I’m Denny Honen, the director of Energy Storage Direct. I started in the Renewables industry in 2005, and in that time I’ve seen the good, bad and ugly of the solar industry.
Having worked on Solar PV projects in many parts of the world, one thing I can tell you for sure is that the price of Solar in Australia is as cheap as it gets, mostly assisted by the Federal Government STC scheme. In addition to that, Australian importers demand very cheap prices out of manufacturers.
Fortunately the Clean Energy Council along with several Government bodies do a great job these days at keeping truly crap product out of the market. A few corners are still cut from time to time, and they sometimes slip through in to the Australian market. On the whole though, if a solar PV product is sold in Australia it meets quite a high standard.
So why do some packages look unbelievably cheap, I hear you ask.
A Solar power system is essentially 5 parts
The Solar panels are typically the most valuable part of any package.
The bulk of solar panels sold in Australia are manufactured in China, and I’ve personally been to several of the factories in China and in Europe (when they used to be there).
- They are generally all fairly well fully automated.
- They all use the same machines and robots.
- The raw materials are all fairly well the same.
The main differences in price of the solar panels is;
- Location of manufacture i.e. Singapore or Korean manufactured panels cost more.
- Size of company. A company like LG has been around for many years and will likely be around for the full 25yr warranty in to the future.
- Representative office in Australia.
- Technology leader or follower
One of the main points here, is the representative office. So typically a Chinese manufacturer who doesn’t have a local office will sell in to Australia for less.
The reason the product is cheaper, is that the importer is now really ‘on the hook’ immediately for the warranty of the product under Australian consumer law. (Although the retailer or wholesaler would end up being on the hook for warranty if a local office was to close and the manufacturer retreats back to where they came).
- In the last 10 years alone, solar panels have improved from 180W per panel to 370W per panel.
- We are replacing systems now after 10 years, where the manufacturer, importer and original retailer are all gone. Leaving the customer with junk on their roof.
The average ROI for cheap solar power system is typically 2-3 years, so I’m sure some people buy these systems knowing they won’t be on their roof for 25 years. If they get 10 years, they’ve made money and can upgrade to the 700W panel in 10 years time.
The solar inverter is the workhorse of any Solar Power plant. The solar panels create DC electricity and then your house uses AC electricity, the inverter makes this happen.
In addition to this, the inverter controls the flow of surplus energy to the grid.
With a cheap solar package you typically get a cheap inverter, typically from China. I have personally visited several of the major inverter manufacturers and one of the best factories I have personally seen is actually one of the cheapest inverter brands around.
In some markets that I have worked in, I’ve even found the warranty support of the cheaper brands to be superior to the more ‘premium’ brands.
Where you get some real differentiation with inverters is in their operation.
A standard grid tied inverter.
Ranges from brands like Growatt right through the ‘premium’ brands like SMA or Fronius.
These inverters will do the basic job that they are built for and will likely last around 12 years.
Grid tied inverter with Optimisers or Micro Inverters.
These inverters will cost more up front, but will also generate more solar electricity every day for the life of the system.
If you are thinking of upgrading to an electric vehicle in the future, adding a battery or upgrading to smart technologies to control your consumption. Then it might be worth looking at brands like Solar Edge, which cost more but are more future proof.
Balance of System (Wires, Isolators and Mounting Structure).
Cheap systems typically use cheap components. These components are all approved under Australian standards, although may not carry recognised brands in the Electrical industry.
More expensive components might;
- Have recognised brand names
- Be easier to install
- Have a longer warranty.
The installation generally takes 2 electricians one full day for a household sized system. Generally the cheaper packages are offered by high volume companies. If a company installs a lot of systems, there are generally some economies of scale able to be achieved.
Retailer Margin and Ongoing Support.
The retailer who is selling the solar package is generally the first point of call if something does go wrong.
The risk to the retailer is if they sell/ install a product with no local office or the local office closes, then the retailer is liable for the full cost of rectifying any problems.
Even the cheapest packages cost a minimum of $5000 when the Government STC program is not accounted for.
The total gross margin on some of the cheapest packages might be around 10%.
So the retailer is really relying on selling a lot of systems with nothing going wrong.