A Bright Future

Opinion, Weekend Sunrise

Australia’s future is in solar energy.

Consider this. Since 1977 the cost of photovoltaic cells (PV) has dropped by over 99%, from $76/watt in 1977 to $0.36/watt in 2014.

Watt does that mean? Well a typical 4 kW system – which can essentially power all household needs – is now about $6,000. Solar panels are constantly getting cheaper and more efficient and they will continue to do so.

Source: Bloomberg, New Energy Finance

Source: Bloomberg, New Energy Finance

Coal-fired power plants are also very efficient in this regard, typically below $1/watt. However they require resources that are inevitably going to increase in price; and as the Guardian reported last week even if coal were free to burn, power stations couldn’t compete.

Australia has always been an international coal capital. Our natural reserves were created around 250 million years ago from sprawling forests of Gondwanaland. But they are dwindling.

To tackle this and also meet Australia’s commitments to combat climate change, the Rudd government revised the Renewable Energy Target to ensure 20% of Australia’s electricity comes from renewable sources by 2020. The target actually exists in two parts; a Large-scale and a Small-scale scheme.

Large-scale renewable projects have suffered under our current government, with the lowest investment levels since 2001 due to uncertainty in the industry. But Small-scale has exploded in popularity. More than a million Australian households have installed rooftop solar panels and it’s revolutionising our energy sector.

Source: Solar Citizens

Source: Solar Citizens

Rooftop solar is now effectively the fourth largest generator in Queensland. On July 2nd this year, so much energy was produced it drove the price of electricity below zero. That means companies were paying people to use power. In Germany this is almost a regular occurrence; last year prices were negative for a total of 48 hours. (This isn’t too surprising considering they already produce 25% of their energy from renewables.)

The instances above occur on cloudless, sunny days, when solar panels are operating at peak efficiency. The main problem with solar is that it’s a fickle power source; it’s not guaranteed the sun will shine to match your electricity demand. At night or during overcast days, solar homes still rely on the grid for power.

The future of solar relies on energy storage. Currently a typical household would need to fork out $20,000 on batteries to be self-sufficient, but the CSIRO has estimated that cost will halve around the next decade. When households can store their own energy – effectively going ‘off the grid’ – then our current system begins to fall apart.

Already companies like Ergon Energy and Stanwell are refusing to pay solar households for their excess power, so instead those houses go off the grid. That means fewer people buying less energy while paying more for the infrastructure. Power prices go up and more people go solar. It’s a death spiral that ends in only one way; the massive collapse of privatised electricity generation.

Source: Solar Citizens

Source: Solar Citizens

It doesn’t help that electricity demand has fallen by 13% in the past four years. We’re using less power but paying more for it – in the past decade our bills have increased by 85% (as this story I produced in 2013 highlighted). The reason is that network businesses have drastically overestimated our electricity usage and spent billions of dollars on infrastructure which falling consumption has made redundant.

About half of your power bill comes from these costs – more than five times the estimated impact of the carbon tax. Instead of running a politically motivated scare campaign, the federal government might consider fixing an outdated system that’s increasingly falling apart and at a massive cost to consumers.

Interestingly the Abbott government used to be big fans of solar power. Environment Minister Greg Hunt was fond of saying the 1 Million Solar Roofs rebate program was the “shining beacon” of his Direct Action policy. He kept saying it up until it was scrapped in the May budget.

Job losses at traditional fossil fuel generators are inevitable. Unless energy retailers start investing in Large-scale renewable energy they will go the same way. But it’s not like there are no jobs in solar. Last year the PV sector employed 11,700 people, which is twice the number employed in aluminium smelting. Manufacturing – generally seen as a dying profession in Australia – is essential in the expansion of solar power.

Our energy network is heading for a nasty shock. But we have the resources to deal with it. To paraphrase economist Jeremy Rifkin, Australia is the Saudi Arabia of renewable energy. We have more sun, wind and space than Al Gore could dream about. Let’s harness it and become the world’s solar capital.

The future is bright.

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