Recently we were asked by a potential investor how becoming a shareholder in the Grong Grong Solar Farm compares with getting a $10,000 solar system at home in Hobart.
It’s an excellent question, and one that we feel will be on the minds of many potential investors. So, here’s the answer:
The Grong Grong Solar Farm uses crowd sourced funding, also known as crowd equity, to onboard shareholders and raise capital for construction. It’s targeting 8% returns for shareholders over 25 years. Investment for retail investors is open from $250 to $10,000.
Grong Grong Solar Farm shareholders will earn revenue from selling electricity into the NSW wholesale market, along with LGCs, which are Renewable Energy Certificates.
In comparison, rooftop solar can reduce electricity bills through reducing demand from the grid and earning revenue from Feed-in Tariffs (FiT). If you use rooftop solar to reduce your imports from the grid, you save electricity tariffs on wholesale energy, retail costs, network charges, environmental and other charges.
However, installing solar at home takes effort – to do the research, get quotes, choose the right product for you and then ensure that the system operates well over time. For some people it might not even be viable, if they know they’ll move home or require a new roof in the near future, are renting or living under roof shading.
The Grong Grong Solar Farm investment will also take some research, but will be delivered by energy professionals. Shares stay with you if you move house, and there is no need for an unshaded roof.
Financial Calculations
For a house in Hobart, one could expect an 8kW system for $10,000, assuming a decent quality system and installation. An average North-facing Hobart system will make 3.5 kWh per kW per day, so after deducting 10% for some panels not facing perfectly North, an 8kW system will generate approximately 9,200 kWh per annum.
Flat rates for electricity in Tasmania are around 22 cents per kWh, and FiTs are around 7 c/kWh. Typically, households use 20-50% of their solar directly, reducing electricity imports, with the rest of the solar exported. As Hobart has more heating demand, which happens outside solar hours, we assume 30% of the solar is used directly, with 70% exported to the grid.
This sees annual bill savings of $1,060.
If you allow $3,000 in the twelfth year to change the inverter or make other necessary updates, and estimate this annual saving for 25 years, the IRR is 8.1%. Around the same as the estimated returns for the Grong Grong Solar Farm.
| Option | Rooftop Solar | Grong Grong Crowd Equity |
| Amount for this example | $10,000 | $10,000 |
| Estimated Returns | 8% | 8% |
| Considerations | Need unshaded roof, more effort | Less control, managed by others |
| Environmental Benefits | Depends on state, Tasmania is already 100% renewable | More generation per kW of solar. In NSW so reduces high emissions coal power generation |
Consideration #1
This example compares rooftop solar in Tasmania, where there is less sun across the year and electricity is generally cheaper, with a solar farm in NSW with more sunshine and higher electricity costs. Rooftop solar may be more viable in another state, but it is an interesting comparison none the less.
Consideration #2
The Grong Grong Solar Farm will use single axis tracking, facing the solar panels East in the morning and West in the afternoon to follow the sun and generate more electricity over the year. In this way solar farms can be more efficient than rooftop solar.
Consideration #3
Environmentally, Tasmania is already 100% renewable power, so there is less need to add solar to the Tasmanian grid to reduce emissions. In comparison, NSW is around 70% supplied by coal power and new solar (and storage) will reduce more emissions.
Conclusion
Installing rooftop solar and investing in the Grong Grong Solar Farm both add new solar generation to our electricity system. But – to state the obvious – one is fixed to your roof and reduces your bills, while the other is a shareholding with returns.
It doesn’t have to be either or. The Grong Grong Solar Farm is open to investments as low as $250, so you can invest in rooftop solar and the Grong Grong Solar Farm.
We hope that helped! Keep the questions coming…