GI Energy was a major supplier of solar battery systems during a 2018/2019 Queensland Government Solar battery program. We want to share with you some great insight from this program that may help you understand the reasons people purchased a battery with their solar system, and the benefits they are looking to enjoy.
What was the purpose of the QLD battery scheme?
The first question many people had, and one that people are still asking is why there were only 2,500 rebate packages available. The reason was that the Queensland Government was using this program to establish the first standards for home battery installation in Australia. As a solar business who puts our customer safety first, we have applauded the Queensland Governments approach to this process. It is very encouraging to see any government body learn from such disasters as the ‘pink batt’ home insulation scheme.
Here is a brief outline of our observations regarding this Queensland Government solar battery scheme.
- Around 2 years of industry consultation to develop a safe plan to develop standards.
- A 7 month tender and industry education process to establish a panel of suppliers
- An independant audit process for every installation to identify and mitigate safety issues and establish a strong basis for future installation standards
- A plan to monitor benefits of battery installation and savings expectations for future consumer advice
- Strong solar supplier accountability processes
We believe this program has been a great success. Initially there were only 1,500 packages promoted, however the slow uptake on other solar programs on offer may have allowed for the expansion to 2,500 solar battery packages. It also ensures a sizeable data bed to establish safety standards.
Warnings against buying solar batteries
Throughout the QLD battery program, there were a number of solar businesses and media commentators that warned against this program. Why? Their objection was simply return on investment. They argued that the savings derived from the battery were not sufficient to repay the cost of the battery before the warranty ran out. On this stand-alone point, we agree. Despite batteries being at their lowest cost in 2019, they still didn’t make a good stand-alone investment. For example, a 10kW battery may have cost $10,000 and have a life of 10 years. If we assume a strong battery utilisation of 9kWh per day and an electricity cost of 30c per kWh, the daily savings would be $2.70, which is $985 per year or $9,850 over 10 years (without considering inflation of energy prices). In addition, the argument that without a battery, a solar system could benefit from a feed-in of 10c+ per kWh. That means without a battery, the same energy would save $3,280 anyway.
So yes, based on financial benefit alone – a battery may not make sense. But wait… is that the reason consumers buy everything? No!
To advise anyone to avoid buying a solar battery based on financial return is to assume that everyone has the same limited needs. Based on our feedback from solar battery buyers, this is a poor assumption.
If you were shopping for a 4WD, how would you react to a car salesman that ‘warned’ you against doing that because it was not a financially responsible choice? If you were shopping for a gaming computer, how would respond to a sales person advising that a basic model was far more cost effective? These may be poor examples, but the bottom line is that not everyone has the same values around their purchasing decisions.
What were the reasons people were buying solar batteries?
Firstly, there were two options for buyers.
- A battery to add to an existing solar system
- A battery and solar system together
When we were dealing with buyers who already had a solar system, we took them through the financial breakdown. For the majority of people, the financial return did not make sense and they didn’t proceed. However – much to our surprise there were still people going ahead.
When we were dealing with people buying a solar system and a battery, the return on investment was presented across both the solar system and the battery. For example, if a battery had a 10-year return on investment, but the solar system had a 3-year return on investment, the combined package might have a 6-7yr return on investment. As a package, it became a viable purchase when considered as a combined acquisition.
So – here is a breakdown of the reasons people were giving us for their purchase choice
1. Independence
One client had made his solar system a personal project with a goal to be as energy independent as possible. Not only did he have an existing solar system, he had an existing solar battery. He wanted the second battery to expand his independence.
2. Retirement preparation
Another client was also approaching retirement and although he understood the 10-year battery warranty life, he wanted to gain control over his situation while he had the available money to proceed. He reasoned that in the future, replacing the batteries would be more affordable.
3. Affordability
The Queensland Government program included a $3,000 battery rebate and a 10-year interest free loan. Most people opted for a quality $14,500 solar and battery package and paid a $1,500 deposit. Others requested a $13,000 package so that there was no upfront cost.
The repayments on the $10,000 government load were around $80 per month. With a new $13,000+ solar/battery system, their ability to save more than $80 a month from solar energy meant that there was no negative change to the family monthly budget.
For many buyers, the logic was simple. I can go on paying $500 per quarter, which is $2,000 a year or $24,000+ in 10 years, or I can purchase a system that doesn’t cost much upfront and does not increase my monthly expenses – then after a return on investment period of 7 years, or the repayment period of 10 years, I have a solar system that provides ongoing monthly savings.
Even without a government loan, personal loan repayments can make solar and battery purchases viable. As long as you can reasonably match your solar savings to your loan repayments a solar and battery purchase can have a minimal effect on your monthly budget.
4. Timing
There were many timing factors in place here.
Some purchased a system in order to make a point of difference on an upcoming home sale.
Some families were anticipating rising energy consumption as the family grew.
Some people felt financially strong and happy to take on a loan at this time.
Some people had been researching batteries for their home and were thrilled to be given the head start.
5. Hate of energy companies
We had more than a few customers who viewed their energy providers as ‘leaches’. These clients felt that energy cost increases were based in large company profit drives. Their feelings were a battery purchase was tipping the control of their costs in their direction.
6. Protection from energy price increases
This reason often worked in with other reasons. A battery installation meant better control of energy costs, but also meant the painful effect of an energy price increase was somewhat padded by a solar and battery package. This view also considered the compiled impact over the next 10 years and beyond.
7. Early adopters
Some buyers were just happy to put a great new gadget on their solar system.
8. Free money!
Sometimes, when you are offered free money – and it makes sense, it’s enough to say yes. A $3,000 rebate and a $10,000 interest free loan can be a very strong point of attraction on its own.
9. Personal values
Without a doubt, personal values around the environment, sustainability and renewable energy are a central or supporting reason for people who buy solar. It turns out that these values do extend to solar batteries. Whilst many of our clients understood that current renewable energy trends are not a final answer, they are keen to support an industry that is moving towards a sustainable future. For them, a solar/battery purchase represented cashflow into renewable businesses who will invest in research and development for a better renewable future. Conversely, by not installing solar they feel they are financially supporting energy companies that continue to contribute to global pollution.
Conclusion
Not everything is about money. Even when it is, return on investment is not the only financial aspect to consider. Most purchase decisions in your life are made by weighing up a number of factors. As it turns out, considering a solar + battery system is no different. There are no doubt many more reasons people might choose to install a solar + battery system, but these were the common responses we observed.
What are reasons you might be considering a solar and battery installation? No doubt you will have questions around financial costs, affordability and safety of installation. During the Queensland Government battery scheme, GI Energy installed over 400 solar and battery packages, we had installed more packages in this program than any other solar provider. A random selection of these installations were audited by Government appointed auditors. Yes – issues were found (and resolved). They were to be expected because the standards were being developed and new issues were being identified all the time. We gained a lot of knowledge and experience from this process. As a solar and battery purchaser, this is knowledge and experience that you will be able to rely upon for a safe and responsible installation. Would you want anything less?
In addition, we have spent hundreds of hours developing the most accurate savings estimate tool for your solar system in our quoting system. We have refined these estimates against the results of over 350 monitored solar systems over the past three years. This means that we are not making savings estimates. We have ensured that all estimates match actual results. Why? We believe that you can’t make an informed decision without reliable savings estimates. We know our clients love to receive achievable savings estimates and we are sure you will too.
If you’d like to talk to our staff about a solar and battery package please fill in the form below and we will be in contact soon. If not, do you know anyone who would appreciate you sending them this article? #bonusbrowniepoints
