way to determine if solar tracking makes sense financially speaking; for it to be viable, the extra energy savings must compensate the extra cost.
Fixed solar panel power systems can also be optimized to a degree, by using the tilt angle that results in the highest energy generation throughout the year. The NASA Atmospheric Science Data Center is an excellent web resource, where you can input your coordinates to determine solar radiation availability by month and optimal tilt angles for solar arrays.
Another characteristic of photovoltaic systems that must be defined before installation is the type of solar panel to use.
Monocrystalline solar panels offer the highest efficiency available, and the highest energy yield per square meter, but are the most expensive as well. The combination of monocrystalline solar panels with double-axis tracking results in the highest possible conversion efficiency.
Polycrystalline solar panels strike a balance between efficiency and cost, and are the most common type as well.
Thin-film panels are cheap and lightweight, but inefficient. They are cost-effective when the area available for solar power is very large, but can greatly limit system capacity if installed on a smaller rooftop.
The type of solar panel should also be designed based on a cost-benefit analysis: for example, specifying monocrystalline solar panels instead of polycrystalline solar panels makes sense if the added savings compensate the price increase.
Common Solar Power Issues and How to Avoid Them
Before installing any solar photovoltaic system, there are several important factors to analyze: rooftop orientation, local shading issues, and structural integrity if the system is rooftop-mounted.
As mentioned before, most sunlight comes from the south portion of the sky in the northern hemisphere, and a solar PV system mounted on a south-facing rooftop will have a higher energy output than in any other orientation.
East-facing rooftops result in a higher generation during the morning, while west-facing rooftops reach maximum output during the afternoon; these orientations can be beneficial if their output matches the energy consumption pattern of the building. North-facing rooftops are the least suitable for a solar array, but the effect is not drastic if their tilt angle is low.
Shading is another important factor to analyze, especially in a city with plenty of high-rise buildings such as Melbourne. Solar panels in photovoltaic arrays are normally connected in strings, and one shaded panel is enough to bring down the production of an entire circuit. Ideally, shadows should be avoided, but if this is not possible there are two alternatives:
Microinverters convert the individual output of each solar panel to alternating current and are connected in parallel, not series. If one panel is producing a limited output due to shading, the other panels in the circuit are not affected.
DC (direct-current) optimizers accomplish the same effect, while keeping the panels in a series DC circuit. These systems optimize voltage and current conditions for each panel individually, and a central inverter converts their aggregated output to alternating current.
Both configurations can enhance conversion efficiency from sunlight to electricity. They are recommended if the extra energy generation makes up for the additional expense.
Structural Integrity of Solar Installations
For rooftop-mounted PV solar installation arrays, it is also important to ensure that the existing structure can bear the extra weight: solar panels typically add between one and two kilograms of weight per square foot of rooftop area. Most of the rooftop–mounted PV arrays require structural analysis of the existing roof structure. The existing roof structure should be analyzed to ensure compliance with local building code requirements regarding the combined self-weight, wind load, snow load, etc.
Some materials are not well suited for the installation of a solar array. For example, older rooftops made from asbestos-cement tiles tend to become brittle over time, and may require a complete upgrade or reinforcement before accommodating a solar photovoltaic array.
Roofs are mainly divided into two categories: sloping roofs and flat roofs. Depending on the slope of the roof and exposure to the sun, flush-mounted solar PV arrays are recommended in most cases on a sloping roof. “Flush-mounted” means PV solar arrays are installed parallel to the roof surface. Fixed, single-axis or double-axis supporting rack systems for the PV solar arrays are used for flat roofs.
Proper waterproofing detail between the existing roofing membrane and PV array attachment is a key component and it should be designed to conform with the existing roofing assembly.
Financial Performance of Solar Panel Power Installations in Melbourne
The following example illustrates how lucrative solar panel power can be in Melbourne. Assume a 20-kW photovoltaic array will be used in a multi-tenant residential building.
Assuming an installed cost of $1000 per kilowatt, the total price is $30,000 after rebates.
Their state tax credit is for 25% of the cost after rebates or $5000, whichever is lower. The $5000 cap applies in this case, and the cost is reduced to $47,000.
Finally, the 30% federal tax credit of $15,600 reduces the net cost to $31,400, almost half of the price before incentives.
With the high electricity rates in Melbourne, you can expect to save around $5000 per year with a 20-kW photovoltaic system.
Saving $5000 per year for an initial investment of $30000 results in a 16% ROI, which is much better than the stock market’s average. If you have access to a low-interest loan, it is possible to install the photovoltaic system for an upfront cost of zero, and yearly savings are so high that they can completely pay off the loan by themselves.
In addition to an excellent financial performance, solar panel systems typically have a service life or around 25 years. Since energy prices tend to increase year by year, the photovoltaic system yields higher savings each year.
High electricity prices and generous federal and state incentives are a winning combination for solar panel installations in Melbourne, turning it into a lucrative investment. However, top performance can only be achieved if the system is properly specified and sized. The best recommendation is to get in touch with a qualified engineering firm for site assessment and photovoltaic system design, and to work with a qualified contractor such as LocalPro Electrical during installation. If you have access to loans with interest rates below 10 percent, the photovoltaic system savings can pay them off completely, while still leaving net savings from the first year of operation.
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