November 15, 2023

Common Questions About Interest-Free Solar

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Solar is a significant upfront investment. It’s a numbers game where the cost of installing a solar system must be weighed against the money you’ll save on energy bills. Sounds like you need to do some math. And math is awful.  

Is there any way to get that price down so you can benefit from a return on investment sooner rather than later? Is there any way to purchase it interest-free without a credit card? What about those pesky energy retailer rates? What if they keep increasing over time and how does that affect the cost of my system long term? 

At Penrith Solar Centre, we love doing math! We actually do, even though math is awful for most people. We are committed to empowering you on your information journey as you learn more about solar and how it can fit into your life.  

We’ve partnered with Nectr, an energy retailer that aligns with our values. Together, we’re committed to getting Australia to net zero by 2050.  

If you’re interested in interest-free solar through Nectr and Penrith Solar Centre, this article is for you.  

In this article, you’ll learn the ins and outs of working with Nectr through some commonly asked questions about it. Here’s a table of contents to help you navigate to the best information in this article: 

  • What Forms of Payment Does Penrith Solar Centre Accept? 
  • Nectr Financing Q & A 
  • A Tale of Two Customers, Some Light Math, and Nectr 

By the end of this article, you’ll be an expert in all things about interest-free financing for your new solar system. 

What Forms of Payment Does Penrith Solar Centre Accept?

At Penrith Solar Centre, our customers typically pay in one of three ways: cash/debit, a green loan from a bank, or through Nectr.  

Cash/Debit: This is pretty self-explanatory. It’s paying for something like anything else you might buy; with cash, a debit card, or bank transfer details. 

Green Loans: This is a loan you can secure from a bank to pay for projects that are good for the environment, like installing solar on your home. Instead of buying it outright from the start, you can use this option to pay a loan for solar in monthly instalments.  

Here’s how they work: 

  • You pick a solar installer to put a solar system on your home. 
  • Instead of you paying the entire amount right away, the company would charge the cost to the bank. 
  • The bank pays the installer for the system, and the installer puts the solar panels on your house. 
  • You repay the bank over a period of years, based on a payment plan you agreed on. 
  • The interest rate is usually variable and can change over time. 

There are some factors to consider before you sign up for a green loan. The payback period is quite long. Some residences aren’t eligible for green loans.  

The application process is unpredictable and varies from one financial institution to another, with some applicants being approved in two days and others taking weeks before receiving an acceptance or rejection.  

All that being said, it’s a great option for some households and should absolutely be investigated. 

Nectr: Nectr is an electricity retailer that offers interest-free solar with a battery through a fixed term. Essentially, Nectr finances your solar system with a battery interest-free. You pay them back for it over the course of 5 years. While you are paying them in instalments for your solar system, they are also providing your home with electricity at a fixed rate per kilowatt hour (kWh) for the length of your contract with them. This is significant because the cost of electricity rising.  

Nectr caps the cost of electricity at the time you sign up with them as an energy retailer. For example, for the duration of your fixed-term contract with Nectr, the cost of electricity might be fixed at $0.31 per kWh. It will stay at $0.31 for 5 years until your system is paid off.  

When you’re crunching numbers, this contributes to how rapidly you see a return on investment by shortening your payback period. We’ll get to that towards the end of this article (woo-hoo, math!). In the meantime, you have questions, and we have answers. 

Nectr Financing Q & A

What makes Nectr’s interest-free financing unique? 

They cover the cost of the solar system depending on the type of system you choose for your home (it doesn’t matter if it’s an Enphase IQ or a Powerwall 2. You make payments over for the duration of the contract. For a solar system with a battery, the fixed rate period is 5 years.

What is the significance of locked-in energy rates with Nectr? 

The locked-in energy rates protect customers from potential future energy price increases. In a quickly evolving market that has unpredictable rate hikes, having a fixed rate for a period of time might be quite valuable to you.  

It wasn’t so long ago that electricity was below $0.30 per kWh. It’s above $0.30 now and at the rate it’s going, it might be above $0.40 sooner rather than later. Inflation is affecting everyone. 

If you’re paying for a solar system upfront, the return on investment will be impacted by the rate increase for electricity. There are some horror stories in comment sections on Reddit and other solar sites about how rate hikes affect the ROI of a solar system.  

For more information about the cost of a solar system, you might want to explore the following article: How Much Does a Microinverter System Cost?

A customer might buy solar and over three years they might be back to where they started because of energy price increases. This only applies to smaller systems. But for a customer who just wanted to make a dent in their quarterly bills and knock off, say 60%, they’re now finding themselves paying what they were paying a few years prior.  

When does the fixed-rate contract through Nectr start? 

Immediately. You get that prime rate locked in immediately, which is fantastic because there is often time between your purchase of a solar system and its installation. That electricity rate starts working for you right away. 

How do I set up an account with Nectr? 

You don’t. We do that for you. Once you have given us a thumbs up or thumbs down on whether you want to take advantage of Nectr, we take care of you. You sign the document, and you will be switched over to Nectr within two business days. You don’t need to speak with your old provider, you don’t need to do any calls or paperwork, we do the whole process for you.  

Nectr will then install a smart meter for your energy distributor (which is determined by where you live).  

What is a feed-in tariff? 

A feed-in tariff is a financial incentive for generating excess energy and sending it back to the grid. It’s meant to encourage people to adopt renewable energy by paying households for surplus electricity.  

The payment rate is determined by your energy provider and where you live.  

This used to be a very lucrative program meant to kickstart solar in Australia. However, the prices for feed-in tariffs have dropped in recent years. If you have a solar battery installed with your solar system, you will be eligible to join a VPP which often offers a competitive feed-in tariff.  

What is a VPP and what are the advantages of joining Nectr’s VPP? 

A virtual power plant (VPP) is a network of distributed solar systems with batteries that are coordinated by a company to release electricity to the grid during peak hours. You give control of your solar battery to a third party and in return, you get discounts on your battery or a higher feed-in tariff price.  

Nectr’s VPP is very similar to other energy retailers out there. In the interest of being unbiased, it should be mentioned that most VPPs are pretty similar to each other when you start crunching the numbers. If you’re interested in investing in a battery to take advantage of a VPP, there are different advantages and disadvantages to each energy retailer and their individual VPP. Some come with frequent flier miles, others come with better car insurance. It depends on what you’re looking for.  

In addition to a competitive feed-in tariff, Nectr also kicks back $20 per month in credit to each household.  

Are there any other advantages to Nectr? 

Their customer service is spectacular. They have a team that handles all Penrith Solar Centre installs and customers. If you have any difficulties with Nectr, you’ll contact PSC and we’ll clear the confusion up for you.  

What are the disadvantages of Nectr? 

Locked-in rates are a double-edged sword. When you sign up for a locked-in fixed-term contract, you can’t leave until it’s paid off. The energy crisis is a difficult game to predict. There’s always an outside chance that the government might step in and cut electricity rates through subsidies or some other financial program. It probably won’t happen, but you never know. 

With a locked in fixed term contract, you are unable to change providers until that contract is finished.  

You can, however, pay your contract off early if you like.  

Who is a good fit for Nectr? 

Nectr’s financing is an excellent choice for homeowners with limited budgets who intend to stay in their homes long-term. If you also happen to use a lot of electricity, and you probably do or you wouldn’t be investigating solar, it’s a wonderful way to save money while paying off your solar system. 

Nectr is also a spectacular company to work with if environmental conscientiousness is a concern for you. Penrith Solar Centre would not partner with them if they were not aligned with our commitment to making Australia reach net zero by 2050. 

Who is a bad fit for Nectr? 

If you’re planning on moving out of your home soon, there isn’t much point in financing through Nectr. Although it is possible to transfer that contract to the new homeowner.  

If you are planning renovations, like redoing your kitchen or adding a swimming pool, it will really throw off your energy consumption patterns, which in turn will really throw off the effectiveness of your solar system. It’s crucial to plan ahead when designing your solar system. Have a detailed conversation with your solar installer so you can get the system you need.  

What happens at the end of my contract? 

Your electricity bill may jump significantly. After all, you’ve been enjoying an electricity rate that’s been locked in for 5 years. You may need to shop for a different energy retailer at that time.  

Or the opposite might happen, and rates might go down, as we mentioned above about government interference. The electricity industry is difficult to predict.  

But more importantly, above everything else, when your contract ends you will own your solar system and your electricity will be free. No strings attached (that’s a wee microinverter joke we like to make at PSC).

If you’re interested in being “in” on that joke, and for more information about microinverters, you might want to read the following article titled What Are the Benefits of a Microinverter System?

Nectr supports our local boys, the Penrith Panthers! – Source: nectr.com.au

Learn about Nectr

A Tale of Two Customers, Some Light Math, and Nectr

The two examples below are the types of customers whom Nectr is a good fit for. They’re hypothetical though because every solar system is unique, and every customer’s home and needs are unique.   

Customer #1: Let’s call him Tim. Tim pays $3,000 per year in electricity bills, which comes in around $750 per quarter. That’s $15,000 over the course of 5 years. That’s how much electricity will cost Tim if the prices do not rise for 5 years.  

The prices will almost certainly rise in the next 5 years. So that $15,000 just might become $20,000 in electricity over that time. It’s a problem that most customers don’t consider when looking at the upfront cost of a solar system.  

Tim is looking at saving some coin by getting a smaller system or a system without a battery. He was going to pay for it upfront, but he’s considering Nectr because he could use that upfront payment as a deposit instead on a larger system. Why would Tim be looking at a larger system? 

Well, Tim understands that in the long run, a larger system or a system with a battery will most likely save him much more money. Especially with no interest on his solar system and a locked-in price for grid electricity.  

Nectr is giving Tim more options for his electricity usage and providing him with long-term savings.  

If you’re wondering how Tim adding a battery to his solar system can save him money in the long run, you might want to read the following article on solar batteries titled 7 Benefits of Adding a Battery to Your Solar System.

Customer #2: Let’s call her Tammy. Tammy pays the same amount of electricity that Tim pays. $3,000 per year, $15,000 for five years.  

Tammy is financially successful so it’s not necessary for her to seek out financing to pay for the solar system. But Tammy is financially successful because she is frugal.  

Instead of dropping a large sum of money on a solar system that’s large and comes with a battery, she chooses to finance that same system through Nectr instead to take advantage of the fixed-rate contract.  

Tammy now has that upfront cost back in her bank account, plus extra savings on her solar and electricity for the next 5 years. She’s spending the exact same amount of money on her solar system and saving money on her electricity for the next 5 years.  

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Wrapping it Up: Ask the Right Questions and Explore All Options

You now know the ins and outs of financing your solar system interest-free through Nectr. There are a lot of factors to consider when you start crunching numbers: the cost of the system, the cost of electricity for the foreseeable future, and your energy consumption patterns.  

Penrith Solar Centre understands how complex some of these options are and the worry that goes along with each question. We’re here to give you the best information to empower you as you search for energy solutions.  

If you’re interested in learning more about how Nectr might work with the solar system you’re considering, you might want to reach out to one of our solar experts to guide you through more specific questions about your unique energy needs. 

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