Installing solar during a recession
During an economic recession, many householders will need to carefully consider the use of their money.
A solar system can generally pay for itself anywhere between 3 and 9 years. This duration depends on a bunch of factors – we can help householders estimate this via our Free solar and battery advice calculator (data updated as of May 2019) or a personalised advice consultation (price discounted for Renew members). One factor is the quality of components, especially panels and inverter.
Investing in solar has many benefits over financial products. During a recession you’d expect a wild ride on markets for stocks and bonds, but the solar panels won’t notice such events. Another advantage of solar is that bill savings aren’t taxable, assuming we’re talking about a normal household. On the other hand, financial investments can be readily sold to raise quick cash, which is not the case with solar systems. Solar components aren’t worth much when sold second-hand.
For a household planning to stay in their home for at least 5 years but expecting budgets to become very tight, then a cut-price solar installation might be a reasonable option. If it pays itself back in 3 or 4 years, the financial risk is small and the bill savings will quickly add up to large benefits in the years after payback is achieved.
If the cheap inverter dies early (say in year 7 instead of the general lifespan of 10-15 years), just replace it with a new one. One year’s bill saving on a 6.6 kW system may exceed the inverter price. Panels are more of a concern – their expected lifespan is around 25 years but if they start failing in year 7 due to micro-cracks or delamination then you’ve got a headache. Warranties might pay for product replacement, but in a recession you may find they’re unenforceable as the installer and importer have both gone bust. Make sure you know your brand and model of panels and inverter, and insist on receiving a photo of each panel’s specifications (located on the panels’ rear). Make sure you’re getting a panel that’s got a decent reputation.
A concern with cut-price installs is poor workmanship and low-quality minor components such as isolator switches. The solar system’s payback could be delayed for years if the installers crack a roof tile leading to a damaging leak during the next thunderstorm. A failing isolator switch could cause the system to stop working or even spark a fire. Keep an eye on the tradies as they’re doing the job, and make sure you’ve got some way to check that the solar system is working as it should – most solar inverters provide a web page for tracking their performance.
For many households, Renew favours high-quality solar installations with a high confidence of a long, trouble-free lifespan. These also have the highest environmental benefit because they minimise the embodied energy of replacement components. However, a cheap solar system as described above still has a great environmental benefit because a solar system only takes a couple of years to save enough energy to cover its own manufacture and transport.
If you expect money to become tight, don’t invest in a solar battery at the moment as their economics are marginal at best. If you need something to help you get through grid blackouts, a cheaper option would be camping-type gear, a UPS for a laptop and internet and perhaps a small generator.
Watch out for finance deals – money is never “free” so you’ll always end up paying via either interest or fees. Paying from savings is the cheapest option. The cheapest form of finance is generally an offset account on a mortgage. Using such an account, solar bill savings generally outweigh the interest.