The time is right now to obtain a 100% return by investing in Renewable Energy for your Property.
At the present time there are at least 5 incentives in place including financial benefits provided by Australian Governments and compulsory reporting to encourage (or stipulate) you to install Solar Panels on your home and your investment properties.
The first incentive provided by the Federal Government is called the Renewable Energy Certificate program. This is where by simply installing Solar Panels to your roof; you will receive over $5,000 in cash effectively reducing the cost of the Solar Panel System by up to 50%. Hence you can improve the value of your home by installing a $12,000 plus system which costs you only $6,000 which is a 100% return instantaneously.
The second incentive provided by the relative State Governments is called a Feed-in-Tariff (FiT). This is where the State Government via your selected Electricity Retailer will pay you for the energy you generate through your installed Solar Panel System. The type of FiT and the amount you get paid will vary from state to state. The benefit could be as high as 60c per unit of energy generated which is on average 3 times more than what it costs to take energy from the grid, a 200% profit.
The third incentive is depreciation, like other improvements to your investment properties Solar Panels are able to be depreciated. For Solar Panels this can be over 5 years and can be worth over $3,200.
In effect for your investment property you could reduce the after tax cost of the Solar Panel system to 30% of its total value.
However there are currently laws being drafted by federal and state governments to have energy ratings audits compulsory for all homes that are sold or leased from May 2011. Compulsory reporting is already required for commercial premises over 2,000sqm plus the
The other issue to consider is with the inevitable energy reporting structure which requires compulsory action why would other incentives such as the FiT and RECs be required?
However the biggest incentive to take action is exponentially rising energy prices. State Governments around the country are allowing more and more increases to our standard electricity prices. According to a recent Independent and Pricing and Regulation Tribunal report out of NSW their energy costs will rise 64% over the next 3 years. The WA government will raise the energy prices by 7.5% in April and then a further 10% in July, that is two price rises in 4 months. Overall a recent Federal Treasury report stated that energy prices around the country will rise by 23% per year between now and 2015 and then a predicted 30% every after that. The incentive for solar panels in relation to rising energy prices is that by generating your own power you are actually minimizing the impact if not removing it totally potentially saving you $40,000 over the life of the solar panel system.
In summary, at present there are financial incentives on offer such as the RECs and the FiT however with the impending compulsory action due in next year we do not know how long they will remain at the current level with the great financial benefits.
You may hear different views on the above which could be just as right but they could be just as wrong for your situation for example solar panel prices can vary as much as $6,000 from the cheapest to the most expensive, there is a balance to strike between short term cost savings and long term financial benefit.
I have covered a wide range of issues in relation to Solar PV above, let me know which areas you wish me to expand upon and I will cover those in future posts.
