How to Beat Rising Electricity Bills

How to Beat Rising Electricity Bills

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The whole of Australia suffered extreme heat waves last summer. New South Wales country towns Ivanhoe and Wilcanniasaw a high temperatures of 46 and 47 degrees respectively in early February 2017.

Capital cities were hit pretty hard too, with Adelaide suffering multiple days over 38 degrees.

Extreme temperatures across Australia means a high risk of bushfires, but it also means that you’re running your air conditioner constantly to keep the temperature inside your home bearable.

Energy Australia recorded that some households were using up to 25% more electricity than usual during the early February heatwave.

This meant that home owners and renters alike were hit by high energy bills, and the same could happen again this coming summer.

The effects of global warming, combined with the constantly increasing energy prices mean that if we’re going to avoid astronomical energy bills in the future, it’s time to start taking action now.

Avoid Electricity Bill Shock

By reducing your energy consumption at home, you'll not only save money, you'll also be contributing to the preservation of Australia's natural enviroment and the economic infrastructure of the area where you live.

The first step to combating rising energy prices is to understand what you’re really paying for. Your electricity bill is made up of fixed costs and variable charges:

Breaking down your electricity bill

Fixed energy supply costs or “supply charge”:

Fixed costs are shared by all households on the network. These cover the infrastructure that brings energy to your home, like power lines, gas pipes, and the cost of upgrades to existing infrastructure to ensure supply remains intact at peak times.

Variable energy supply costs or “usage charge”:

Your usage charge reflects how much power you’re using, and whether your main energy consumption is during peak or off-peak periods. Usage costs are affected by the type and number of appliances that you have, changes in the weather, and the number of people living in your house.

Quick Tips for Using Less Power

  • Getting rid of a second fridge could save $172 per year
  • Switching off a game console when you’re not using it saves up to $193 annually
  • Install a water efficient shower head to save $380 a year on energy and water.
  • Use the clothesline instead of the dryer once a year to save $79 a year.

If you do all of these things, that’s an easy $824 back in your pocket.

But what if you’re already really careful with energy use? How can you get the bills down when the weather throws you into a heatwave?

Control the Temperature of Your Home

If you’re building a home, you should definitely take advantage of the opportunity to create a ‘passive energy’ home, and save thousands of dollars on your future energy bills.

Designing your home to stay cool naturally, with good ventilation, insulation and proper shade will totally transform the occupants experience.

If you’re renting or buying an existing property, keep windows and doors closed and shaded on hot days.

If it’s going to be a total scorcher, it’s a good idea to cool your home before the heat hits so the house doesn’t heat up. This works out to be more energy efficient than trying to cool down a home that’s already sticky hot.

Reduce Reliance on Power Networks

Reducing your electricity usage will not only reduce your usage costs right now, it will contribute to keeping the network costs on your bill down as it reduces the overall burden on the power network.

The best way to ensure that you reduce your energy costs and reliance on the power network is to start making a switch to renewable energy.

In the past this has been prohibitively expensive for most households, but in the last few years the cost of installing solar panels has dramatically reduced. Solar panels are now a cost-effective way to reduce your energy bills over time.

No Blackouts with Renewable Energy

As the technology becomes more prevalent in Australia, it’s more affordable to install. In fact, one in 7 Australian homes already have solar panels installed.

Once installed, solar panels will produce 80% output for 25 years, and probably much longer. There’s certainly no shortage of sunlight in Australia, so chances of running out of energy are slim.

If you’re considering installing solar power for your home for the first time, you might start small by installing a solar hot water system.

Solar hot water systems

No one likes a cold shower. One way to avoid this is to install a solar hot water system, so that even in a blackout, you’ll still have hot water. The average usage of hot water in Australia is 80L per person each day, so you can see that’s quite a lot of hot water.

How solar hot water systems work:

  • Solar collectors - flat panels or vacuum tubes - absorb energy from the sun to heat water for your home.
  • This hot water is stored in an insulated tank, ready for you to use when you need it.
  • There’s 2 types of solar water systems. Thermosiphons have the solar collector and storage tank on the roof. Split systems have the solar collector on the roof, and the water tank on the ground.
  • Ideally the solar hot water system will be installed to face north.
  • Most systems have a booster that uses gas, wood or electricity to produce hot water if there’s no sunlight.

Solar hot water systems are suitable for apartments and townhouses, as they don’t require a large roof space for installation. Choose the system size that’s suitable for your usage so you don’t run out of hot water.

Solar electricity for your home

Rooftop or photovoltaic (PV) panels installed on the rooftops of 16% of Australian homes.

The cost of installing solar panels has fallen 75% over the past 5 years, making it even more affordable to install solar energy for your home.

There’s 3 main types of solar panels with varying efficiency.

  1. Standard monocrystalline panels are black. Very similar to these are multi-crystalline panels, which are navy blue, and have a better temperature tolerance.
  2. Interdigitated back contact solar cells (IBC) have higher efficiency as the electrical contacts are at rear of the cell, so don’t block sunlight getting to the cell.
  3. Thin film solar cells are less efficient, but more flexible in possible uses. These are found in solar powered calculators and garden lamps, and the technology is still evolving.

Solar panels are most effective at moderate temperatures, when they get too hot, they are less efficient. If you live in an area that sees fairly frequent high temperatures, look for panels with a lower ‘temperature coefficient’ that will stand the heat.

It might be cost effective for you to install more cheaper panels if you have a lot of roof space.

Roll back of Solar Feed-in tariffs as renewables become affordable

To encourage early adoption of solar power technology, Australia introduced a system where energy suppliers would ‘buy-back’ electricity at a higher rate, up to 2-3 times the rate it was sold at, beginning in 2001.

In 2016 this scheme was dramatically rolled back, so installing a solar system with the aim of paying it off by selling your power back to the grid isn’t going to work any more.

As government rebates for solar electricity feeding back into the grid take a plummet, more and more Australians are considering installing a solar battery to store power generated by their solar system. In 2016 the electricity feed-in tariff fell from 60c/kWh to just under 5 c/kWh.

At the same time as these feed-in tariffs were cut, the price of solar batteries in Australia fell dramatically. Perhaps this is fortuitous.

Storing Renewable Energy

With batteries available from 20 different manufacturers and prices starting from $1, 200 installing a solar power battery could mean you still have electricity during the next blackout.

Installing a solar energy battery to store power generated during daylight hours will mean you have power for the night time and on rainy days without having to rely on the network. Larger batteries range in price from $8, 000 to $10, 000.

There’s more versatility in what’s available in the market now too, with zinc - zinc bromide options now available. These are perhaps more suitable in Australia than the traditional lithium ion batteries, which can catch fire if they reach temperatures over 50 degrees.

Solar batteries become more affordable

A solar battery like the Tesla Powerwall doesn’t take much space to install, and comes with a 10 year warranty. In one case study, a family saved 90% off their electricity bill after installing the battery. It’s projected that by using solar power stored in a battery instead of relying on the grid, a solar power battery will pay for itself within 14-18 years.

If you have solar panels in place, installing a battery costs around $12, 000. You can buy a complete solar system with a standard 7kwH battery for $13, 990 to $16, 500.

Can I get off-the-grid with a solar battery?

One 7kwH battery isn’t going to provide enough electricity for most Australian households, but you can install more than one battery to increase your capacity.

Can I control when power is stored in my solar battery?

There’s a start-up company in Canberra called ‘Reposit Power’ that has designed a “brain” for your battery. This computer system communicates with you via an app.

Monitoring the local weather, it anticipates your energy needs, advising you whether to store power now, use more solar freely in your home, and when it pays to sell your battery stored power back to the retailer.

Cheaper Infrastructure with Local Government Incentives

Depending on where you live, you may be eligible for sustainability incentives which will contribute to make a solar power system even more affordable.

For example, the Adelaide City Council offers rebates for installation of solar PV, solar hot water systems and energy storage systems.

Renewable Energy the future for Australian communities

A Choice survey has identified that 44% of consumers don’t trust energy companies, and that ⅔ of Australians want to become self-sufficient in meeting their energy needs.

This demand will continue to create strong competition in the renewable energy market, causing more efficient products to be offered more cheaply in the next few years.

One small community in east Melbourne are trialling sharing energy produced by solar power between neighbours. This might be the beginning of the possibility of self sufficient neighborhoods and a big change in the way energy is sold in Australia.

South Australia a leader in renewable energy

In 2016/17 South Australia is demonstrating that renewables are a realistic energy source right now, with 57% of the State's energy needs being produced by wind and solar. It's estimated that by 2025 rooftop solar capacity in SA will double to reach over 1500MV.

Pairing this continous electricity sources with battery storage will provide energy security for the State, meaning there's a source of power during peak usage times when the sources of energy can lapse. In the evenings as the sun drops and wind stills, battery stored power could fill the gap and prevent future Statewide blackouts.

In July 2017 South Australia announced it would become home to the world's largest lithium battery, to be installed by Tesla to store energy generated at the Hornsdale Windfarm near Jamestown. The battery will hold 100 megawatts, and will stabilise the energy supply in SA next summer.

Funding solar installation

An increase in the amount of energy sourced from renewables will gradually decrease the costs of our energy supply and eventually result in no more bill shock, especially for households choosing to become independant of the grid.

If you're looking to install solar power or add a battery to your existing solar system, refinancing your home loan or taking out a low rate personal loan are both options with many mainstream and specialist lenders.

Tom Caesar
Tom Caesar

Tom Caesar is the Managing Director of The Positive Group, a group of Australian financial services companies offering a broad range of finance to clients Australia wide. The Positive Group assist clients in the areas of car finance, mortgages, insurance & wealth management. Tom has been in car & asset finance for over 10 years. Tom regularly contributes articles on car finance, insurance, technology and business growth, drawing on his experience of starting his own brokerage in 2009.

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