Menu lock

Markets

Jun 1, 2012

A third of energy from solar by 2022? Depends who’s connected

A new report suggests Australia could produce one third of our energy capacity via solar by 2022. The barrier will not be about cost or a lack of demand but the ability to get connected, writes Giles Pakinson of RenewEconomy

It seems that the greatest barrier to the rapid deployment of solar in Australia will not be about cost or a lack of demand — it will be the ability to get connected.

That has been the common theme from a range of reports from different sources in recent weeks — from the Victorian Competition and Efficiency Commission’s inquiry into feed-in tariff’s in Victoria, the Australian Energy Market Operator’s landmark report on solar this week, the accompanying analysis from Sunwiz and Solar Business Services, and the Australian PV Association’s annual report for 2012.

The APVA report says most parts of Australia have reached grid parity, which might better be described as “socket parity”, meaning that solar panels now offer a cheaper alternative than power from the grid — a reality that will become increasingly obvious to the public as more solar leasing products and programs are rolled out to consumers.

The APVA notes that in 2011, a total of 837 MW of solar PV was installed in Australia, more than twice the capacity of 2010, taking the total installed capacity in Australia to 1.4 GW. The report noted that 36% of the new electricity capacity installed in Australia in 2011 was rooftop PV — even if it still only accounted for 3% of total electricity capacity and 1% of actual generation.

This is set to grow dramatically in coming years, because — despite the winding back of government tariffs and other incentives — the declining costs of PV and rising electricity prices meant that most residential PV customers and many commercial ones will be at parity.

The biggest issue, it says, is on long-term regulation, particularly the “right to connect”, and on appropriate tariffs being fed back to the grid. It wants restrictions to be placed on anti-competitive actions of electricity retailers and gentailers and more emphasis and support for energy storage to enable higher PV penetrations, as well as encouragement for customers on the on fringe of grids (who faced costly network upgrades) to convert to off-grid systems. (One interesting statistic was the increase in domestic off-grid installations, which more than doubled to 101MW in 2011.)

This actions of retailers and gentailers, as well as distribution networks, was an issue also identified by VCEC, which noted that utilities were often reluctant to provide connections — but did not offer a solution — while the AEMO said there may be physical constraints to the network.

AEMO also noted the various barriers in its groundbreaking report on solar earlier this week — the first time the energy regulator had formally recognised the potential size of the solar PV market, and its disruptive nature to the broader grid and energy businesses.

The AEMO report canvassed various scenarios for the rollout of PV, suggesting a high scenario of 18GW of installed PV on the National Electricity Market (so excluding WA, NT and other off grid areas) by 2031 — nearly 10 times the forecast of Treasury and other government advisory bodies.

Sunwiz, whose forecasts helped shape the AEMO report, have issued a separate paper suggesting an even more rapid deployment of PV, and predicting that if off-grid, utility-scale, and WA and NT solar installations are included, the installed capacity in Australia could reach 18GW by 2022 – or around 30 per cent of total capacity, and approaching 10 per cent of production.

In this scenario Sunwiz head Warwick Johnston notes that this will have a disruptive influence on generators and retailers — the merit order is changed, transported volumes decrease, and peak pricing events alter in their timing and frequency.

“Indeed, though deployment on this level may threaten current vested interests, PV can deliver outstanding benefits to the Australian community, environment, and economy,” Johnston writes in his report. “On the basis of PV’s inevitable financial favourability within a decade, it is likely that today’s owners of fossil fuel generators will be heavily invested in the deployment of solar power in the not too distant future.”

And, he notes, it means that home owners (and their capital) can take a more active role in climate mitigation. “Rather than relying entirely upon government or the top 500 Australian energy users to address climate change, most of the investment in solar electricity generation (and associated emissions reductions) entailed in the forecast would come from home and business owners, leveraging billions of private dollars to mitigate climate change and improve the financial sustainability of businesses.

“In the long run, the fewer barriers there are to solar power, the sooner solar power can distribute its benefits, to the betterment of current and future generations.”

*This article was originally published at RenewEconomy

We recommend

From around the web

Powered by Taboola

29 comments

Leave a comment

29 thoughts on “A third of energy from solar by 2022? Depends who’s connected

  1. John Bennetts

    Is the AEMO report available on line? If so, how about a link?

  2. John Bennetts

    Secondly, it is nice to see Giles now mention “socket parity”, which presumably means that solar power is now cheaper than full retail tariff, ie about 25 cents per kWh.

    Grid parity would, of course, be about 5 or 6 cents, because that is the average market wholesale price of energy sold into the grid. Five cents per kWh is, of course, is totally unachieveable in the forseeable future using photovoltaics, hence the need for uneconomic non-market forcing of PV via a muddle of mandated greenpower targets and feed-in tariffs which serve almost no recognisable purpose apart from cost shifting from the PV generators to retail customers in general.

    Socket parity is a far more relevant term, but only to the retail on-site user. When selling PV electricity back into the grid, the appropriate price comparison is with other suppliers to the grid. That is the true meaning of the term “grid parity”. So, the grid parity price is only about 20% of that for socket parity.

  3. John Bennetts

    The heading “A third of energy from solar by 2022?” is misleading. Nowhere in the article is it stated that one third of energy might be solar.

    If the heading was “A third of installed capacity by 2022?”, it would be closer to the truth.

    Come on, Crikey, even your editorial team are not so dumb as to not know the difference between peak or nameplate capacity of intermittent power supplies such as solar and the expected energy actually generated, which for solar averages perhaps 20% of the nameplate rating.

    In other words, it takes 5 kW of PV to generate at an annual average (allowing for clouds and night time and so forth) of 1 kW.

    Thankfully, Giles had this correct in the article – the error only appeared in the heading.

  4. gdt

    Here in SA most of the increase in electicity price will come from maintenance and upgrade of the grid. Consider that customer-mounted PV pushes out such maintenance as there’s less total demand and less peak demand. So although PV is bad news for electricity generators, it’s good news for electricity distributors. What needs to be fixed is a way for the distributors to pay PV owners some share in the reduced expenditure on the grid, at the moment the feed-in tariff doesn’t do that and distributors are getting a free ride at the expense of generators.

  5. Hamis Hill

    The off-grid connections are interesting. Presumably portable gas is also used and obviously water and sewerage is off grid as well. This has interesting effects on the supply of land and land prices. Fixed income owners like retirees should be attracted to such stand-alone homes no less because the costs are fixed or reducing unlike grid connected suburban homes. Domestic banks holding one trillion dollars of mortgages on suburban homes will be very alarmed at a threat to their holdings.
    Will they fund a political challenge to renewables? Or have they already? It may be too late for them as it seems that the future is already here, complete with that holy grail, the affordable home. The NBN
    guarantees communications so the last barriers to comprehensive decentralisation are going down despite the long political struggle to delay these enabling technologies. Seems quite revoluitonary across the whole economy. Is a counter-revolution coming form the “conserve the old paradigm” dinosaurs? This whole market is racked with political motive and opportunities to subvert the public interest infavour of private, vested interests. A bigger picture here?

  6. John Bennetts

    @ GDT:
    Your contention that PV pushes out peak demand is false.

    Winter peaks occur in either the morning or evening, neither of which is contributed to by PV because the sun has not risen or has set.

    In summer, the peaks are in the middle of the day, but PV still cannot contribute if there is cloud about or, worse, rain.

    So, PV needs to be 100% backed up by other means, which at present means gas fired or (worse) coal fired generation, complete with the capital and operating costs which this entails.

    The transmission lines are not downgraded due to PV installations – in fact, they need upgrading in order to move this unpredictable power around to find a load.

    Apart from installations which are off grid, PV has been an expensive scam and a waste of opportunity. Take a long hard look at the German experience, where they have committed many hundreds of euros to PV and wind in order to simply stand still. Their generation capacity has not risen for years, they are now constructing new coal fired power stations (low grade dirty plants, at that!) yet they are persisting in throwing money at their wind and PV toys. This is incredible.

  7. AR

    We’ve seen how legislation can be manipulated depending of the flibbertigibbets flavour in politics so I would be wary of trusting any given promise, incentive, guarantee or other inducement to go PhV.
    There are any number of reasons to do so apart from those listed above – sheer independence being my favourite.
    However the storage of unused power until required remains problematic – batteries are expensive, toxic, shortlived & environmental disaster.
    With the right topography, ideally, or a new outbreak of hilltop reservoirs there is an old idea, still used by Snowy Hydro & Sydney Water which is to pump water up when power is excess and use it to generate flowing down when needed. There is a loss of 30% but environmentally neutral, in that the same water is used, no external inputs or waste product.

  8. Microseris

    Historically a lot of very intelligent people have said some pretty silly things: “There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will.” — Albert Einstein, 1932.

    Who knows where some political will and scientific developments will take us. Conceding defeat from the outset is a cop out. If we leave it to the likes of the John Bennetts of the world, we will still be digging up and burning coal to generate electricity in 100 years.

  9. John Bennetts

    @ Microseris:

    My comment relates to the art of the possible, today. That is the real world.

    Microseris, on the other hand, is referring to his perception of a future time, which may or may not come to pass, where photovoltaic energy is available in vastly greater quantity than is possible at present – hundreds of times greater.

    Einstein probably didn’t consider that parallel universes exist.

    Microseris is living in one, although I do agree with him in one regard – the atom has been split. And what a marvellous source of safe, reliable energy it has become.

  10. Microseris

    Yep I’m living in a parallel universe for expecting science will advance..