Price of Electricity

PV reducing your electricity bills

Power on the rooftop


PV can produce electricity for around 10-20c /KWh. It is expensive if compared to coal fired electricity at 5c/KWh. However Australia has over-capitalised on the transmission lines, (because they could charge for whatever they built), The delivered price at the power socket is  12-48 c/KWh. and the price is scheduled to increase. Rooftop PV is cheaper at the socket.

The industry has countered with net metering. This allows you to pay the difference between power you have bought, and have generated. The catch is the account is closed every half hour. So you get no credit for any excess power you generated half an hour ago.

For example, you have a pool pump using 2KW and your PV is 1 KW. When the pump runs, you supply 1 KW from the PV, then you buy 1Kw from the grid at 44c/KWh. If the pump is off for the next half hour, your 1 KW goes to the grid and you get no credit for it, you are paid 8c/kwH. This is so clase to theft it could almost be taken to court.

Selling excess power to the grid is designed to lose you money. The power companies do not want you to install rooftop PV.

It may be necessary to install a battery to store your cheap electricity for use at night at about 15 c/KWh. This can come from PV, or off-peak.

The price of electricity

Although coal fired or hydro electricity is very cheap, it must be delivered to us, and this pushes up the retail price we pay.  

It is very difficult to find the wholesale cost of electricity. The average cost quoted by IPART for 2012 is 4.6-5 c/kWh.

"Transmission network" is the high voltage lines between cities. At the substations the voltage is decreased and the electricity enters the distribution network.

The retail price varies. My own prices are
Peak - 48 c/KWh
shoulder 19.4 c/KWh,
off peak 12 c/KWh.
Feed In Tarriff 8 c/KWh
The price paid to the generators and their insurers is 4.6-5 c/KWh
If we add in:
10% of  electricity lost in transmission
Carbon price, 
Green schemes
then it becomes 9.6 c/kWh
For information contact:
AEMC Chairman, John Pierce (02) 8296 7800
Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817

Price of Rooftop PV electricity

National Electricity Market, NEM, regulates the grid joining all the Eastern states. WA is on a separate grid. The Bass  link is completed and part of NEM.


Rooftop PV will produce electricity for 10-20 c/KWh. It depends on where you are and what deal is going at the time. The table on the right shows how you can calculate the cost. You need to put in your own figures.

The capital cost depends on the deal you get, and any government subsidy.

The hours of daylight can be found from: BOM, or LiA. However this figure must be corrected for the angle of the panels. If they are not auto tracking to always face the sun, then their output is only 70% of rated.

Easier to use the figures given in a table by the Clean Energy Council. We've used 3.9 KWh/day.

We've made an assumption of 10% return on your money. Even at that price, the cost of PV electricity in our example is 14c/KWh. If you installed a 4KW system, and your bill is 20c/KWh, then you are saving $340/year and getting a 4 + 10 =14% return on your money for say 20 years. Not too bad. When prices increase the return is even better.


Net metering!

If you are using power inside the house as you are generating it, you save this money and get the returns above.

But, the net meter which you install so you can sell your excess to the grid, closes the account every half hour. This is the hidden catch no one talks about. It changes the numbers dramatically.

During the day your rooftop PV will power the fridge etc, but is will be generating excess electricity. This you will export to the grid and be paid at 7-8 c/KWh, You save money on the fridge, but you lose on the export.

At night, you will be buying electricity at 20 c/KWh.

So if you install a system bigger than your daytime use, fridge etc, you will be losing money.

Unless you install a battery to go partly or fully off-grid.


Payback time for rooftop PV  Source: ATA


The only way to avoid this loss is to store the electricity in a battery and use an inverter can convert the 12 V to 240V for the house.

Economically it would make more sense to charge the battery with off peak or time of day metering, at 7- 8 c/KWh.


Reducing electric​ity use

Hate to point out the obvious, but the easiest way to reduce the electricity bill is to cut waste.

Pull the fridge out from the wall to allow air to cool it. Pool pump, can you reduce the hours? Run it during the day when the sun is shining on your PV and you are exporting power for peanuts.

A house is already wired with the lights on separate circuits, so the first step should be to convert all lights to 12V LED for an extra energy saving. If you ran a 12 V power system it could save all those power supplies wasting energy while they sit idle. (But your main 12V transformer will be wating power)

A typical house uses 15 KWh/day.


Time of day metering NSW

Shoulder 7 AM-2 PM 18 c/KWh
Peak 2-8 PM  44.6  
Shoulder 8-10 PM 18  
Off peak 10 PM - 7 AM 10.56  
Weekends 7 AM - 10 PM 18  

Calculating the cost of PV power

Cost of electricity from the grid - average inc GST
Interest + depreciation
Price of off-peak electricity
Feed in Tariff  FIT (
Days in a year -
PV electricity
Cost of PV
Size of
KW capacity
KWh/day/KW capacity -
KWh Sydney
Shade factor - trees on site
Trees on site
KWh/day for
KWh / year generated by
Cost of PV
% of PV Electricity used - rest sold to grid
Cost of all PV electricity
Savings on PV electricity used. cf retail price
Income from sale of excess PV electricity to
Cost of producing PV that was sold to
Profit (after interest and depn.) (allowing 12% return above)
Storage of electricity
Size of
Cost of storage
Cost of storing electricity for 1
Cost of off peak +
Cost of PV +
Electricity used in home in 1 year - 2

Source Clean Energy Council   (This pdf download is an excellent guide to domestic PV.)

Future prices

Regulated NSW retail electricity prices will rise on average by:

$338 per year (19.2%) for EnergyAustralia* residential customers
$182 per year (10.3%) for Integral Energy* residential customers
$381 per year (17.6%) for Country Energy* residential customers
* EnergyAustralia is owned by TRUenergy and Integral Energy and Country Energy are owned by Origin Energy.

(However the data does not say which year. Ed)



Source: Clean technica

Solé Power Tile​

A polycarbonate tile that generates electricity has been developed.

Solar tiles


Feed in Tariff


Qld 44
NSW 6-8
Vic 25
Tas 23
SA 16
NT 20
WA closed

Wholesale electricity varies every 5 minutes

Generators bid how much electricity they are willing to provide, and at what price, for each five minute interval. The Australian Electricity Market Operator (AEMO) then accepts the bids – starting from the lowest priced bid – up to the
point where supply equals demand in that interval. The price paid for all electricity in those five minutes is that of the highest bid accepted.

These are graphs of NSW on a typical day. Both in 5 and 30 minute intervals.

The average wholesale price was $33/MWh or 3.3 cents/KWh.



Feed-in tariff

In SA and NSW the price of power exported to the grid has been set at 7-8c/KWh. Although this means a loss for anyone with a PV system, it is more than double what the power generators get.

The criticism of the price is that it does not acknowledge the efficient use of the existing grid for daytime peak, It avoids the need to build new transmission lines.

Rooftop PV also reduces the need for peaking power stations. These are gas fired power stations kept on standby for just a few hours a year. 

In NSW, 15% of the electricity capacity is used only 4 days a year. $11 billion worth of generating capacity to supply 100 hours  a year. Rooftop PV is probably much cheaper. 

The electricity generators bid their prices every 5 minutes. The units are $/MWh. Divide by 10 to get cents/KWh.


With time-of-day metering, you could buy some cheap electricity between 2 and 7 AM to charge the car in time for work.


Average Daily Prices - April 2012

profit projections – and the debt repayments – built into the Australian generators’ financing models depend almost entirely on the “super dividend” they receive when peak demand surges and the cost of wholesale electricity rises up to 10-fold for just a few hours of the year. A large deployment of solar PV will quite literally throw a spanner in those works.

Graph: Bruce Macfarlane, at energy and carbon market advisory firm Exigency

Rooftop PV is reducing German power prices

by Giles Parkinson, of RenewEconomy

Here is a pair of graphs that demonstrate most vividly the merit order effect and the impact that solar is having on electricity prices in Germany; and why utilities there and elsewhere are desperate to try to rein in the growth of solar PV in Europe. It may also explain why Australian generators are fighting so hard against the extension of feed-in tariffs in this country.

The first graph illustrates what a typical day on the electricity market in Germany looked like in March four years ago; the second illustrates what is happening now, with 25GW of solar PV installed across the country. Essentially, it means that solar PV is not just licking the cream off the profits of the fossil fuel generators — as happens in Australia with a more modest rollout of PV — it is in fact eating their entire cake.



The red line shows the price after PVs. The profit from the daytime peak have been reduced by rooftop PVs.

The red line is the price before PVs.

With rooftop PV, the morning peak is still there, but when the sun shines, the daytime peak and profit is reduced from about 58 to 45. 


Wind in South Australia reduces prices

These graphs show that the more the wind blows, the lower the power prices. This effect is most important in South Australia where wind supplies 24% of the electricity.

This has taken the profit from the brown coal generators in Victoria that are supplying SA.



Estimated impact of a MWh of wind
– SA: -0.091%/MWh (-2.28c/MWh at median  price)  
– VIC: -0.072%/MWh (-1.69c/MWh at median price)
– Reasonably comparative results with other international
research work to date (eg. Woo et al for ERCOT)

Rooftop hot water

Rooftop solar hot water systems save electricity and global warming.


The installer will usually leave with teh words "You have a off peak backup system to heat the water on rainy or cloudy days. Yes you think, that is wise, OK.

If you shower at night, the water in the tank is then cold, so is heated overnight by the off peak electricity. During the day there is no heating needed. So you have bought a solar heater and you are still buying electricity. 

You need to shower in the morning, and turn the switch off in sunny weather. 

It could have been designed better. It is almost as if there are industry forces at work.





How the Merit Order works.

All available sources of electrical generation are ranked by their marginal costs, from cheapest to most expensive, with the lowest having the most merit.
The marginal cost is the cost of producing one additional unit of electricity. Electricity sources with a higher fuel cost have a higher marginal cost. If one unit of fuel costs $X, 2 units will cost $X times 2. This ranking is called the order of merit of each source, or the Merit Order.
Using Merit Order to decide means the source with the lowest marginal cost must be used first when there is a need to add more power to the grid – like during sunny afternoon peak hours.

But 2 hours of sunshine cost no more than 1 of sunshine: therefore it has a lower marginal cost than coal – or any source with any fuel cost whatsoever.

So, under the Merit Order ranking of relative marginal costs, devised before there was this much fuel-free energy available on the grid, solar always has the lowest marginal cost during these peaks because two units of solar is no more expensive than one.
(Wind is similarly fuel free, but solar has more impact on the price than wind, because its afternoon production peak mirrors peak utility loads on the grid, while wind’s peak is often at night.) Solar production peaks during the same time as afternoon peak power needs.
Source: Clean Technica


Smart meters

Smart meters will allow the electricity cost to the customer to vary in line with generating costs. This way when the cost is very high, the meters can turn off unnecessary equipment. Pool pumps, etc.


Choosing a PV rooftop system

Best angle to fix PV panels: website

If your latitude is between 25° and 50°, then the best tilt angle for summer is the latitude, times 0.93, minus 21 degrees.

The best tilt angle for winter is the latitude, times 0.875, plus 19.2 degrees.

Thin film panels

The thin film panels, while less efficient than conventional silicon, were projected to perform better in cloudy weather than silicon.


Uptake of rooftop PV

there is very little pattern between how rich households are in a postcode, and the popularity of solar PV. The very rick however do not seem to care.

Payback ti​me for a PV system

The ATA has done their calculations


State FiT Rate (net / gross) 2.0 kW system
30% export 50% export
QLD 8.0 c/kWh (net) 6 to 7 years 7 to 8 years
NSW 8.0 c/kWh (net) 6 to 7 years 8 to 9 years
VIC 8.0 c/kWh (net) 6 to 8 years 8 to 10 years
WA 8.4 c/kWh (net) 6 years 7 to 8 years
SA 11.2 c/kWh (net) 6 to 7 years 7 to 8 years
ACT 1:1 (gross) 5 years
TAS 1:1 (gross) 6 years
NT 27.8 c/kWh (gross) 4 years