The Gap in the Grid: A Growing Concern for the Solar Savvy

08 Jun 2022


We’ve all seen the price of electricity sky-rocket recently. There are a lot of parties at play here and we won’t go into them all, but we know for certain that the price of electricity will trend upwards. Globally, the ongoing shortage of non-renewable resources will ultimately only get worse if we continue the way that we are. As we draw nearer to the deadlines imposed regarding decreased carbon output and eventual carbon neutrality, taxes will be instated to disincentivise the use of finite resources for powering our countries, technologies and ways of life. This is barely speculation; this is an extrapolation of current trends.

So, in an attempt to save money, you’ve gotten a solar setup. Perfect! You’re immune to the rising cost of electricity, right? Maybe not. Much to the chagrin of many who have installed a grid connected solar system over the last 10-20 years, I would posit that with an average, single phase, grid connected solar system will soon not be enough to even reduce one’s electricity to a reasonable amount, let alone zero.

 The Grid

I don’t think it’s esoteric knowledge to most people who use grid connected solar that most of the time you are not using the electricity that you’ve generated. For those with residential solar systems, the main time that you are going to be using electricity is the evening, outside of standard business hours. Since it’s unlikely that the sun is shining for much time outside of these business hours, where is this electricity coming from? The same as anyone else connected to the grid, solar setup or not, you are purchasing it from your electricity company.

What’s the point then? You’re generating all of this electricity throughout the day when you’re note using it, so it’s just going to waste. Yes, your appliances are drawing some power from solar during the day, but that’s surely not enough to utilise the full potential of your solar setup. Well, in this case, your excess power generation is fed back into the grid, where your electricity company will buy this electricity from you.

The Gap

Through a different lens, this could absolutely be viewed as your electricity company ‘storing’ your generated electricity for you, allowing you to access it when you need it, plus giving you a little extra bonus for any electricity that you’re not going to use, with them charging a small fee for storing it for you. While this isn’t the furthest thing from the truth, it depends on what would be reasonably considered a “small fee”. Currently, electricity companies are paying about one third their selling rate for electricity. Assuming that the only times that you are using electricity are the times where you are unable to generate it, that means that in order to pay for the electricity that you are using, you would need to generate three times the amount of electricity that you are consuming.

Now, my understanding is that the ratio of 1:3 is taking into account the recent reduction of the solar rebate, where companies are paying 10c/KW, as opposed to the 15c/KW that they were paying before, however, this is not taking into account the increased electricity costs that have been reported on recently. Using Queensland as an example, as we are experiencing a more ‘middle of the road’ price increase compared to others, the price of electricity is due to increase by 12.6%. Working on a 1:3 ratio, the math of the whole situation comes out to an increase in the cost of your electricity of nearly 4c/kw. That may not seem like a lot, but bear in mind that this means that you will have to generate an additional 12c worth of energy per kilowatt of usage to account for this. That’s not an insignificant change.

 The Concern

In writing this, I’ve had a discussion with a few colleagues of mine who either have or have had grid connected solar. I was hoping from these discussions to glean whether these colleagues have noticed a marked increase when it comes to their solar bills over the last few months. Though the 12.6% increase in energy usage cost has not really been noticed yet, due to it being a very recent change, the decrease of the solar rebate certainly has. Where not long ago a person would only have to generate twice their usage to feed back into the grid, the change to the solar rebate (the price that electricity companies would buy solar energy for) has increased the amount that needed to be generated to 3x your grid usage, and now increasing to 3.4x your grid usage due to a higher cost of energy being purchased from your electricity company. All this increase in just a few short years. See a slippery slope forming? I sure do.

Historically, we can see that energy usage increases substantially over time. This is another important consideration when looking at the future of on-grid solar energy. We are expending more energy, being charged more for it, being given less options to offset these charges, and all of these changes are compounding and getting increasingly worse over time.  When we put all of these facets together, it certainly paints a troubling picture, where the dream of not having to pay for power any longer seems like once again a distant dream.

 The Growing

We’ve looked at the problems we are facing, but what of the solutions? Well, off-grid solar is a great one. When not connected to the grid, excess energy that has been generated will then filter into your batteries. This allows for the storage of your electricity that doesn’t rely on an intermediary who will charge you effectively double what the energy is worth to then access it again. Though the cost of off-grid solar is definitely higher than on-grid as far as initial setup goes, in the not-too-distant future this setup cost may well pay for itself and then some, depending on the severity of future changes that aren’t favourable to the on-grid consumer.

To be entirely honest, as it currently stands, without any rebates on solar batteries, the price of off-grid solar and hybrid on-off-grid systems are still much higher than that of grid connected systems. When we look at a payback time estimate on both an on-grid and off-grid system, even with the recent price increases and reduced tariffs, the margin of difference is a number of years. My hope with this post is primarily to highlight a potential future, bleak though it is, that may make the outlaid cost of off-grid solar more worth while for a standard consumer than a grid connected setup.

Unfortunately it seems that the only way forward  is through for grid-connected solar users at this point, however, with geo-political changes, more emphasis on climate-wise decision making, and mounting demands from consumers, I would not be surprised to see changes to the rebates and incentives offered in the near future.

It's not the easiest job trying to predict the future, and using the last few years as an example is probably (hopefully) not the best indicator of things to come. Regardless of these exceptional times, the points highlighted above still show trends that don’t work in the favour of the on-grid consumer. In my opinion, for those considering a new solar setup or are in need of substantial upgrades to their current system, an off-grid system could save you a huge amount of money in the long run, assuming that we ever see a rebate on solar batteries!