Solar Finance

Solar Financing Sydney: Wouldn’t we all love to slice a chunk off of our monthly utility bill? Solar panels are a great investment that can save you hundreds of dollars in utility bills for your house. At first glance, the price of installing solar panels can look hefty. However, many feasible solar panel financing options can work for your home.

The four main types of solar panel financing available are cash purchase, solar loan, PPA, and solar lease. We will explore each of these options below so you can decide which method will save you money long-term.

  • Cash Purchase

The most cost-effective option of solar panel financing is an upfront cash payment. Loans and leases require consistent payments to cover lower utility bills as long as you continue to live in your home, whereas a cash purchase covers the costs of an entire solar energy system. You are essentially paying for 25 years of electricity in one payment! Consider future electricity bills a thing of the past. As electricity rates continue to rise from utility companies, you will be completely unaffected. 

The biggest downside of solar panel financing in cash is that you need to have a large sum of money stored and readily available to install solar panels. The cost of capital can be around $4000- $7000 for your home. If a cash purchase of your solar energy system is not an option, there are still options available to finance your solar panel installation.

  • Solar Loan

Solar loans are an excellent option for solar financing because they require no money down. This makes solar a more attractive option to middle-class homeowners. Monthly loan payments often are less than your monthly electricity bill, which means you are still saving money from day one of your solar panel installation.  

The biggest benefit of a solar loan over a solar lease is complete ownership of the solar energy system. This means you are eligible for government solar rebates and incentives from purchasing a solar panel system. A con associated with this ownership is that you must cover the cost of regular solar panel maintenance. You may qualify for solar panel warranties through the manufacturer that would help pay for the cost of solar panel maintenance.

  • Solar Lease

Leasing solar panels are the easiest way to secure the benefits of solar energy, and free electricity without the maintenance. A third party installs the solar panels, maintains ownership, and provides all solar panel maintenance. Upon signing a solar lease, you lock in a set rate on electricity that is substantially reduced for the duration of the solar panel lifetime. 

The cons of a solar lease include becoming ineligible for solar rebates 2021 and incentives of solar. These benefits go to the third-party company that owns your solar panel system. In addition, the increase in property value of homes with solar panels does not apply to homes leasing solar panels. This is because the new buyer does not receive anything from the investment you have made; instead, they must choose to continue leasing solar panels for a regular fee or discontinue solar energy from that home.

  • Solar PPA (Power Purchase Arrangements)

Under a Solar PPA (Power Purchase Arrangement), an operator installs solar panels on your roof for free. In return, the operator retains ownership of the solar panel system, and you agree to buy the solar power produced from these panels at a rate less than what you’d pay from the grid. For example, an operator could charge you 18c/kWh for solar power while the grid price for electricity could be 28c/kWh.

Solar PPA’s generated much excitement when they first popped up. However, several critical issues with this setup have been found since then. The biggest problem is that PPA’s only work if you can use or store all the solar power generated by the solar panels. If solar power is not used immediately, it’s fed into the electricity grid in exchange for a feed-in tariff. If you’ve paid 18c/kWh for that solar power, but receive a lower feed-in tariff, say 10c/kWh, then you’re essentially 8c/kWh out of pocket for nothing.

Additional Financial Benefits Once You Go Solar!

  • Solar Rebate

The Small-scale Renewable Energy Scheme (SRES) creates a financial incentive for individuals and small businesses who install small-scale renewable energy systems such as solar panel systems. It is done by creating small-scale technology certificates. Renewable Energy Target liable entities are legally obligated to buy these certificates and surrender to the Clean Energy Regulator every quarter.

Small-scale technology certificates (STCs) are provided ‘upfront for the systems’ expected power generation over 15 years or, from 2017, from the installation year until 2030, when the scheme ends. Electricity generated from non-renewable sources is replaced by renewable electricity. Usually, homeowners who purchase these systems assign this right to create certificates for an agent to get payback for a lower purchase price. The extent of this benefit is different across the country depending on the solar energy you produce.

Once the installation of an eligible solar panel system is done and the calculation of the amount of electricity your system produces or replaces (that is, electricity from non-renewable sources), Small-scale technology certificates can be created.

Under the Small-scale Renewable Energy Scheme, all the documents like signed compliance statements, forms, certificates, reports, photos, and invoices must be retained for a minimum period of five years after the Small-scale technology certificates are created.

Specific documentation should be provided while claiming STCs by the registered agents, who have the right to create small-scale technology certificates (STCs). The agent is assigned to them by system owners. The Clean Energy Regulator can request these documents at any time to prove that the system was eligible for STCs.

Anyone living anywhere in Australia can receive STCs for solar panel installations up to 100kW.

  • One does not need to apply for STCs (Small-scale Technology Certificates) as your solar panel retailer itself generally uses them as a point-of-sale discount.
  • Each STC has a dollar value redeemed for you by your solar panel retailer in a government-regulated market. Then the value of your STCs is reduced from the cost of your system by your solar retailer.
  • There is no such limit for the number of properties you can get STCs for. You can get STCs for your primary residence, holiday home, small business, and rental property.
  • This scheme is gradually being eliminated, reducing the value of STCs occurring on 1 January each year until 2030. The scheme will come to an end on 31 December 2030.

How the STC process works with AYKA Solar

  • When you select AYKA Solar as your solar panel system supplier and installer, we simplify the process.
    • Submit your contact details here – aykasolar.com.au/contact-us
    • Our Solar Expert team will call & email you a free quote based on the information you provide (Electricity bill), including the amount of the discount you get for your STCs.
    • Accept the quote and pay the deposit.
    • Our Solar panel Installation team will install your new solar system.

Feed-in tariffs

Details with the electricity distribution network include ‘downloads’ and ‘uploads’ of electricity. You are charged by your solar panel retailer when you download electricity from the main grid. 

But if you have solar panels installed, you can also ‘upload’ power, and you get paid for this from your retailer. The payment you receive is called a feed-in tariff.

The value that you get paid through feed-in tariff not only varies from state to state but also between retailers. Don’t forget to check the latest solar feed-in tariffs with your electricity retailer, as feed-in tariffs can change.

AYKA Solar provides you with any solar panel finance option that is most suitable for you. Our team of solar experts is here to help you with every doubt you have. Contact us today and get your solar journey started.

Reference and Sources

https://www.energymatters.com.au/

https://www.cleanenergycouncil.org.au/

https://www.energy.gov.au/rebates/renewable-power-incentives/

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