One Important Thing Your Energy Provider Won't Tell You

We talk to people who are keen to get solar and interested in the prospect of spending half as much as they are now on their quarterly energy bill. We also talk to a lot of disgruntled homeowners that vow never to touch solar again. But why?

Well, usually the story goes something like this. They were once very excited by the idea of solar power. It seemed like a logical step in reducing their expenses. They were told that based on their bills and their usage, solar could help them save thousands over the coming years. So, they went ahead and bought the best system they could get their hands on alongside a solar hot water system and whatever else the salesman had to offer.

“Their bill read that they had only saved a measly $70 over the past 3 months”

Soon enough, they received their first quarterly bill since their brand new 6kW solar system was switched on. To their disappointment, instead of eliminating their bills, or even cutting them in half, their bill read that they had only saved a measly $70 over the past 3 months.

Now, a lot of people don’t really look at their quarterly bills in much detail, until they start thinking about getting solar installed and reducing them. So, understandably many people don’t understand what the numbers actually mean, or how much they are spending...or saving. There is some debate whether this might be done on purpose to confuse people into paying increasingly larger bills, but regardless, it confuses people anyway.

So, what’s actually going on?

Well, when you install solar you probably agreed to sign up to a feed in tariff. It may not be as generous as it once was, but it still adds savings. This means that whenever you aren’t home, your solar system is producing power, it will export the excess energy back to the grid at $0.06 - $0.10 a kW, or higher if you bought solar a few years ago. This feed in tariff is discounted off your bill as a solar credit.

But, what if you do use the electricity your solar system generates? Well you certainly don’t see it reflected on your bill because your retail energy provider doesn’t see or measure that usage. Do you see where this is going?

“...When you get your next bill, take a closer look at the numbers.”

Most people assume that because your energy provider has always told you everything you needed to know about your power consumption, they will also know how much electricity your solar system is generating. But, in reality their electricity meters aren’t designed to measure your total savings. So when you get your next bill, take a closer look at the numbers.

Where it mentions your solar contribution, it’s actually referring to how much excess power you have exported back to the grid and the dollar amount your energy provider paid for it. Your solar contribution is listed as a credit on your bill, reducing your total payable amount. So while your bill does reflect the money you’ve saved by selling excess electricity back to the grid, what it doesn’t show you is the amount of solar generated electricity you are using in your home each day. Their meters only measure what you sell to them and what you buy from them. This is leaving out an important piece of information. The bottom line is; you are saving more money than what your bill is telling you.

To make things worse, energy providers use phrasing and terminology leading you to think you’ve only saved a nominal amount of money, when in reality, it’s just not true. Do they do this on purpose to discredit the benefits of solar power? We couldn’t say, however, judging by the amount of people who think they’ve wasted their time and money, this lack of information isn’t helping. This begs the question, “How can you work out how much you’ve actually saved with Solar Power?”

Well, there is a little technique you can use to figure out your actual solar savings. We used a similar method in our Simple Guide to Solar, to find out what system size will cover your bill. First off, you will need to know how big your solar system is in kWs. From there it’s quite simple.

All you have to do is multiply your system size by 4.2, for example if you have a 6kW system you should get 25.2 just as average. This number represents the average kWs your system is producing on a daily basis. Alternatively check your inverter display to read the total kWH generated since it was installed. If you know the date it was installed, simply divide by the number of days since installation. If you don’t know the exact date of installation, just use the calculation above.

Then we simply multiply that figure by 90 (90 days is the average quarterly bill). This gives us the total number of kWs your system will produce on average over a three month billing period. So now, we have the actual number of kWs your system has produced. For a 6kW system, this will equate to roughly 2,300kWs in total.

So to figure out how much you have saved in dollars, subtract the number of kilowatts that were exported, from the total number of kilowatts your system produced. For example if your bill says your solar contribution was 1100kW, then you have used the other 1200kW in your home.
So, now you have the total number of kilowatts you consumed over a 3 month period.

If you’re paying 22c a kilowatt, you will have saved 1200kW x .22 which is roughly an additional $265, plus the $70 you receive for selling excess power, bringing it to a total of $335. Does that start to sound a bit better?

“... but there is a way you can save hundreds of dollars more each quarter.”

The example we just used is actually, in some ways, a worst case scenario. Most people who sell that much power back to the grid are usually hardly ever home during the day, and therefore aren’t taking full advantage of the free energy they produce. Remember, it’s better to save 22c by using the power you produce, than to make 6c from selling it back to the grid. That being said, even if you aren’t home during the day, there is a way you can ensure you save hundreds more each quarter.

You might not know this, but usually your energy provider will arrange to heat your hot water during the middle of the day by offering you “off peak” rates, and if you didn’t have solar then this is as good as it gets. This way, if you have signed up for off peak rates, you save money by heating your hot water when no one is home and the demand on the grid is less.

“... Energy Providers make money by keeping you reliant on the grid.”

However, a lot of people who connect their homes to a solar system, either continue paying their energy provider to heat their water or buy an expensive solar hot water system. In reality, both of these options are unnecessary and cost you more in the long run. Unfortunately, energy companies make money by keeping you reliant on the grid. So a lot of people miss out on the cheaper and easier alternative. What is it? A high quality clock timer for your hot water system.

Instead of spending an extra couple of thousand on a solar thermal heating system, why not just use the system you already have? Basically, the timer is set to direct your solar generated electricity to heat your hot water in the middle of the day for free, instead of selling it back to the grid at only 6c. And free, is undeniably cheaper than any off peak rate.

In fact, just recently we recently spoke with a very unhappy family who had bought their system some years ago from another company. It was the same story we had heard many times before. They were only saving $70 a quarter, despite their impressive 6.24kW system. So the first thing we did was show them how much they were actually saving, not just the bit their bill was reflecting. Then we took a closer look at their bills. We discovered that they were using around 14kW a day to heat their 450L hot water tank. And, to do that they were using energy sourced entirely from the grid at peak rates! Their electricity provider hadn’t even offered them off peak tariff.

We showed them how to save, by installing a timer on their electric hot water system, they could save roughly an additional $800 a year. Simply by intelligently managing the power their solar system was already generating, instead of selling it back to the grid.

A lot of people assume that just by putting any old system on their roof, they will eliminate their bills. The truth is, to get the most out of your solar you need a system and supporting components that are fit for purpose. Unless you have an experienced energy specialist work out where and how you can make the most savings, you risk missing out and leaving money on the table.

When it comes down to it, by going solar you're effectively reducing the revenue of the company that was once solely responsible for your electricity. That means if you're looking for information about solar and the best ways to save, your retail energy provider probably isn’t your best bet. There are many more ways to reduce your electricity bills and increase your savings. Each household is unique. Get personalise advice, so you don’t keep throwing away thousands of dollars in potential solar savings unnecessarily.

Try our technique for analysing your bill and let us know how you go.

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