The cost of energy has recently increased for Australians. We are all aware that the National Electricity Market’s rates frequently start with gas. Sadly, gas prices are steadily rising due to issues with exports rather than scarcity. The impact of the war between Russia and Ukraine led to a global prohibition on the importation of fossil fuels. Due to this, over 80% of Australia’s gas is used for exports.
Gas is used in homes for energy, cooking, and heating. One factor affecting most Australians’ ability to spend money is the rising power costs. The conversion of solar energy is a workable solution for this situation.
What is solar energy? The sun emits light which is known as electromagnetic radiation. Solar technologies capture the radiation and convert it to energy. When the sun hits the solar panel, it is absorbed by the photovoltaic cells in the panel. It creates electrical charges that move in response to an internal electric field in the cell which makes the electricity flow.
There are two types of technology for solar energy. These are Photovoltaics or PV and Concentrating Solar Power or CSP. PV is for residential use while CSP is used in large power plants. Solar panels are built for all kinds of weather, however, some rooftops may not be suitable if there is tree cover. The age, size, shape, and slope are also important factors to consider for your roof.
If you are considering switching to solar energy for your investment property, here are some benefits:
✅Avoids climate change
✅Reduces the use of fossil fuels
✅Contributes sustainable development
✅Can reduce electricity cost by 60% (depending on usage)
✅It is versatile that can adapt to a different climate
✅It can increase the property value
✅It makes the property appealing to renters
The landlord or the owner of the property is responsible for solar system installation and maintenance costs. If you wish to divide the responsibilities with a tenant, include this in your lease, contract or rental agreement to avoid disputes. In some cases, if the renter wants to put their own solar panels on your rental property, you get to make the decision as an owner. If you agree to have it installed, ensure to state it in your lease agreement.
In order to stimulate the installation of battery systems with solar, home battery schemes are being developed in Victoria, South Australia, the Northern Territory, and the ACT. The technology stores solar energy for nighttime or cloudy days. By storing the energy, households can save on electricity expenses and network demand is reduced during peak periods.
The pricing for solar depends on your solar system size and location. The solar system can be pricey but it is a good long-term investment. This can actually pay for itself with the savings it generates. Most solar systems do have a warranty of 10 to 15 years and beyond that period will generate pure profit.
Solar feed-in tariffs (FiTs) are the rates credited to homeowners’ bills by the electricity retailers for exporting the leftover power back to the grid. Usually, if it is for a rental property, the homeowner’s bill is named under the tenant since they are the ones consuming the energy. Otherwise, you can make a specific arrangement with your tenant for the credits earned.
Installed solar panels on an investment property may be eligible for a rebate, depending on your location. Investment property owners can also apply for a loan to help with solar installation.
Installing solar panels on your investment property depends on your budget. It can be a smart investment move as it will also benefit you in the future. This is a significant financial commitment and its recommended to consult an expert.
If you consider that solar is a smart move, Schedule an Obligation Free consultation. At Micah Finance Solutions, we can assist you based on your investment property needs.