Home Insurance News

The benefits of solar power

Using the Sun to power your home can help reduce your electricity bills and your carbon footprint. Giving you access to a renewable and clean source of energy, we take a look at how a solar power system can benefit your home.

It doesn't matter if it's summer or winter, throughout the year our country bakes under the relentless sun. Australia is not called the Sunburnt Country for nothing: we experience more solar radiation per square kilometre on average than anywhere else in the worldⁱ. The Sun gives us 10,000 times the energy annually than Australian's consume in a yearⁱⁱ. Solar panels allow us to make the most of this incredibly large and renewable source of energy.

Harnessing solar energy

Solar electricity panels capture the Sun's energy and convert it into electricity that we can use in the home to power our appliancesⁱ. The panels, comprised of photovoltaic (PV) cells, are usually mounted onto a home's roof and oriented in a way that maximises their exposure to the Sun's lightⁱⁱⁱ. When the sunlight hits them, they generate electricity. An inverter is used to convert the energy into AC electricity that you can use in your home^iv.

Energy from the Sun can also be used to warm your water and to heat your homeⁱ. Heating water can account for up to one third of a typical home electricity bill^v and so even just heating your household's water with a solar hot water system can make a difference to the amount of energy that you draw from the grid.

And it seems that many Australian homeowners agree: in April 2013, more than a million households across the country had solar panels while nearly 800,000 are using solar to warm their homes and water (solar hot water systems and air source heat pump systems)^vi.

The financial benefits of solar panels

Solar power systems have financial benefits that materialise over time^vii. There are initial start-up and set-up costs of a home solar power system. But it's worth looking at the upfront expenditure as an investment, as there are many ongoing benefits for owners that make up for the initial cost.

The first is obvious: as you create your own energy, you use less from the grid and you save on your power bills^vii. The second is that when your panels generate more electricity than your household requires, the excess electricity can be sold back to the grid (depending on schemes in different States or Territories)^vi.

An argument could be made for solar panels as a way of protecting your household against future price increases of electricity produced by more traditional energy sources (coal, oil and gas). As a provider of your own electricity from a renewable source, you can reduce your household's dependence on fossil fuels and energy providers.

In the long term, solar panels can be a real estate selling point and potentially add market value to your home.

Additional benefits

Installing a solar power system at home can reduce your carbon footprint. Unlike traditional sources of electricity from the grid, solar energy is green, clean and renewable. In use solar panels release no greenhouse gases and they don't pollute the air^vii. And even the amount of electricity used in the manufacturing process is minimal compared to the electricity saved by using them^vii.

What you need to know

As a considerable investment, it's worth evaluating a solar power system for your home before have it installed. Doing your research and seeking professional advice can help you to make an informed decision^viii. Here are a couple of other things to consider before making the change:

• The efficiency of your solar power system will depend on many factors including the type of panels you have installed, the size of your system, where your home is locatedⁱⁱⁱ
• The efficiency of your solar system and how much electricity your household uses will influence the extent to which you can rely on your solar-generated power to replace grid power
• Be realistic in your expectations. Solar power can work in tandem with grid electricity, so you don't have to worry about being thrust into the Middle Ages at night or on a rainy day. You'll still have electricity that you can access from the grid when the sun-generated electricity isn't sufficient. Similarly, it is unrealistic to expect to only power your home by solar^ix
• For a solar power system to be worthwhile, your home has to have a roof that's not shaded and which is oriented to maximise the sun (preferably north-facing)^x
• Government policies will affect how your solar power system is subsidised and how you receive rebates for the electricity you produce. It's best to check out your respective State/Territory policies to see what you would be eligible for and how you can benefit further from your solar power system^viii
• Ensure that any purchase meets government standards and that any consultation or installation is conducted by an accredited installer^viii

Solar power is one way to gain financially and to have a greener home with a reduced carbon footprint. With building insurance from Allianz, you can insure the fixtures in place that make your home green - like a solar power system, solar hot water system or a rainwater tank, for example. And, if your building is destroyed and Allianz agrees to rebuild your home, Allianz can offer up to $5,000 on top of the insured sum to help you install a combination of selected green technology systems, including solar PV panels~. Contact Allianz for a quote to insure your home and contents, including fixtures that reduce your impact on the environment.

~ Applicable when you have building cover and after the deduction of any rebate you are eligible for under any government or council rebate scheme.

ⁱ Australian Renewable Energy Agency (Australian Government), Solar Energy, http://www.arena.gov.au/renewable/solar.html

ⁱⁱ Australian Government, 2010, Australian Energy Resource Assessment, p.261, http://adl.brs.gov.au/data/warehouse/pe_aera_d9aae_002/aeraCh_10.pdf

ⁱⁱⁱ Your Home (Australian Government), 2010, Technical Manual: Photovoltaic systems, http://www.yourhome.gov.au/technical/fs67.html

^iv Your Home (Australian Government), 2010, Technical Manual: Batteries and Inverters: Inverter Installation, http://www.yourhome.gov.au/technical/fs69.html#inverter

^v Save Power (NSW Government), Solar hot water: it’s an energy efficient choice, naturally, http://www.savepower.nsw.gov.au/households/power-saving-tips/hot-water/switch-to-solar-hot-water.aspx

^vi Clean Energy Regulator (Australian Government), 2013, Latest Updates: One million solar panel systems installed under the Renewable Energy Target, http://ret.cleanenergyregulator.gov.au/Latest-Updates/2013/April/one-million-solar-panel-systems-installed

^vii Essential Services Commission (Victorian State Government), Facts About Solar Power: Environmental Considerations, http://yourchoice.vic.gov.au/solar-power/solar-power-information/facts-about-solar-power#environmental-considerations

^viii Clean Energy Regulator (Australian Government), 2013, Choosing your solar panels, http://ret.cleanenergyregulator.gov.au/Solar-Panels/Choosing-your-Solar-Panels/choosing-solar-panels

^ix Essential Services Commission (Victorian State Government), Facts About Solar Power: Generating Power, http://yourchoice.vic.gov.au/solar-power/solar-power-information/solar-power-generating-power

^x Your Home (Australian Government), 2010, Technical Manual: Photovoltaic systems: Siting, http://www.yourhome.gov.au/technical/fs67.html#siting