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Increased prices for Solar and is it still worth investing?

The largest quarterly and annual increase in inflation has been recorded in Australia since the introduction of the Goods and Services Tax (GST) in 2000. New data from the Australian Bureau of Statistics (ABS) showed that the Consumer Price Index (or CPI) rose 2.1 per cent in the March 2022 quarter and 5.1 per cent annually. There has been a significant increase in solar panel prices due to increased shipping costs which has consequently led to the inability of solar companies to sell cheap systems as this would cause them to go bankrupt.

The shock inflation figure largely beat market expectations, which was expecting an increase to match that of the Global Financial Crisis, when the annual CPI hit 5 per cent in September 2008. The CPI is largely considered to be Australia’s standard way of measuring inflation. Today’s 5.1 per cent increase is the largest annual change in CPI since June 2001, when the introduction of the GST rose headline inflation by 6.1 per cent.

According to Ms Marquardt, “Strong demand combined with material and labour supply disruptions throughout the year resulted in the highest annual inflation for new dwellings since the introduction of the GST.”

There has been a significant rise in demand for Solar panel installations over the past few months as an increased number of homeowners are looking for a more environmentally and financially sustainable alternative to traditional sources of electricity. Since Covid, most homeowners have been working from home which has consequently led to an increased reliance on the grid for their power needs. This change in power usage has understandably left most of the population with an outrageously high energy bill each quarter. The pandemic caused solar demand to rise a lot over the past two years.

One of the best ways to combat this increase in electricity bills across Australia would be to invest in solar. Therefore, many homeowners have begun to make the transition to a more affordable and sustainable future. In turn, this has caused a ‘mini boom’ for the solar industry, and a lot of companies are taking advantage of it.

However, the cost of solar panels has increased significantly due to low supply and increased shipping cost due to global inflation. There is a noticeable global increase in prices on shipping costs which has not only affected the solar industry but all other industries as well.

Australia has taken a strong hit due to these increased shipping prices as 90% of all solar panels and inverters are imported by Australia. Known brands like Jinko solar are all from overseas and have taken the hit. A price increase like this hasn’t been observed in years. In fact, solar panel prices have been dropping each year for the past 10 years.

So, what exactly does this mean for the solar industry?

The solar industry has always been an extremely competitive market, however since there has been an increase in demand, the competition has gotten worse. Solar companies are slashing prices on quotes and systems are being offered at cost price. Generally, most solar companies can afford to take the hit on selling a system at a cost price because they will cut the costs elsewhere, for instance, cutting costs in solar installation, safety or equipment and after-sales care.

Such Solar Companies run by sales and marketing tactics that are just cashing in on the solar boom and not considering the bigger picture won’t be able to survive long. One of the types of solar companies that will be hit the hardest are those which focus on selling volume-based solar systems. The main goal of such solar companies in Australis is to sell as many cheap systems as they can in the fastest period of time. However, this will be their downfall. As the prices for all components required for a solar installation increases, such solar companies won’t be able to absorb the cost because their prices were too low. Now that prices have started to increase, all the systems that were sold months ago and pending payments will have to be re-assessed by the solar companies.

Is solar power still worth it?

For Australian households, the answer is still a resounding YES. Solar technology is an investment that pays off for itself for years. Even if the price does increase by 10%, solar buyers will continue to enjoy savings with significantly lower energy bills. This is even more so for customers with solar batteries, as they can use solar power at night when energy usage is at its peak. If you want to learn more about how you might benefit from solar, contact Solar Power Nation today for a free quote and begin saving!

Sources

Australia records largest jump in inflation since introduction of GST (9news.com.au)

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