If you’ve been considering investing your savings in shares, in banked savings or in your mortgage, now might be the time to think twice. Rising energy prices around the country, paired with the modest returns from other savings and investment options makes solar energy a smarter place to put your funds.
After the government announced changes to the buy-back price and subsidies of solar last year, Australia saw the largest ever month for solar investment in December 2016. Over $100 million was invested, between businesses and homes around Australia, with households accounting for some $70 million of the total. Despite the reduction in incentives for households to take up solar since January, 2017 has still been a stellar year for the industry.
Energy prices are credited with having a lot to do with Australia’s voracious appetite for solar energy. Since the abolition of the carbon tax (which was promised by Tony Abbott to be the panacea to our energy-price woes) all major cities except Hobart, Darwin and Melbourne have seen increases in their energy costs. Once again, power prices rose significantly in July, after several major retailers announced increases of up to 20% for the new fiscal year. As energy prices continue to rise with no relief in sight, it is no surprise that many Australian families are considering installing solar power systems for their homes.
Even without feed-in tariffs, solar investment shows no signs of slowing down. With record low interest rates and the huge prices of electricity, homes can benefit from significant returns on their solar investment. In fact, those returns can outweigh the benefits of offsetting your mortgage with extra repayments.
Solar investment in Australia
During 2016 Australian households saved around $1 billion in energy costs, thanks to solar power. With an investment of $8 billion in solar technology, it’s clear to see that the savings are far outweighing the costs.
Invest in solar rather than the mortgage
These savings can be broken down to a household level, in order to demonstrate the potential return on a solar investment, versus further investment in cash savings with the bank, or even putting the funds into the mortgage.
According to Horn & Bird, a 3kW solar system, at a cost of $5800 can save the average household around $1100 per year in energy costs. That’s a return of a whopping 19%. Considering that interest rates are as low as 3% with the big banks of late, the benefits are clear. Redrawing on the household mortgage (at rates as low as 4.75%) to invest in solar is an obvious solution for many Australian home-owners. The savings and returns projected could increase further still, as energy prices continue to rise.
A recent American report measuring the returns on solar investment compared to other investment options (namely: Standard & Poor’s 500 stock index) has found that in 46 of 50 cities observed, solar energy investment came out ahead.
The falling costs of solar
As new players enter the solar energy market, and the technology continues to improve, the cost of obtaining solar power for homes has dropped significantly. Prices for residential solar installation are estimated to have dropped by 25 – 30% since 2012, which equates to a reduction of around $0.6 per watt for the cost of solar. This impressive figure of course, does not consider the significant reductions which occurred in the years prior to 2012, which were even more significant. These figures clearly indicates the increasing affordability of solar for Australian households.
Despite the reduction and removal of certain government incentives, entry barriers to solar investment continue to fall with low-interest loans and flexible payback options being offered by many providers.
If you’ve been considering making investments in your mortgage, while still suffering with astronomical energy bills, now might be the time to rethink your investment strategy. Contact Beam today, and register for your Beam device, to find out just how much solar can save you.