Solar PV's false dawn

Business Spectator
Monday 30/8/2010 Page: 1

Michael Fraser has put his finger on a point that is central to planning future electricity supply - and it raises yet another one of those leadership issues that our political types seem to find so hard to handle. In his Climate Spectator interview with Giles Parkinson, the AGL Energy chief executive referred to the "really interesting thing about solar power" - the "almost love affair" the Australian public has with the technology.

The big question is whether governments should pander to public sentiment, as most around Australia (with the exception of Martin Ferguson at the federal level) have done in the past few years, or whether they should ensure the love-struck voters have a proper understanding of what is involved? The "big picture" issue - that's an authentic Paul Keating saying - is the economic cost of giving in to the public solar sentiment. The federal Department of Climate Change has pointed out repeatedly that installing a 1.5kW solar PV system on every household rooftop in Australia will involve a capital outlay, at today's costs, of around $200 billion. That's five times the cost of the controversial broadband project.

What will we get in return? DCC has estimated that the carbon abatement in 2020 from doing this would be 16 million tonnes a year, extraordinarily expensive. Even if one assumes that the capital cost could be halved, the department has pointed out, this is still very costly. State government owned distributor Energex has politely made another point about PVs to the Queensland parliament's environment and resources committee, which is currently undertaking an inquiry in to growing the renewable energy sector. It says that it has been "significantly affected" by the state's solar bonus scheme, which has seen a "dramatic uptake" of PVs in southeast Queensland, resulting in extra network costs and additional expenses from feed-in tariffs that are passed on to all customers.

Its twin, Ergon Energy, also government-owned that delivers electricity across the rest of the state, reveals that as of May it had seen 6,500 solar PV systems connected to its network under the bonus scheme, providing feed-in credits worth $1.68 million over a year for a generation capacity of 10MWs. What's more Ergon Energy says smart-alec residential solar PV owners have spotted that they can maximise the value of their feed-in tariff earnings by minimising their use of washing machines, dishwashers and clothes driers during the peak solar generation daytime period, ensuring the highest benefit for their output to the grid.

There is very little overall network savings benefit to be had from the subsidy-driven PV boom, it adds. And it poses the question that, shouldn't the current and future power price rises be sufficient incentive to customers to invest in solar PVs as well as other energy conservation measures? Brisbane City Council presses the point harder. Customers voluntarily taking up GreenPower schemes, it asserts, face costs out of their own pocket of about $50 perMW hour, while the whole community bears the $400 to $600 per MWh cost of PVs through the feed-in tariff.

This situation is the more peculiar when you consider that, for any regions that have good access to gas. Australians now have an alternative to solar PVs in the shape of the BlueGen fuel-cell system, a dishwasher-sized generator which requires far less installation hassle and delivers six times as much carbon abatement as PVs - but has no government support whatsoever because it uses a fossil fuel.

It seems to me that the solar love affair is a classic example of the modern political idiom, encapsulated in the Yes Prime Minister television comedy series in a line pinched from a real-life 19th century French socialist leader: "There go the people. I am their leader. I must follow them". To which one might add that the road to economic hell is paved with venal political intentions (sooled on by an increasing number of pigs with their noses in public troughs).