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A Comparison of Australian and U.S. Residential Solar Markets

Nov 03, 2020

Solar is cheaper in Australia than in the U.S., but is it as safe?

Thanks in part to dropping solar panel and installation costs, Australia and the U.S. have enjoyed rapidly growing residential solar markets over the last decade. The two countries may look similar in their approaches, but there is also a key difference that you should know. Australia makes it easier for homeowners to install rooftop solar… but at what cost?

The table below highlights the key similarities and differences across Australia and the United States. Read on to see how they compare and contrast in more detail.

Table: Key Similarities and Differences Across Australia and U.S. Solar Markets

Category Australia United States
Safety Lagging safety regulations still allow the use of high-voltage DC systems, which are responsible for two solar-related fires each week The National Electric Code (NEC) maintains strict guidance on weatherproofing, wiring, rapid shutdown, and more
Cost High incentives cover roughly half to two-thirds of project costs Moderate incentives cover roughly one-third to half of project costs
Federal Incentives Small-Scale Renewable Energy Scheme (SRES) credits homeowners for each 1,000 kWh of production The Federal Investment Tax Credit (ITC) provides a 26% credit for solar system owners, significantly reducing upfront project costs
State Incentives Some states offer loan programs, rebates, and feed-in tariffs to further incentivize solar, notably in Victoria and New South Wales Net energy metering programs allow households to “store” solar in the grid and receive a one-to-one credit for energy used later. Some states, like New York, have cash incentives and Renewable Energy Credits (RECs) to reduce system costs

Solar Incentives and Rebates 2020

A Look at Australia’s Solar Policies

Australia’s home solar market boomed over the past few years. Generous incentives and rebates on both the federal and state levels have slashed install costs – plus, solar homeowners can get paid extra for the solar they put back into the grid.

Since 2011, the Small-Scale Renewable Energy Scheme (SRES) has been reimbursing homeowners for about one-third of their upfront costs. This federal initiative credits homeowners with one Small-scale Technology Certificate (STC) for every 1,000 kilowatt-hours (kWh) that the system produces. If your system is 10 kilowatts (kW), that’s roughly $5,000 back in your wallet.

Rebates and Feed-in Tariffs (FITs) can sweeten the deal even more for solar owners. FITs are payments for any solar-generated electricity that your system exports to the grid, paid by kWh. This means that if your home solar system generates 30 kWh in a single day, but you only use 10 kWh, you can be paid for the 20 kWh that you didn’t use. FIT rates vary by state and provider – check yours out here .

Victoria electricity providers offer some of the consistently highest FIT rates. Victoria’s Solar Homes Program also boasts a generous rebate program of up to $1,850 towards system costs and includes an interest-free loan of up to the same amount. If your system’s total cost is less than $3,700, you don’t have to pay anything upfront!

While New South Wales also offers FITs for solar owners, it doesn’t have a dedicated solar rebate program. However, the state is currently running a trial program to subsidise 2 kW solar systems for up to 3,000 low-income households. In addition, its Empowering Homes program provides an interest-free loan of up to $14,000 for homeowners installing combined solar and energy storage systems.

A Look at the United States’ Solar Policies

While the U.S. lacks a federal solar credit program like Australia’s SRES, the federal Investment Tax Credit (ITC) was created in 2005 to provide a 30% tax credit for owners of residential and commercial solar systems. It has since stepped down to 26%, will continue to 22% for systems installed in 2021, and will be fully phased out for new residential systems in 2022. The ITC has been pivotal to the growth of the U.S. residential and commercial solar market.

Like Australia, additional U.S. solar support varies by state. In some states, the main driver of solar is a program called Net Energy Metering (NEM). This policy pays solar owners on a kWh basis for the solar that they export to the grid. In states like California, customers often save tens of thousands of dollars over the lifetime of their systems.

Other states like New York have direct cash incentives to help with upfront project costs, including additional incentives for low-to-moderate income households.

In addition to cash incentives, many U.S. states have established Renewable Portfolio Standards (RPS) that require electric utilities to deliver a specific percentage of electricity from renewable sources. To meet these standards, there are Renewable Energy Credit (REC) markets, whereby a REC can be sold for every 1,000 kWh of electricity generated – similar to the Australian SRES model. So far, 30 states and Washington D.C. have each established an RPS over the last three decades and the value of a REC varies a lot by state.

Overall, U.S. incentives may be similar to Australia’s, but they are far less lucrative. In fact, residential solar systems are roughly 50% cheaper to install in Australia than in the U.S.

Solar Regulations and Safety

What safety measures must you consider when working with solar panels?

A Look at Safety in the United States

While the U.S. and Australia have some common ground across incentives and rebates (even if incentives are much higher in Australia), the two countries manage solar system safety very differently.

In the U.S., requirements for solar safety have been added into state and municipal electrical, building, and fire codes, as well as permitting and inspection processes. All electrical contractors must follow National Electric Code (NEC) guidelines, which are updated every three years and adopted by most states. Within these guidelines are some strict requirements on weatherproofing enclosures, rapid shutdown in the case of a grid outage, wiring, and much more.

Rapid shutdown, a feature that all Enphase microinverters have standard, is an important mechanism for utility worker and homeowner safety because it automatically lowers voltage and de-energises modules in the event of an outage or fire. This significantly reduces the risk of electrical shock to firefighters and first responders when addressing solar-related fire events.

A Look at Safety in Australia

Australia has struggled with a rash of solar-related fires over the last decade. According to the Fire Investigation and Research Unit superintendent of Fire and Rescue NSW, solar-related fires in the state have increased five-fold over the last five years. To address this issue, the Australian Standard AS/NZS 5033 mandated the use of DC isolators for solar systems with string inverters in 2012.

A DC isolator is a switch that is intended as a safety mechanism to disable dangerous high voltage direct current (DC) between the solar array and inverter. But DC isolators can easily degrade and malfunction, so they have now become a common cause for solar system fires. In New South Wales alone, there is a 20% increase in fires related to solar panels since last year, with more than 50% caused by DC isolators. Since they are connected to high-voltage systems, DC isolators also pose an electrocution risk for maintenance or emergency personnel.

While Australia’s regulations may lag behind its global counterparts, state and federal authorities are actively working to address this issue. Australia is currently the only country that requires DC isolators, but this is currently under reconsideration due to safety concerns. In addition, five common brands of DC isolators have been recalled.

Despite the lack of better safety standards, homeowners still have a choice to ensure that solar is safe and reliable. Enphase’s microinverters all come standard with rapid shutdown and they avoid high voltage DC by running low voltage alternating current (AC), the same current used by our home appliances, from the roof down to the circuit panel box.

You Can’t Put a Price on Safety for Your Home and Family

Both Australia and the United States have thriving solar markets, especially in certain states. While Australia may exceed the U.S. in incentives, it falls behind in safety regulations.

We know that safety in the home should be paramount. Just ask yourself: if airbags were not required on new cars, would you still want one? Home solar safety should be treated the same way. The good news is that you can still choose an option that allows you to sleep peacefully at night. Enphase microinverters meet or exceed even the strictest solar safety regulations globally.

Looking to get solar for your home? Contact Enphase for a detailed consultation and to be connected to Australia’s most trusted solar installers.

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