The Green Power Company has witnessed a change in customer behaviour when installing residential rooftop solar PV systems. Back in 2008, 75% of our customers were only interested in installing 1kW solar power systems. This was due to still relatively high prices for solar PV but also the federal Government tailoring their rebate to encourage people to only install a 1kW system. By 2010, we saw changes to the federal solar rebate that encouraged people to install 1.5kW systems, and most of our installations were between 1.5kW and 3kW. The Solar PV industry was steadily growing due to the generous Government rebates, saturated solar advertising and well publicised Climate Change issues. Investors were realizing that solar PV, backed by government rebates and generous Feed-in-tariffs, was one of the most rewarding investments in the market. Solar was booming and there did not seem to be a cloud in the sky.
2011 saw increased momentum in the solar power industry, customers were starting to install bigger systems that not only reduced their power bills, but completely eliminated their power bills and even more. We started to see retirees withdrawing their entitlements from superannuation and using that money to load up their roof space with solar pv. Customers were receiving returns of over 25% pa, with solar PV systems paying themselves off within 4 years, while also receiving substantial credits from their electricity retailers. The industry was becoming too good, nearly every electrician was undertaking a solar accreditation, solar installation companies were popping up everywhere, importers were flooding the market with solar products, government rebates were still very generous and state backed feed-in-tariffs were becoming unsustainable. Welcome to the second half of 2011.
The second half of 2011 saw the solar industry undergo a correction. It was the perfect storm for the solar power industry. The Australian Government reduced the solar STC rebate from a 5 times multiplier to a 3 times multiplier in conjunction with the STC price falling from $37 per STC to $22 per STC. This resulted in rebates reducing by over $3000 per installation. Also, we witnessed several States of Australia significantly reduce their Feed-in-tariffs. The market was overheating and it was costing Australian taxpayers too much money, not to mention the increased electricity costs associated with Renewable Energy Certificates. Something had to give. And it did. Right on cue, as the solar incentives in Australia were being slashed, the world witnessed the onset of European credit crisis. As Europe was the main driver of the world-wide solar industry, a dramatic reduction of consumer confidence and Government Solar spending resulted in decreased global demand in solar. This happened right when commercial investment in solar pv manufacturing was reaching a climax. We were witnessing a major correction in the solar market. People were genuinely fearful that GFC2 was about to raise its ugly head, and customers were holding onto their hard earned money.
Solar panel prices were slashed in the second half of 2011; manufacturers were dumping stock at unsustainable levels, with almost half of the solar manufacturers in China going broke. We were witnessing solar panel prices dropping by over 50% in the space of a few months. This was not good for solar manufacturers, but it was great news for solar power customers. The reduction in equipment costs seemed to nullify the reduction in federal rebates. Customers quickly realized that solar PV was still a very rewarding investment with ROI of around 25% and payback periods of 5 years. Solar advertising started increasing and by the start of 2012, we saw the emergence of a new, stronger solar industry that rewarded quality manufacturers and quality solar installers. The retreating tide was quickly turning back into a tsunami. The Green Power Company was positioned perfectly, we were carrying a great range of equipment, we had a team of fully qualified installers and we were offering great prices. 2012 started strong, and just got stronger and stronger. Customers were now considering solar as a fully-bonafide long term strategic investment. They were steering away from cheap Chinese imports and more concerned with quality products that could completely power their homes for the next 25+ years. 2012 was the year that saw solar customers loading up their entire sunlit roof-space, after all, solar was one of the only strong investments in the market. Property prices were falling, the stock market was going sideways, and superannuation was looking dicey. Customers were taking their money out of the banks/super and putting it on their roof, where they could guarantee returns of around 20% P/A for the next 25 years. People were also concerned of rising electricity costs as a result of the carbon tax and rising electricity distribution costs. People were also thinking about electricity independence, not having to rely on the power companies. The mindset was changing significantly, solar was now becoming a ‘thing that I have to do’. Nearly all home owners are affected by rising electricity costs, and they are wanting to take the power back and have some control.
We are seeing many more expressions of interest from the commercial sector. Most business use electricity in peak periods right when solar power is at its most effective. Peak electricity costs are around 30cents per kWh. Why pay the power companies when you can install a large commercial solar PV system which will pay itself off within 5-6 years. In this current climate, business owners are less likely to expand operations and more likely to operate their business more efficiently. Solar is the perfect low risk value add to their business as a means to run it as efficiently as possible. We foresee the solar commercial market growing steadily over the next 5 years. Hopefully it will co-inside with Government Regulations on residential and commercial energy standards. There is no reason why we can’t move forward into a low-cost renewable energy future, with solar power contributing significantly to peak load. Our economy must transitions into one that is clean and sustainable, taking consideration of the global environment. It is inevitable that renewable energy industry will continue to grow and thrive, and overcome all minor hiccups in it way.
After all, Solar Power is a smarter way of doing things.
Solar power still remains one of the wisest investments you can make. Solar PV adds value to your home, it generates cheap clean renewable electricity, it shades your roof in summer reducing internal temperatures, it localises power production creating power independence, it is a financially rewarding investment and best of all, it is great for the environment and helps create a sustainable future.
Green Power Forever!
The Green Power Company Pty Ltd