Domestic Solar Power – Expensive Mistake

Industry Professional Speaks Out

I was asked to write an article to explain why I felt that the current deployment of Ad-Hoc solar installations in domestic premises is a very bad idea. This is from my perspective as a professional engineer who has worked in the power distribution industry in Australia for over 20 years and as a home owner with 6 years of real-world data taken from my roof-mounted solar panels.

When I started work in the electricity industry, it was a utility organisation, wholly owned by the public. As an organisation, I felt that it served the community very well. The key performance indicators at the time included: capacity, reliability and safety. Electricity was realistically priced to cover the cost of maintaining the system consistent with the needs of the community.

Then everything changed. The whole operation was split up and sold to private companies. Not one, but many. This included generation, distribution and retail, with the government still having regulatory control over some aspects of the operation.

Unfortunately, the key performance indicators have changed and the public is left with a crippled service. The current power networks in Australia are still safe, but capacity and reliability performance indicators have been replaced by maximising shareholder dividends.

Then to make matters worse, we have now had government involvement in the whole system with “publicity” taking centre stage. We have been promised “clean, cheap electricity for everybody, powered by solar and wind”.

Rigorous scientific and engineering analysis along with commercial impact studies have been replaced with a “go green” chant.

As I worked in the industry, I believed the hype for a while. I installed solar panels on my home in 2017, on the expectation that “somebody” had done the studies and this was a good idea.

I was so wrong and this is my story.

Solar Energy Embraced in Australia

Today in Australia, one in three rooftops have solar panels installed. This is over 3.3 million houses.

The Australia public is still being convinced, by government, that installing solar panels is doing something socially responsible and believe that they will get financial benefit for their investment.

In the next section I will go into some detail on the reasons why this is not true, based on key technical considerations. The current utility companies do not have your best interests in mind and it seems that your government is “blowing” with the latest fashion breeze.

In fact, if you have installed solar panels in the last 5 years, or are considering it for the future, I can guarantee that you will not get a return of your investment and will only be contributing to the power distribution issues we are faced with today.

Why Am I Not Saving Money?

Most of the solar installations in people’s homes do not have battery storage. So the ability for the system to save you money depends only on the following factors:

1. The utility voltage at your house (measured with your system powered off)
2. The feed-in tariff set by your utility company (this is also regulated by government policy as it does not reflect the real cost of anything within the system generation infrastructure. It is in fact completely arbitrary.)
3. The purchase cost of your panels inverter and installation.
4. Your own power consumption during the hours that the sun is visible and shining directly on your solar panels. (not obscured by heavy cloud, trees, etc.)

Of these factors, you only have direct control of item 3 and 4. The first two items have a significant effect on the financial benefits of your system and are out of your control.

1. Utility Voltage At Your House

In order for your solar panels to feed into the grid and generate money for you, your utility voltage needs to be lower than the voltage of your home solar inverter. (Electricity only flows from a higher voltage to a lower voltage)

The utility voltage at your house is set by automatic transformers feeding power along wires in your street. This is done to ensure that the AC voltage at your home stays within the range 216V and 253V. The transformers make adjustment either manually, by sending personnel out to make the adjustment, or automatically by electronic controllers controlled remotely.

Utility voltages go up when solar panels generate electricity and drop when loads are connected (ie. the appliances in all of the houses in your street). To stop your solar system from increasing the voltage in the street too high, it contains a function called Grid Voltage Dependent Power Reduction (GVDPR).

You will normally not be aware when this GVDPR is activated, unless you happened to be looking at your solar inverter when this was happening. The effect of this is that your solar inverter’s power generation is significantly reduced, by dumping the energy generated.

Once consequence of this function is that you no longer get the power generation capability that you paid for. Since it is a setting for the whole system in your house, you no longer get the benefit from the feed-in tariff, or self-consumption (using your own solar power for your own appliances.)

As solar panels are connected to more and more houses in an area, the fluctuation between loading and feeding power into the grid increase. The result is that the GVDPR function is activated on all of the systems within the street for longer and longer times.

If the utility company is reluctant to adjust the automatic voltage transformers down to compensate, then all the residents will be losing out on their expected power production benefits.

In my experience, utility companies will ignore requests from consumers to address this problem even when physical evidence is given to them to substantiate the problem. I can only conclude that they are reluctant to address the problem as it does not work in the interests of the shareholders of that company, to have their customers producing too much electricity. Throttling by GVDPR is good for revenue!

2. Feed-in Tariff

The feed-in tariff is a totally arbitrary figure set by government. To show you how arbitrary is, remember that when solar was first promoted by government, homeowners were given such a large amount of money for their feed-in power that they have virtually free electricity for many years ($0.60/kwh). This certainly encouraged people to install solar panels on their homes.

When the number of domestic installations increased, this incentive was dropped and the amount was massively reduced. It is now so small that the annual income from your solar generation is only a few hundred dollars ($0.08/kwh) and this amount is going to be reduced in 2024 to less than $0.05/kwh).

3. Purchase Cost of Domestic Solar Power

The total cost of a solar installation is a significant financial outlay for any household. Many people have to take our loans to pay for their system. In this article, I will assume that you are able to afford the outlay outright.

Solar equipment loses it’s ability to generate electricity as it gets older. In addition, environment factors such as a build up of dirt on the panels, corrosion of terminals used in connection the panels to the inverter and street, also degrade the ability to generate electricity.

Many people have also found that the solar installers have used under-sized cabling in order to save costs and this also reduces the ability to generate electricity.

In order to correctly calculate the cost of ownership of solar equipment, you will have to take into consideration that there is a constant drop in efficiency over the equipment lifetime due to the factors above, in addition to the need to replace all or most of the components at some stage, due to failure, or total loss of efficiency.

Most of what I have described here is not disclosed at the time that system is sold to you. (There are many home owners in Australia that have solar systems on their roofs that have stopped working. Many cannot be repaired as the workmanship is so bad and others were supplied by companies that have long since gone out of business). The useful lifetime of a solar installation varies but can be as little as 3 years. More expensive systems built using higher quality components can generate power for 15 years but even they need to be replaced in order to maintain optimum efficiency. This is expected as solar panels and inverters are outdoor devices and are exposed, by design, to high temperatures which is not ideal for electronic equipment in general.

4. Your Own Power Consumption – On Sunny Days Only

From what I have described above, it should become apparent that the only thing left in your control, which will determine the amount of money you save is by addressing your self-consumption.

Self-consumption is simply the power you consume at the same time as your solar panels are generating electricity.

Remember that your total return from your solar system is calculated as follows:

net value = self-consumption * (utility daytime tariff) + feed-in * (utility feed-in tariff)

When feed-in tariffs were reduced to very low values, all that is left, to get a return at all, is to increase your self-consumption.

In order to do this, you need to minimise the power you use at night and make sure you use all your high power appliances during the day (when its sunny).

If you don’t work from home, you can do this with time-switches on your larger appliances such as dishwashers, washing machines, driers, etc.

While I have not tried it myself, it is also possible to put time-switches on fridges and freezers to operate during the day and stay off at night. Depending on the ambient temperature of where you live, most fridges and freezers only run 12 hours a day or less, so this should work for you.

I followed this strategy for the 6 years that I have had domestic solar panels, as you can see below in the next section.

Cost Benefit Analysis – Actual Example (my home)

To illustrate the cost benefits of domestic solar, I thought the best example I could give is to use actual figures that I have for my system. It is an 18 panel, 4.68kw total system that was installed in 2017. The system is located in a sunny area in Melbourne (no shade from trees). I have my major appliances running during the sunny parts of the day. So in effect, I have a best-case scenario for solar. The figures were taken from January to December 2023

For that year, the feed-in tariff was $0.09/kwh and the off-peak electricity period which runs during the day, costs $0.184/kwh.

If there was no solar panels, the self-consumption power would have cost $456 extra. The utility company paid me $248 for the year. In 2024, this amount is likely to be reduced to $155 or less.

The system was installed in 2017 for a total cost of $6,730. This means that a total benefit for 2023, was $456 + $248 = $704. If that rate had been the same for the life of the panels, I would have broken even in 9.5 years. However, this period is now likely to be longer as the feed-in tariff is being reduced again in 2024. The break even period is now looking like 11-12 years at best.

There are plenty of online calculators for working out the “investment” potential of domestic solar installation which give much higher potential savings. On reflection, these calculators are misleading as they do not take into account GDVPR, the age of regulating transformers in your neighbourhood, or the attitude to optimising consumer generation capabilities, or the total installed neighbourhood power generation. Remember that all of which greatly influence the actual power your system is allowed to generate.

In my opinion, item 1 and item 2 above, which are both contributing factors outside of your control and working against you, will guarantee that you will never break even for recent purchases in Australia. As shown in my example, this is true even if you have the choice to run most of your appliances during sunlight hours.

To be fair, the results above are just for my system in Melbourne. I don’t live in a heavily populated area, so this would be typical of the majority of the Australian public. As the housing density increases, the benefits decrease. If the same installation was made in Queensland, in a farm area, the benefits would increase.

Factors That Affect Power Continuity To Your House

Power system reliability/availability is also something that has suffered from utility privatisation and some very seriously naive government decisions. Let me explain the factors that contribute to the availability of power at your house.

1. Maintenance of the assets owned by the utilities.
2. Equipment damage due to natural disasters such as fire, wind or flood.
3. Equipment damage man-made disasters such as car accidents
4. Equipment damage due to other reasons (age, incorrect application, etc.)
5. The baseline power generation capability of the utility company. This is the amount of power that the company can generate without the addition of domestic solar panels.
6. The total output from domestic solar panels within your local area.

The first items on the list make good sense. If you don’t maintain equipment, then it will certainly break and stop working. When the power and energy utilities were owned by our government, appropriate preventative maintenance and system capacity expansions were properly budgeted and the systems keeps up with growth in power demands. The only time loss of supply was experienced was when equipment damage occurred.

REMEMBER: Your solar system will shut off when power is lost in the grid connecting to your property. This is true even if you solar system is generating at maximum capacity during the day. The system is not designed as “off-grid”. The energy generated by your solar panels is simply dumped.

When managing the total system capacity to generate electricity, the following must be considered. In theory, this would be the responsibility of the combined utility companies:

• The number, capacity and availability of generators (gas/coal/hydro/solar/wind) owned by the utility company. Traditionally, this was well-known and within the control of the utility company. Provisions were made for generation sources that were seasonal (hydro), time-of-day (solar) and weather dependant (wind) in addition to scheduled outages due to maintenance.
• Residential and industrial geographic geographic power profiling. This type of planning allows for power to be re-routed on a needs-basis due to common time-of-day usage for these customers.

Over the recent years, I have witnessed three “knee jerk” reactions from our governments, that showed me that, both appropriate engineering and the needs of the community, were never considered. These were all done in the interests of “Going Green”.

• The first was the closure of some solid base-line coal generators.
• The second was the uncontrolled deployment of domestic and residential grid-connected solar systems (as described in this article).
• The third was the promotion of electric vehicles to replace petroleum powered ones.

I could write a book on the technical challenges introduced by these policies but suffice to say that the fundamental physical fact that energy cannot be created or destroyed is lost in decision making process.

• Closing a coal power station, removes base-line (24/7 energy). This has already been done and there is apparently more to come.
• Installing customer solar generators, solves only the daytime energy demand and relies on home-owners to maintain their own equipment and worse still, when more systems are installed, pushes the whole system into a state that the dynamic energy production from these systems is higher than the total daytime system power load. This is likely to happen in Victoria and New South Wales this year, based on January’s reported power figures. How this will be felt by the public is yet to be seen. What is definite is that all people will get significant reductions in their generation capabilities due to the need to “dump” the excess generated power.
• Replacing gas appliances with their electrical counterparts is not solving any problem.
• Electric vehicles need to be charged. For most people this means connecting to an electrical network overnight. This is exactly the time where our dynamic power generators (solar) is not working (there is no sun at night!)
• All machines and electrical equipment needs to be manufactured, shipped and then disposed of in the same environment that we are seeking to protect by “Going Green”. This environmental impact is never considered when a nicely packed kit is installed on your house. Remember that all of these processes requires fuel and generates toxic by-products and requires using resources mined out of the ground. Unfortunately, in reality this has to be done for equipment that has a usable lifetime of as little as 3 years.

The Future Looks Worse

There is recently a new drive by governments here to promote the installation of batteries to be connected to your home solar installation. On paper, this looks great. You have the ability to channel the power you generate into your own batteries. The battery technologies are reasonably mature, but still have their own challenges. They have a limited lifetime and are very expensive. Typically, you would have to pay $18,000 to install a system which could help provide power for half your house for an evening’s entertainment. Given that the lifetime of these batteries is likely to be less than 10 years, this makes the cost benefit dubious at best. Remember the cost to the environment from battery production and disposal is well-known and not what we are striving for.

Don’t Become Part Of The Problem

To sum up, I would encourage everybody reading this to consider the consequences of their future purchasing decisions. This includes purchasing solar systems, battery upgrades for the solar system and electric vehicles.

It is time to get the decision makers in government to provide comprehensive impact studies for their proposals and correctly report benefits to the community they claim to serve.

Most of all, don’t believe the glossy brochures, or the utility companies, who seem to ignore the true cost of the new solar only strategies.

On a final note. Australia has one of the richest deposits of uranium on the planet. The evidence from other countries, suggests that nuclear power generators are no longer the demons they were in the past. Improvements in safety and efficiency has been demonstrated by these power plants worldwide. Become proactive and encourage your government to consider reevaluating this alternate clean energy production strategy, rather than just blindly following popular culture.

-Senior Utility Engineer, Melbourne, Victoria