Consultant Dan
24 June 2011
Productivity Commission gives carbon tax committee wrong figures on solar PV
This was republished by Climate Spectator.
A review has found that the Government’s carbon tax committee negotiations are founded on emissions data for solar PV that may underestimate its cost effectiveness by up to a factor of 10.
The Australian PV Association (APVA) has published analysis of the recent Productivity Commission report being used by the Government, Greens and independents in negotiations about a carbon price. The APVA findings show that solar PV could be between 4-11 times more effective as a way to cut greenhouse pollution than the Commission has calculated.
The Commission claims that the cost of emissions reduction achieved via solar PV is $432–1043/tonne CO2. According to the APVA, the true figure is $90-95/t CO2 depending on the installation location. This discrepancy is explained by the following errors in the Commission report:
The Commission has failed to note the rapidly declining costs of PV over the past 4 years. The cost of solar modules averaged $3.20/Wp in 2010 and total prices for small systems averaged $6.50/Wp. Total costs have fallen from $9 in 2009, and $14 in 2001. The Commission overstates the true costs of PV by about 100%.
The Commission assumes solar systems are an average size of 1.5kW. This is completely incorrect. Using more accurate figures from the Office of the Renewable Energy Regulator (ORER), solar generates 453 GWh, 32% higher than the 344 GWh estimated by the Commission.
Solar’s contribution to emissions reduction is calculated by the Commission is 317kt. Using the ORER corrections, the true figure is calculated to be 415kt.
The Commission fails to include extra value of that solar electricity has by virtue of being produced at the point of consumption, which negates losses in transmission and distribution (and, where relevant, Use of System charges).
The Commission wrongly assumes that 50% of solar electricity is exported to the grid and is thus subsidised by net feed-in tariffs (in the relevant states). In fact, the amount of power exported from 1.5kW systems typically ranges between 17% and 28%. Households that use more power, export less. Bigger systems export more.
The Commission counts all the subsidies to solar but fails to count all the electricity generated. It appears to assume that the electricity is only being generated for as long as the subsidy lasts! In NSW the subsidy lasts for 7 years, meanwhile the International Energy Agency uses 30 years for its life cycle analyses.
The fact is that solar PV electricity will almost certainly reach cost crossover in 4 years. At this point, it will be cheaper than grid electricity for the consumer, in major population centres. Crossover could reach Sydney as early as 2018 and Brisbane by 2015, depending on how quickly grid power costs continue to rise. Once this happens, the cost of abatement will be negative. Cutting emissions will save on electricity and thus become a positive stream of income for households.
Other independent studies around the world have come to the same conclusion about solar cost crossover. The race is on to get solar cheaper for the consumer than coal and gas in the case of Australia and in Europe and cheaper than both coal and nuclear for the USA and Japan.
Bloomberg reported on 15 June that James Prendergast, Chair of the Institute of Electrical and Electronics Engineers says solar is already cheaper that grid power in Southern California and this will be widespread across the USA by 2015.
On May 26, Mark M. Little, the global research director for General Electric Co., told Bloomberg that solar should be cheaper than both fossil fuel and nuclear electricity as soon as 2014 in the USA.
On 24 May, Reuters reported on a KPMG study that predicts solar will be cheaper than grid electricity for much of India by 2017.
Solarcentury told the Guardian on 12 May that solar will be cheaper than grid power in the UK as early as 2013.
On 16 March, John Denniston, a partner at Kleiner, Perkins, Caufield, and Byers, said that within 3 years solar will be cheaper than grid power in Spain, Japan and major US states including New York, Florida and Texas.
What is even more disruptive for the dominant energy paradigm is the crossover point for ‘baseload’ solar, the technologies that can dispatch electricity after the sun has gone down.
President Barack Obama’s Energy Secretary Steven Chu is in charge of the President’s ‘SunShot’ Initiative. The SunShot is named in homage to President Kennedy’s ultimately successful dream of landing astronauts on the moon within a 10 year timeframe. President Obama’s SunShot aims to get baseload solar cheaper than grid electricity, by 2020.
The technology for this is not solar PV, but Concentrating Solar Power (CSP) plus thermal storage, that gives it the ability to dispatch 12 to 17 hours of “baseload” power, when the sun is not shining and the plant is not generating.
Solar electricity is becoming cheaper so quickly that it will soon be cheaper than black electricity around the world. Australia’s international competitors are racing toward cheap solar but unfortunately our country is stuck in a time warp of misconceptions which say that solar is expensive and inefficient. The recent Productivity Commission Report used out of date data on solar, which makes its conclusions incorrect about that technology.
I look forward to the Productivity Commission urgently revising its figures and presenting that update to the Multi-Party Climate Change Committee. When that happens, we can have confidence that the Committee has all the information it needs to make the right decisions about solar’s role under the carbon price package.
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