Thursday, 29 December 2011

Australian government is 'overstating renewables costs'
22 Dec 2011

The Australian government's draft energy white paper overestimates both the current and future cost of major renewables technologies, claims a new study.

Using data gathered from local and international wind turbine and solar module buyers and sellers, Bloomberg New Energy Finance (BNEF) claims the official figures overstate the costs of solar power by up to a factor of three and wind power by 50%. The government's errors provide a "distorted view" of the contribution from individual technologies, says lead clean energy analyst Kobad Bhavnagri, author of the study. For example, BNEF estimates the capital costs of large-scale solar PV to have averaged $2.7m/ MW in 2011, and to be declining rapidly as a result of manufacturing economies of scale and technological innovation.

Adjusting for foreign exchange rates and the cost of labour in Australia, this translates to A$2.9m/ MW in the local market in 2011-up to about three times lower than the figures in the white paper, which was released last week. The main reason claimed for the discrepancy is that solar PV prices have been falling consistently for a number of years, and by some 34% since 2009. Using data points that are even a year out-of-date can result in cost assumptions that are too high. "Remarkably, it seems large-scale PV was not considered as a generation option in some white paper scenarios, despite the fact it is already widely used across the world with 11 GW in total installed capacity", adds Bhavnagri.

BNEF's study also suggests that the government modelling may not have taken into account the effects of increasing wind turbine efficiency. "Our expectation is that wind will be one of the least-cost generation options from 2030-50 and that wind power's share of generation will be higher than the white paper projections", BNEF says. A spokesperson for the Australian department of energy would not comment on the veracity of data contained in the white paper.

However, a government source says the draft has been released for "consultation and to encourage discussion", and does not determine Australia's energy policy. "Australia is a market economy, and ultimately it will be the interaction of the energy, carbon and Renewable Energy Certificate markets that will determine the composition of our electricity generation mix. The government does not prescribe specific technology outcomes", the source adds.

In the white paper-open for public consultation until March-the government says it wants to accelerate cleaner energy technologies through market-based mechanisms. But Australian Solar Energy Society chief executive John Grimes has accused it of "seriously underplaying" the importance of solar. Australia risks missing the international boom in small-scale solar, the industry claims, noting that China thinks PV will be as cheap as coal by 2021. In contrast, Australia's draft white paper predicts small-scale PV will cease to grow after 2030.