Mar 27, 2012

Why power generators are terrified of solar

In Germany, solar PV is not just licking the cream off the profits of the fossil fuel generators -- as happens in Australia with a more modest rollout of PV -- it is in fact eating their entire cake, writes Giles Parkinson, of RenewEconomy.

Here is a pair of graphs that demonstrate most vividly the merit order effect and the impact that solar is having on electricity prices in Germany; and why utilities there and elsewhere are desperate to try to rein in the growth of solar PV in Europe. It may also explain why Australian generators are fighting so hard against the extension of feed-in tariffs in this country.

The first graph illustrates what a typical day on the electricity market in Germany looked like in March four years ago; the second illustrates what is happening now, with 25GW of solar PV installed across the country. Essentially, it means that solar PV is not just licking the cream off the profits of the fossil fuel generators — as happens in Australia with a more modest rollout of PV — it is in fact eating their entire cake.

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26 thoughts on “Why power generators are terrified of solar

  1. Jimmy

    My sister installed solar panels last year and, although there was significant issues dealing with the power company initially and they were on her roof for some months before the pwer company got all the paper work and inspections completed, her 3 monthly bill she received in Feb was $60. She lives in Eastern Surburban Melbourne, hardly the most sunny of climates.

    While I do not know the size of the unit it cost around $5k 12 -18 months ago (Ordered Oct 10 finished Mar 11).

  2. Blaggers

    “…a question of culture”

    Couldn’t agree more. Both from the utilities and the consumer.

    Kinda reminds me of the retail sector and internet sales…

  3. hooleys

    I don’t think you make much out of the two charts. The graphs only show the prices and volumes for one day of the year, and you wonder whether they are representative. (Was it especially hot or especially cloudy those two days?). Note that the volume traded in 2012 (722 GWh) is nearly double that for 2008 (445 GWh) so that the actual value in euros of energy sold is about one-third higher in 2012, with the solar panels, than it was four years ago. If anything, the data suggest that solar panels actually increase the amount of energy traded and generated, and presumably increase the income of big fossil fuel generators!

  4. Lord Barry Bonkton

    Jimmy , i have just had a 1.9kw ( 10 x 190 watt ) solar panels with a 3kw inverter fitted on my shed and got them to run power from the house to my shed as well, fire proofed the meter box, isolation switches , safety switches for the solar and shed for $3549.00 . My 3 month bill is about $170-$190 (have had solar hot water for 15 yrs ) and they say that i will wipe my bill out and may get a small amount of cash. The best way is to do your washing at night, using the cheaper power (22 cents ) and letting the solar (50 cents )pump the meter backwards at peak times. I am in sunny qld. Took about a month to get it up and running, just waiting for Energex to replace the old meter with a digital + and – meter . Then i can get paid for my excess power. Later on i can put another 6 x 190 watt on the system .

  5. John64

    Sorry, I don’t buy it. That price drop must be hurting the solar power producers as well surely? I have a sneaking suspicion that the only reason it’s so low is because the solar producers don’t care about price, they’ve got their guaranteed rebates and tariffs all paid for by the Government (which have been as high as 70c per kilowatt hour). In other words: of course the price will drop when “someone else” is paying the bill.

    @Jimmy: I’d be interested to know what the subsidies are on that system. How much of that $5k was paid for by the Government? And for your bills now, how much of that money is actually the feed-in tariff? If you take that all of that out, how much did your sister’s system really cost and how much does she really save?

    For example, a friend of mine installed his own small 1 kw system a year or so ago. The cost was about $1,000 and his first bill was pretty good. But take into account that the system /actually cost/ about $2 – $3k but was reduced thanks to the Federal Government rebate. Then there’s all the power that’s he’s “selling” back to the grid at some ridiculous price of around 40c per kilowatt hour. The only reason anyone is buying that is because of State tariffs… No electricity producer would pay 40c per kw/h for something they can produce at around 3c per kw/h from coal.

    If you actually take both of those out, what happens is his system is generating power when no-one’s home to use it (from 1 – 5 pm in the afternoon) and most of the power he uses is actually coming from the grid (IE: Coal). The only reason his bills look so good is because of the tariff. If that power wasn’t being sold at such a ridiculous rate, he wouldn’t actually be any better off. And he’d never actually pay off the initial cost of the installation before it passed its use-by date.

  6. Jimmy

    Just spoke to my sister, apparently she got a 2.5kw system for $7500 after a $5k rebate. As for how much did it really cost and how much did she really save well, it cost her $7500 and she save about $250-$300 for that quarter, the fact that the tax payer subsidised it to a degree is a different story.

    Lord BOnckton – “just waiting for Energex to replace the old meter with a digital + and – meter . Then i can get paid for my excess power. Later on i can put another 6 x 190 watt on the system .” That is where my sister ran into troubles, it took a few months, they had to send out an inspector and then he issued the notice, and then someone else had to come out and install the meter and then I think there had to be another inspection and then they wer able to go live.

  7. Filth Dimension


    Does the figure you use of 3c per kw/h factor in direct or indirect Government subsidies to coal fired electricity producers? Also, do coal fired electricity producers even have to pay $$$ for coal?

  8. outside left

    Germany, in decommissioning their nuclear power plants by 2020, which supply 20% of their power, is spending $260 BILLION dollars on solar and wind. Our conservative,and very popular state govs in Victoria, NSW, WA & now Qld want to cut back or limit the growth of renewables. Contemptible!

  9. Jimmy

    Outside Left – I find it interesting that these conservative govts who are so dead against the federal carbon price are now saying that they don’t need to spend money on climate change because of it.

    Also both Victoria and Queensland have today said that if they kept their renewable energy targets it would result in people in their states paying more than other states. I assume NSW and WA are making similar arugments which means that if every state kept their commitments they would all be paying more and therefore no one would be paying more than the other.

  10. AR

    This article, with pictures & emoticons for the terminally thick, should be printed on A3, laminated and nailed to the backbenchs in Fed & State parliaments, so that the lobby fodder dozing there will know their leaders are lying, or dumb, or both – unfortunately probably the latter.
    I’d prefer nailing it to the foreheads of the pollies but that might be thought cruel – not sure why, no brain, no pain.

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