Australians to benefit as world moves to solar power: analyst

Australian
Thursday 10/7/2008 Page: 2

AUSTRALIA will be one of at least 10 regions in the world enjoying solar-generated electricity that costs the same as conventionally produced power by the end of the next decade, a new analysis predicts. US-based McKinsey & Co says solar power is already creeping towards cost competitiveness in some parts of the world.

The McKinsey analysts are unsure which of several competing technologies will emerge as the cheapest. But as investors pumped $US3.2 billion ($3.3 billion) into the sector last year, they say new competitors raise the potential for excess supply and falling prices.

"During the next three to seven years, solar energy's unsubsidised cost should equal the cost of conventional electricity in parts of the United States (California and the southwest) and in Italy, Japan and Spain. These markets have in common relatively strong solar radiation, high electricity prices and supportive regulatory regimes that stimulate solar capacity growth needed to drive further cost reductions." Taking these factors into account, McKinsey says at least 10 regions with strong sunlight - including Australia - will have reached parity by 2020.

It predicts the price of solar electricity will fall from more than US30c a kilowatt hour to US12c or even less than US10c. Solar capacity installed globally over this period will grow at 30-35 per cent a year, from 10 gigawatts to 200-400 gigawatts, needing investment of more than $US500 billion. "Even though this volume represents only 1.5 to 3 per cent of global electricity output, the roughly 30 to 40 new gigawatts a year of installed solar capacity would provide about 10 to 20 per cent of annual new power capacity over this period," the report says.