The Balance Between Renewable Energy Costs and Savings

Fossil fuel reserves are dwindling and there is no escaping the fact that we are experiencing an energy crisis which will not abate until we have fully adopted alternative forms of energy. With energy prices soaring, and only set to further increase in the coming years, not to mention the environmental cost, the world is desperately looking towards renewable energies. Putting aside the undeniable environmental benefits of renewables, the question that many ask is whether the savings made from utilising nature’s free resources are dwarfed by the costs of installation. We look at one renewable energy source in particular - solar - and weigh up the costs and savings.

There is no doubting the environmental benefits of renewable energies such as solar, wind, hydro and geothermal. Utilising the energy generated by natural forces produces clean, green electricity that won’t contribute to climate change or pollution. But what about the financial costs?

Often, this depends entirely on a number of factors. For example, the cost-effectiveness of installing an array of photovoltaic solar panels on your roof depends on how much sun you get where you live, the direction in which the panels face, the size of your system and, as ever, your energy consumption. However the average cost of a standard 1kW solar panel system, including installation, in Australia is $10,000. With governmental rebates that cost is brought down to between $6,000 and $7,000. That cost is rapidly decreasing and it is even possible to find a system available for just $3,000.

Clearly the upfront costs of buying and installing solar panels are still fairly high and so understandably the majority of potential renewable energy customers want to know what the payback time is and the sort of the savings they could make. Again, payback times depend on a number of factors but could only be a few years. The reality is that as soon as your solar panels are installed you can be generating free electricity and using that directly in your home.

If you’re lucky enough to live in a particularly sunny area or have a large enough solar system, you may even generate more energy than you need, in which case you can store it in batteries and live independently of the grid, or else sell your excess back to the grid. Either way you will be saving money. Payback times also shorten when government incentives are applied. For example, many areas offer rebates which effectively give you a discount on the cost of set-up.

So, yes, the initial cost of buying and installing solar panels can be steep. However, what with the rising costs of electricity and the decreasing costs of renewable, renewable energies are fast becoming more and more financially attractive.