The cost of solar power is a major problem for the renewables sector.
IN last year’s annual report from state electricity retailer Synergy, there are some telling statistics that show the divergence between policy hope and reality.
According to Synergy, at June 30 last year there were 30,000 people who had joined its Renewable Energy Buyback Scheme, which offers a special deal to people who put photovoltaic solar power systems on their rooftops to generate electricity for their home and the grid.
The state and federal governments have offered a subsidy to purchase the panels and then a special high price for the electricity exported to the grid. This is a very costly way of producing power.
Thankfully, Western Australia’s net-back policy, which pays only for electricity generated over and above what the household uses, is not as generous as that in NSW, which provided a gross-back system, paying households for whatever power they produced, not how much they actually used.
For obvious reasons, Economic Regulation Authority chairman Lyndon Rowe describes this as middle class welfare. The only people who can afford the up-front capital outlay for solar PV tend to be those who are wealthy already.
It is estimated in NSW this policy has added 6 per cent to the price of power, at a time the retail cost has risen 18 per cent, mainly due to the removal of other hidden subsidies.
There doesn’t appear to have been an effort to understand how much this policy is costing WA.
One-time Greenpeace activist Patrick Moore, who was in town last week, added to my concern on this front.
Dr Moore was here as a guest of Canadian company Cameco, which is hoping to develop the Kintyre uranium project in WA.
He highlighted the fact that solar power is currently the most expensive option available and, if you took the threat of CO2 seriously, you’d use that money far more efficiently by investing in nuclear power.
While Dr Moore is a sceptic about the need to cut CO2 emissions, he agrees that there’s plenty of pollution caused by burning fossil fuels and if you wanted a clean affordable option then nuclear is the way to go.
To hear this from someone who went on the first Rainbow Warrior voyage is enlightening.
Dr Moore puts up a convincing argument about how current policy on solar is a waste of a valuable resource in the fight to protect the environment – cash.
In most cases in WA, not only is solar the most expensive way of saving CO2 emissions, but dispersing it across rooftops plays havoc with the network’s systems.
As a result, it actually limits the amount of solar power a system can handle, which seems counter-productive to me. An example that I was provided was the difference between the Marble Bar-Nullagine system where a single large-scale solar project can deliver as much as 80 per cent of the power required when the sun is available (40 per cent on average), compared to Carnarvon where rooftop solar penetration is high and therefore significant investment is required just to get to a 20 per cent peak.
In researching the renewable world last week I was twice told by people in the government and bureaucracy that the cost of the scheme is not the only issue. The fact that people were putting solar PV on their rooftop directly connected the public to the issue of renewable power.
WA Energy Minister Peter Collier is one who made this point to me.
“That empowers the community, it makes them part of the process,” Mr Collier said.
This is true, but at what cost?
The Synergy annual report shows that people clearly only want to be part of the part of the process when it makes them money.
Synergy has a number of so-called green products, all of which have relatively small uptake compared to the generous solar scheme.
For instance, Synergy’s NaturalPower is sourced from a portfolio of accredited renewable sources such as Emu Downs and Albany wind farms. At June 30 last year, Synergy had 5,831 NaturalPower customers.
Finally, customers can be carbon neutral by purchasing Synergy’s Earth Friendly product. Earth Friendly is certified under the Greenhouse Friendly Program, and guarantees a customer’s energy use is offset by the equivalent investment in certified greenhouse gas reduction projects. Synergy had 663 EarthFriendly customers in 2009-10.
But here’s the rub. Synergy stated that the number of customers buying these products fell over the previous two years, which is due to the rising costs of providing energy.
It is quite possible, therefore, that the high cost of rooftop solar power may have the perverse impact of discouraging people who would otherwise be willing to pay extra for more efficient green power.
ALSO on renewable power ... I have a real issue with the way the cost is projected.
We are constantly given numbers that compare solar cost with, for instance, coal and the CO2 emissions that go with it. If you are boiling a cup of tea in the middle of the day, that makes sense; both coal-fired and solar power are equally available.
But what about at midnight? Without the sun you are, presumably, using coal or a fossil fuel alternative. So from a cost perspective, the solar option ought to include the capital cost of the alternative power source and the CO2 emissions.
I couldn’t help thinking about this as I followed a Toyota Prius the other day. That car is a hybrid, which has dual power, with a petrol engine kicking in as and when it is needed to back-up the electric motor.
While the emission benefit of that is obvious, at least the owner of the vehicle is paying the real cost of what they drive. The Prius is relatively expensive because it has two engines – and the owner pays for both of them as well as benefiting from the savings due to lower fuel use.
When the fuel economy of the Prius is compared to other cars it includes the total performance for a set driving distance and period under conditions set to approximate some form of realism. The cost comparison is self-evident.
I am all for renewable power and believe the solar story will come to fruition, one day. But I don’t think we should delude ourselves in the interim.