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Going solar

March 18th, 2010

The Rudd government’s ventures in subsidising energy-saving measures such as home insulation haven’t exactly covered it in glory. It’s not alone in this respect. The Howard government had similar problems, and Spain had a huge boom and bust in solar photovoltaics. The common feature in all of these cases was that the schemes got into difficulty because take-up was much more enthusiastic than was expected. This in turn reflects the fact that the economics of these measures, particularly solar PV, are improving fast.

I recently got solar PV installed on my roof, and the deal (available from Origin here), though not the cheapest on the market, was very attractive. A modest upfront payment, and monthly payments that are substantially offset by the cost savings, especially when the system is exporting back to the grid and attracting the feed-in tariff. And it is just so cool to open the meter box and watch the wheel turning backwards and the numbers going down.

The deal is attractive because it is subsidised in two ways: the capital cost is offset by Renewable Energy Certificates, and the cost savings are amplified by the feed-in tariff. Looking ahead, it is clear that governments will want to reduce the subsidy element of the feed-in tariff, as is already happening in Germany. And recent changes to the REC scheme have been designed to ensure that household installations don’t have such an edge over large-scale renewable generation.

The impact of lower subsidies will be offset by declining costs. Globally the cost of solar panels has declined by about 20 per cent and is likely to decline further, now that size economies are starting to kick in at all stages of production, and particularly in the supply of silicon. Until about 2005, the industry relied on offcuts from the semi-conductor industry. When demand outgrew that supply, prices rose for some time, and it’s only recently that a declining trend has resumed. With the decline in panel costs, and the growth in demand, it is now become worthwhile to look hard for cost savings in the more prosaic elements of the process, such as installation costs, and there are some interesting innovations here. Within a few years, the subsidy-free capital cost could fall to a level comparable to the current subsidised price.

Looking at feed-in tariffs, I’m getting 55c/Kwh compared to a daytime retail price of 22 c/Kwh (quoting these from memory, I’ll check later). That’s a pretty big subsidy, but the gap would be smaller if the grid supply were priced properly. A carbon tax of $50/tonne would add at least 5 c/Kwh, maybe 7 c/Kwh with retail margins and GST, and peak-load pricing would raise the price on sunny summer days, when the system is producing peak output for long periods, maybe by as much as 10 c/Kwh. With those changes, no feed If the average cost saving were 30 c/Kwh and the output averaged 6 Kwh/day, the annual return would be $650/year which would make a $5000 investment look very good.

In policy terms, I’m ambivalent about all this. I’d prefer a straightforward pricing system that reflects all the costs of energy, including carbon costs, either through a carbon tax or an emissions trading scheme. But we don’t have anything at present, and even it gets through, the government’s ETS is full of exemptions and special deals. In effect, the REC scheme works roughly like an emissions trading scheme, since non-renewable generators have to trade to get credits. Similarly the feed-in tariff is embedded in the pricing system. The big defect is that these schemes don’t distinguish between non-renewables like gas and coal which differ greatly in their emissions intensity. So, they are somewhere halfway between a proper carbon price and the kind of winner-picking scheme proposed by Tony Abbott.

Sooner or later, the need for real action will become so pressing as to be irresistible. In the meantime, efforts like the REC scheme will help to drive continuing innovation. The economic cost of responding to climate change will be much higher than it would have been had there not been so much delay and delusion on the subject, and the damage to the global environment much greater. But that’s true of so many areas of policy, it’s perhaps not surprising in this case.

You can do your own calculations using this spreadsheet worked out by my colleague Tim Coelli.

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  1. Steve
    March 18th, 2010 at 08:03 | #1

    I thought that queensland had a net feed-in tariff. I thought you only got the higher tariff for any net export to the grid over a billing period – net export over a billing period is likely to be zero for almost everyone.

    Is this right? Do QLD have a gross or a net feed-in tariff?

  2. Michael
    March 18th, 2010 at 08:19 | #2

    The cost to me installing solar was increased because I had to have the house, built very cheaply in the 1950′s, rewired before the installers would connect to it. Just as well in the end because the process uncovered some potentially dangerous wiring. Having solar installed probably also makes people more aware of their usage and drives savings in other ways. Before the system was installed I used a usage meter to check all the appliances and converted all the lights to CF’s producing an imediate reduction in bills. There comes a point though when the remaining efficiency options are expensive building alterations such as retrofitting wall insulation and double glazing which starts to make solar look affordable.

  3. Ernestine Gross
    March 18th, 2010 at 08:43 | #3

    JQ, Yes, solar (hot water and PV) programs do not distinguish between differences in ghg emissions from various non-renewable energy sources. However, there is a side benefit from solar (hot water and PV) programs for individual households which, IMHO, tends to be underestimated in cap and trade schemes (wrongly named ETS), namely public education.

    An ETS or a carbon tax system is designed by experts, sold to the public via public relations methods, and implemented by experts who reside, often namelessly, somewhere. It leaves nothing more for the public then asking: How much does it cost and do we need it? By contrast the solar program for individual households gets the public involved on a level that does not require a lot of time to study and it allows individuals to observe data directly. Given the division of labour we have, I say this learning by doing is a good thing and it may even help to reduce these annoying verbal noise PR strategies, run by commercial special interest groups or, possibly, by alternative universe believers, sometimes described as denialists.

  4. March 18th, 2010 at 09:11 | #4

    Ernestine Gross :By contrast the solar program for individual households gets the public involved on a level that does not require a lot of time to study and it allows individuals to observe data directly.

    Indeed, I agree here: this helps make it tangible to the individual, and helps their hip pocket by reducing their overall spend on energy of a period of time. Stressing the prudence and pragmatism in “going solar” is a good strategy. I’m looking into myself.

  5. Fran Barlow
    March 18th, 2010 at 10:22 | #5

    Seriously, the only economically efficient and equitable way to introduce solar for electricity would be to make it part of the general electricity supply system, using whatever funds one thought apt to supply output to everyone.

    Putting PV on rooves with state subsidy is not only not cost-efficient and it is certainly regressive. Tenants and those below or just above average income almost always miss out and the payback in energy terms is poor, relative to something like wind. Throw in house churning, and again, many of the systems won’t make their 20-years.

  6. TerjeP (say tay-a)
    March 18th, 2010 at 11:04 | #6

    I’m of the view that the ETS, solar subsidies and all this fiddling is a complete distraction from the main political challenge which is the removal of all the unreasonable regulatory impediments to nuclear power. The case for switching to nuclear seems to be clear to all the major economies bar Australia. China and India seem keen to use cheap electricity from nuclear where we seem to be gearing up for expensive electricity from solar. Not very smart on our part.

    I love solar. I would have topped the year in solar in my undergraduate degree except my girlfriend beat me (now my wife). I think it is way cool to make electricity out of sun light. However I’m simply not sold on solar as a credible scalable alternative to exisiting fossil fuel electricity production. The high prevalence of preferencial subsidies does nothing to reduce these concerns, quite the opposite in fact. I’m sympathetic to some other industry start up incentives such as those in California for PHEVs. However I really do think residential solar is on the whole a dud idea. Panels lose efficience with only modest amounts of dirt, their lifespan is limited, maintenance will emerge as a problem as feed in subsidies are removed and notions that the demand profile can be shifted enough to take up lots of this variable energy source are unproven. Ironically I think home insulation is a much better way to spend subsidy dollars.

  7. Uncle Milton
    March 18th, 2010 at 11:04 | #7

    It’s not even clear that this scheme is privately worthwhile, let alone socially, given the subsidy. The scheme involves a hefty up front cost and payback later with lower electricity bills. Coelli uses a low discount rate, 3%, which makes it a good deal, but any discount rate above 5.8% and it’s a bad deal. Of course there are non financial benefits, like the thrill of seeing the meter run backwards, and doing one’s bit for the environment. But in purely private financial terms, it’s marginal.

    However, as Fran says, as a policy measure, it’s a dog. You can try to rationalise it ex post with second best arguments, but anything can be rationalised with second best arguments.

  8. TerjeP (say tay-a)
    March 18th, 2010 at 11:06 | #8

    p.s. When I got my first washing machine I thought the way the clothes went around was novel. However the novelty does wear off pretty quickly. If I could watch my power meter run backwards I’m sure that would also be novel but I’m also sure the novelty would soon pass. Novelty is not a good way to judge public policy.

  9. Ernestine Gross
    March 18th, 2010 at 11:50 | #9

    TerjeP (say tay-a) :p.s. When I got my first washing machine I thought the way the clothes went around was novel. However the novelty does wear off pretty quickly. If I could watch my power meter run backwards I’m sure that would also be novel but I’m also sure the novelty would soon pass. Novelty is not a good way to judge public policy.

    Back to the silly stuff?

    As for your post @6, firstly, Australia has and had nuclear facilities – ask the residents of Hunters Hill and the taxpayers of the State of NSW. Secondly, major EU countries are trying to get rid of the stuff. Third, the insurance premium of $50m for nuclear operators, mentioned by Fran at a post some time ago, is laughable. (To Fran’s credit, she said the rest of the risk is to be carried by the public.) The sum of the personal liability insurance of all the houses in my street (not Parramatta Road but a relatively small suburban street in the leafy North Shore) is about that amount. Finally, why should people in Australia care if others don’t have anything to offer except military equipment and nuclear power plants? Since you are for ‘small’ tax, I am asking you to discuss with Fran why anybody who has technologically possible and real and financial resource feasible alternatives wants to cary a a potentially more than GFC public debt contingency.

    On the novelty bit – the novelty of nuclear power has worne off, too – not in Iran, India, Pakistan, China. True. But it is also true that circumstances are different.

    I assume you have an interest in uranium mining.

  10. March 18th, 2010 at 12:40 | #10

    Local Power has a community bulk buy PV scheme.
    http://localpower.net.au/buyinggroup.htm

    If you pick the 3kW system and look at the totally unsubsidised cost – i.e. no Solar Credits (RECs) and no FiT (but ignoring the cost of capital for now), over the system life, the price of electricity generated is around 20c/kWh. With retail electricity about to go over this price, we are about to hit “grid parity”, i.e. where the cost of PV electricity (over a 30 year PV system life) is the same or less than grid electricity. This is good news I think for a large uptake in renewables!

  11. Hermit
    March 18th, 2010 at 12:49 | #11

    In my opinion neither feed-in tariffs nor RECs are justified. My home PV is net metered at 18.5c per kwh. A neighbour who has a 14 kw microhydro gets the same deal. Whether he can sell RECs depends upon a bureaucrat deciding if his setup is green looking and playtpus-friendly. The rationale for FiT, namely to thin the fixed cost, could be used for anything. It gives rise to absurdities like negative pricing for commercial windpower in Europe. That is pay someone to use the electricity so the seller keeps the subsidy. RECs as offesets are illogical because they can be sold cheaply to coal burners so the whole exercise doesn’t save CO2.

    For the foreseeable future micro solar will add up to bugger all at great expense. Admittedly it somewhat offsets peak air conditioning demand. Even if it was major the grid may have trouble coping with irregular two way flows. Thousands of commuters return home at 6pm when their roof is producing 1 kw. Suddenly they turn on the 2.5 kw air con to cool the house. That sucks, in grid electricity terms.

    Let’s have more solar without FiT and RECs when the capital cost gets down to say $2 a watt, i.e. $2000 for an unconnected 1 kw rooftop system without any rebates. Noting that outer Melbourne got to 48C in the bushfires I think future summer heat will be deadly. Nukes cooled by sea water are the answer.

  12. BilB
    March 18th, 2010 at 15:02 | #12

    You’ve got your thinking around the wrong way there, Terge. Here is a calculation for you. Sydney has 256 solar days with an average 7.5 solar hours. If some, many or all houses and small factories have a 10kw solar PV system (not the systems that you are familiar with but another) that cost approximately $15,000 for the hardware, then the calculation becomes 256*7.5*10*$.17 which is $3264 per year. A house hold with such a system will pay for that system in 4.5 years, on the displaced cost of electricity imports alone, with any exports refunded at the regular buy in price indicated conservatively at 17 cents. After the payback period such a system is earning $3000 per year which if set against mortgage payments starts to significantly reduce the mortgage term. This prospect requires no feed in tarrif or carbon tax to be marketable. With such an incentive, hugely reduced mortgage term for the cost of an OK second hand car, do you think that such a prospect would be popular?

    Now apply the model to the whole community over a 30 year period and think about the impact of that on the main electricity generation industry and I think that you will discover that Nuclear power is no longer appropriate for Australia as its output will not match the nature of future demand for non solar power.

    No doubt your reaction will be that such a solar energy system is not available. For this brief moment in time that is true.

  13. Fran Barlow
    March 18th, 2010 at 16:24 | #13

    @BilB

    If some, many or all houses and small factories have a 10kw solar PV system (not the systems that you are familiar with but another) that cost approximately $15,000 for the hardware, then the calculation becomes 256*7.5*10*$.17 which is $3264 per year.

    A couple of things here.

    Firstly, that 17 cents has to be paid by someone, and those someones are ultimately going to be the pool as a whole, including everyone who doesn’t have access to that solar technology. If it is paid for out of a carbon cost then we really need to explore whether this is the cheapest way to reduce the emissions offset, all things considered. Personally, I prefer an early start and even if it were more expensive this way than by some other method, I’m more interested in the total abated, especially when the abatement is out of coal fired power.

    One suspects though that in practice, high costs per ton abated is going to cost abatement rather than electricity users.

    I’m also not sure about the accuracy of your calculation methods. It’s all very well to allow for an average 7.5 hours over 256 days, but are you allowing for the fact that peak insolation — say at high noon, is going to be a lot more than insolation either side of that time? Are you allowing for the tilt of the Earth at any given part of the year in relation to the sun?

    Professor Mackay illustrates these problems here.

    The power of raw sunshine at midday on a cloudless day is 1000W per
    square metre. That’s 1000 W per m2 of area oriented towards the sun, not
    per m2 of land area. To get the power per m2 of land area in Britain, we
    must make several corrections. We need to compensate for the tilt between
    the sun and the land, which reduces the intensity of midday sun to about
    60% of its value at the equator (figure 6.1). We also lose out because it is
    not midday all the time. On a cloud-free day in March or September, the
    ratio of the average intensity to the midday intensity is about 32%. Finally,
    we lose power because of cloud cover. In a typical UK location the sun
    shines during just 34% of daylight hours.

    The combined effect of these three factors and the additional compli-
    cation of the wobble of the seasons is that the average raw power of sunshine
    per square metre of south-facing roof in Britain is roughly 110 W/m2,
    and the average raw power of sunshine per square metre of flat ground is
    roughly 100 W/m2.

    Mackay goes on to point out that the calculations would be different in Australia. As it goes, Sydney is a lot closer to the equator than is London (51N as opposed to 34S) so we would get significantly more of the insolation at any given point in the same season, but cloudiness is a wild card. Not all those days are clear skied and they come off the calculation. And if we are talking of shutting down baseload, then averages are no good. We need to know about the lengths of time that they will produce minimal output and how minimal is minimal, unless we agree to have brown outs or keep gas plants or something else at at least white start readiness.

    And if we aren’t replacing much coal or oil combustion, one might wonder what the point of giving people extra near zero-CO2 highly subsidised power was.

    The fundamental constraint here is not technological though, but political. Will people agree to fund enough to do the job we need to get done when we need it to be done? I’d be happy to pay a premium if we could start right now, and the sooner we start the more I’d be happy to pay, but I’m just one person. Can we get about 5 or 6 million adult Australians onto the same page i.e. the page of savagely redcuing emissions by replacing coal with as much PV wind and other renewables plus storage as is needed to do the job?

    If the answer is that nobody would be game to bring it in because it would be too expensive and/or imply accepting power outages, then the potential of solar is largely theoretical. The technical numbers don’t matter. We will be stuck with coal.

    Just out of amusement, I took your optimistic calculation and assumed that 100,000 rooves in Australia took advantage of it and were able to produce their peak output for an average of 7.5 hours per day for 256 days and we paid out the $1.5 billion to do it. I worked out that in an average hour, we would be producing a bit less than 220MWe. Since baseload in Australia is between 15 and 27 GWe this represents just a tiny portion (a bit more than 1% of baseload at best.) This may understate its contribution during daylight hours of course. During the 7.5 hours of daylight it’s probably going to represent something more like 5% but nothing at night, when you’d fancy most people were recharging their electric cars.

    To get the kind of punch I’d like using this method you would have to make the system at least 15 times larger, spend 22 billion on the kits and maybe three times that on storage so that any surpluses could cover night demand and cloudiness and allow fossil plants to be at black start. I’d be happy to do this, but who else is up for it?

    But then, why not have large concentrated facilities, which would be more cost-efficient?

  14. Hermit
    March 18th, 2010 at 16:30 | #14

    @BilB
    Some heroic assumptions here. Firstly at a future unsubsidised capital cost of say $6 per watt the 10 kw system would cost $60,000. I don’t know the insolation regime for Sydney but let’s say the average annual day/night output is 16% of nameplate. I get 10 X .16 X 8,760 = 14,016 kwh per year. Alternatively try around 40 kwh daily average X 365 days. At 17c I make that $2,383 a year for grid input avoided or exported which means it will take 25 years to pay back the $60k capital.

    You will indeed make a profit (ignoring interest foregone) at uniform electricity rates if your home uses say 30 kwh per day. However without a battery pack you will be drawing upon the x-powered grid at night, as will hospitals and aluminium smelters that operate around the clock. That will have to be some major power source that doesn’t drop out suddenly. Since it is unlikely that enough households can afford 10 kw of PV most of them will need that alternative energy source as well, both day and night. Solar helps somewhat but absent cheap scalable energy storage it is limited. More detailed calculations (see Barry Brook’s website) show that the large amount of money that would have to be spent on solar would get a better 24/7 result if spent on certain other technologies. Solar could be a good daytime load follower if it was dirt cheap, which it isn’t.

  15. BilB
    March 18th, 2010 at 16:55 | #15

    Think about it, Fran.

    “Firstly, that 17 cents has to be paid by someone, and those someones are ultimately going to be the pool as a whole, including everyone who doesn’t have access to that solar technology”

    This 17 cents represents money not spent on electricity. ie if 50% of all electricity was generated within the distributed electricity generation system, then the gross turnover of the electricity industry would fall by 50%, and CO2 emissions from the electricity industry would fall by very nearly that amount.

    This 17 cents is also highly conservative

    http://www.smh.com.au/nsw/nsw-electricity-bills-to-soar-20100318-qgjw.html

    Solar irradiance at the equator is nearer to 1400 wats per square metre (see google)

    The system we are working with has many aspects and compensations that make the energy calcualtions conservative.

    Hermit the $cost per watt is $1.50 not $6, which makes the rest of your comment incorrect. Also, the 17c per kilowatt hour is entirely conservative, read the SMH articles.

    The cost of the hardware ($15,000) multiplied out to 6 million factory and domestic rooves is a very large number, but it is irrelevent as this money is a diversion of income to hardware from service costs. If this is hard to believe, think of it as interest on capital not paid ie if house mortgage terms were reduce by 50% multiply the amount of interest money not paid to banks by 6 million to see an astronomical figure.

  16. March 18th, 2010 at 16:59 | #16

    Fran / Hermit,
    Correct. Once you add in that the best PV cells are made using some pretty exotic (and dangerous) raw materials such as gallium arsenide and many other ones that require significant (and environmentally damaging) processing then, to me at least, this whole thing makes no sense.
    Really what is happening is that environmentally damaging materials and processess are being paid for out of general taxation and through subsidies that hit the poor hardest and benefit virtually solely the wealthy through (effectively) lower energy tariffs. The actual amount of power added to the grid is often put in at a times when it is not needed and could be more effectively supplied by almost any other method of doing so.
    Have I missed anything?

  17. BilB
    March 18th, 2010 at 17:08 | #17

    “But then, why not have large concentrated facilities, which would be more cost-efficient?”

    To say this is to miss the essential substance of the economics at work here. Once the system is paid off, every participating household or business is saving the money that they would otherwise be paying to grid suppliers. And this is an easy thing to test. Simply disable the PV system and then soon after a bill from the line provider will turn up and require payment. Quickly turn the system back on again and go on holiday with the savings. Other aspect is that property values of PV fitted houses increase relative to those not fitted.

  18. BilB
    March 18th, 2010 at 17:12 | #18

    Andrew, you have not been following the discussion.

  19. Tim Macknay
    March 18th, 2010 at 18:14 | #19

    Have I missed anything?

    Yes: the fact that domestic solar panels are not made of exotic materials like gallium arsenide – they are made of silicon. Gallium arsenide et al are used for specialised applications like the space program, and there is no prospect of their large scale deployment for domestic power generation. In short, your point is a red herring.

  20. iain
    March 18th, 2010 at 19:12 | #20

    Steve :I thought that queensland had a net feed-in tariff. I thought you only got the higher tariff for any net export to the grid over a billing period – net export over a billing period is likely to be zero for almost everyone.
    Is this right? Do QLD have a gross or a net feed-in tariff?

    In Queensland it’s net, at 44c/kWh (last time I checked).

    It isn’t over a billing period however. It’s real time net.

    From 9am-3pm many homes, especially if no one is home, use about 200-400W/h. A 1kW panel exports about 400-600W/h during this period (they rarely get up near 1000, except in summer).

    In Queensland, you are exporting about 3kWh a day for a good 1kW system. Making around $1.40 a day on average.

  21. Sam
    March 18th, 2010 at 19:26 | #21

    I don’t know if this is still current, but at least until a few months ago, solar was being artificially boosted by “phantom REC’s.” The government would allow a person with small scale residential solar to sell 5 REC’s for every 1 that was produced in order to increase the return. In effect, selling solar electricity was a huge net environmental BAD. It was on the 7:30 report a couple of months ago.

  22. Tim Macknay
    March 18th, 2010 at 19:36 | #22

    Sam, the Fed Gov has announced that it intends to change the system to get rid of phantom REC’s, but the change requires legislative amendment. As far as I am aware, the Gov has not yet introduced a Bill into Parlmt, so the phantom RECs still stand at present.

  23. Alice
    March 18th, 2010 at 19:39 | #23

    We live in Australia.

    One of the sunniest countries on earth. If solar isnt going to work here then it isnt going to work anywhere.

    So why, when I have visited Hawaii do I see rows and rows of streets with houses with solar on the roof. Let me guess…a government actually pulled out a suppository and funded it?

    Never believe the “market” talk coming from the United States when it comes to infrastructure – they are not that stupid. They only talk “market” so every other c ountry will open its doors to their investment when they feel like it – woe betide a country who wants the US to open its doors, especially in agricultural produce (farmers lobby in US pretty damn powerful and nicely protected). Take a look at their deficit if you dont think they dont spend publicly on infrastructure (even then not nearly enough – but clearly enough to get solar on a huge number of roofs in Hawaii).

    Here in Australia we have been subscribing to the “market talk” but not to the walk…unlike the US.

  24. Sam
    March 18th, 2010 at 19:43 | #24

    Here is the relevant link.

  25. Sam
    March 18th, 2010 at 19:57 | #25

    Ok thanks Tim. In that case, my point stands. I can’t believe anybody ever thought phantom REC’s were a good idea. It should have always been clear that it would cause REC inflation and undermine the entire renewable market. It would be better for the environment if you just turned on all your electrical appliances and wasted electricity. Every 1 REC you create displaces 5 from other alternative sources.

    John, were you aware of this?

  26. Michael
    March 18th, 2010 at 20:22 | #26

    @Alice
    Indeed.
    I like what John Kay says about the myths of the “American business model”. They don’t practise what they preach and their own success isn’t attributable to the market presprictions they are pushing onto everyone else.
    There seems to be more fog than clarity on the whole issue surrounding PV solar. The technology will improve, the price will come down, the management of electricity in homes will change (and solar installations provide a test bed for this). The prefered solution is a proper price on carbon but since that nots on the horizon as far as subsidies go when compared with FHOG and LPG tanks I’m not convinced that it is unreasonable. Another issue is distribution losses and grid maintainence. The grid is expensive and it’s construction and maintainence need to be factored into large concentrated energy generation such as nuclear.

  27. Alice
    March 18th, 2010 at 21:01 | #27

    @Michael
    Any chance you could get John Kay’s article up without me having to subscribe Michael?.I wouldnt mind reading it.

  28. Michael
    March 18th, 2010 at 21:39 | #28

    @Alice
    Maybe there is a problem with the link, but it worked for me and I wasn’t required to subscribe. Try http://www.strategy-business.com/article/03310?gko=db3fa or try googling “John Kay: The Thought Leader Interview” and that should find it. The interview is about his book “Truth about Markets” which is a great read.

  29. TerjeP (say tay-a)
    March 19th, 2010 at 02:38 | #29

    I assume you have an interest in uranium mining.

    No I don’t. The fact that you assume I do is telling.

    Australia has and had nuclear facilities – ask the residents of Hunters Hill and the taxpayers of the State of NSW.

    Noted. We also have Lucus Heights.

    Secondly, major EU countries are trying to get rid of the stuff.

    The tide is somewhat turning. In Sweden public opinion is tilted in favour of keeping nuclear. They are rethinking their former ban on new nuclear plants with amendments to legislation now in the pipeline. Germany is looking to halt their shutdowns. And of course France is almost exclusively powered by nuclear.

    the novelty of nuclear power has worne off, too

    My point was that public policy should NOT be based on novelty. So I’m not real sure what you’re point is.

  30. TerjeP (say tay-a)
    March 19th, 2010 at 02:51 | #30

    BilB – I’ve never paid as much as 17 cents per kWh. I assume you take this figure from one of those artificial feed in tariffs that is more about politics than energy economics.

  31. Marcus
    March 19th, 2010 at 05:41 | #31

    I paid 20€c/kWh. But I have stopped buying from the grid and stopped heating some years ago.
    You can heat any house with body heat (70-90W/pp) and excess heat. If it is really cold (we do get -15°C) just use some oven for that days or a heat pump. But I guess you never go sub 5°C even at night.
    A household of 4 does not require more than 6kWh a day, including water.
    EVs would need about 8-20kWh/100km.

    PV cells can be made from abundand materials. You do not even need Germanium or Indium.
    Some Austrian company is upscaling their prozess right now. Their thinfilm cells will be made from copper, zinc, tin, sulphur, and selenium.
    http://www.crystalsol.com/technologie/technology.html
    Roll to roll process will not only reduce price by 70-85% but these 3rd Gen cells will be applied to building materials (facades, tiles, walls, windows,…).
    Once you can buy a pv roof for 20% premium you will not think twice.
    These cells also work better in lowe light or clouded situations than previous cells.
    There are other nano cells that need only 5% of the silicone but double the output.

    nuclear industry cant keep track with this developements. Thats makes nukes huge financial risks.
    Then there are new wind plants that will take their share on the energy market.
    Kitegen is just building their first 27MW windpark. Once they get their Stem systems on the market and start to built carousel configuration plants from 100MW to GWs (technical they can go up to 60GW plants) I can`t see anybody investing into CO2 trouble or nuclear trouble. Nobody is investing in nukes now…any bank will warn you….wait…only tax payers are forced to pay for nuclear.

  32. Hermit
    March 19th, 2010 at 05:53 | #32

    @BilB

    the $cost per watt is $1.50 not $6

    . Where in the world can you get unsubsidised solar that cheaply?

  33. jquiggin
    March 19th, 2010 at 07:55 | #33

    I hadn’t heard of phantom RECs. They certainly sound like a silly idea – I’m not sure if my deal attracted any.

  34. Ernestine Gross
    March 19th, 2010 at 08:17 | #34

    Terje,

    1. You say you have no interest in uranium mining. As consequence I discard my assumption. (Indeed it is telling that I make explicit assumptions rather than presumptions)

    2. Yes, we have Lucas Heights, too. But it is the decommissioned site at Hunters Hill which provides data for longer term consequences.

    3. German politicians are discussing delaying the shutdown of existing nuclear plants. This observation hadly changes my point.

    4. “My point was that public policy should NOT be based on novelty.” Agree; only you introduced novelty and it wearing off.

    5. I assume you agree with my point about future tax and debt contingencies from uninsurable risk associated with nuclear power.

  35. Ernestine Gross
    March 19th, 2010 at 08:25 | #35

    Phantom RECs: There seems to be a problem with going from the macro framework of the Kyoto protocol to implementation on the institutional design level. The ABC Landline program last weekend had an item on a biomass fuel production company being on the verge of bankruptcy due to the issue of RECs.

  36. Fran Barlow
    March 19th, 2010 at 08:34 | #36

    @Marcus

    Nobody is investing in nukes now…any bank will warn you….wait…only tax payers are forced to pay for nuclear.

    Wrong.

    Over half of Swedes think that the country should continue to use nuclear power plants and that Sweden’s existing reactors should be replaced with new ones, a new opinion poll has found. [...] he poll showed that 52% of Swedes support the continued use of nuclear energy, 30% support the replacement of Sweden’s current fleet of power reactors when they have reached the end of their operating lives and 22% think that additional new reactors should be built.

    UAE

    Poland

    South Korea recently started constructing a test facility for a sodium-cooled fast reactor capable of reprocessing spent nuclear fuel without generating weapons-grade plutonium, an official at the Korea Atomic Energy Research Institute said Sunday. The move seeks to get around a clause in the Korea-U.S. Atomic Energy Agreement that bans Seoul from reprocessing its own nuclear fuel. The agreement expires in 2014.

  37. Hermit
    March 19th, 2010 at 09:22 | #37

    The financial woes of the bagasse burning power plants shows that RECs are on a shaky foundation. If I recall they needed a price of $52 per megawatt hour saleable as an offset whereas the CPRS ‘solar multiplier’ had driven the price down to $24. The correct approach should be that biomass co-fired fuel escapes carbon tax, prorata if mixed with coal or gas. That gives them an electricity price advantage without RECs or feed-in tariffs. Note the Landline program poured scorn on the idea of a fourfold increase in renewables within the decade. Just to create even more confusion pricing tribunals have pre-approved State wide electricity price increases that include carbon charges. That assumes the CPRS will even get off the ground.

    The CPRS increasingly looks fudged up beyond all recognition. Meanwhile coal exports to China increase strongly, albeit from a low base. There is no sign that Australia or its carbon junkie clients will wean themselves off coal anytime soon. Wasn’t Rudd supposed to do something about it?

  38. Fran Barlow
    March 19th, 2010 at 09:35 | #38

    @Hermit

    The correct approach should be that biomass co-fired fuel escapes carbon tax, prorata if mixed with coal or gas.

    Or simpler still, you work out the net CO2 flux associated with the deliverable biomass and apportion that to the resultant fuel feedstock mix. If the biomass for example, in LCE terms adds 100Kg of CO2 per tonne of CO2e absorbed, then it is gets a 90% credit. Some waste biomass might get a lot more. For example putrescible waste such as sewage or landfill would normally be disposed of and eventually release 100% of its carbon load back into the atmosphere. Thus, 100% of any such waste could be zero rated, less the CO2e cost of delivery to the plant. Since all of this waste and its disposal via council collection or the sewerage system would originally have had a carbon charge on it, this should be fine.

  39. BilB
    March 19th, 2010 at 09:42 | #39

    Terge 17 cents? I took that figure from my power bill. The figure was actually 19 cents but I reduced it for fairness. If you are on the grid and have never paid that much then you soon will be.

    Hermit, currently availble technology being repackaged into a more useable form, coming soon. That is the problem with so many of these discussions, they are built on comments of comments of comments, and rarely reflect the true science and industry. Take Fran’s reference above to one Professor Mackay

    http://www.inference.phy.cam.ac.uk/withouthotair/c6/page_38.shtml

    that guy should have his title taken away for putting forward such a fallacious article and reinforcing it with his professional standing. For starters the solar energy at the equator is 1360 watts not 1000, and then he fails to recognise that solar panels are optimally presented normal to the radiation ie flat to the sun not flat to the ground, so his derating is false. The real issue at higher latitudes is to do with solar refraction off the atmosphere and losses due to the greater thickness of the atmosphere that the rays have to penetrate. I doubt that his cloud cover information is correct either. And here is the problem, people with Fran’s minimal science knowledge are not able to see falacies, and accept the information as being true because the guy applied his professional title to his misconceptions.

    The point that I am making is that solar technology is proceeding at a pace many magnitudes stronger than Nuclear technology offering ever higher efficienceis along with steadily reducing costs, and the energy world 5 and 10 years from now will be a completely different one.

    And curiously enough this is the market at work doing precisely what I was sure that it would not do. But very importantly the market would not be returning these exciting new prospects without the incentives provided by our perception of approaching doom.

  40. wilful
    March 19th, 2010 at 10:39 | #40

    The key issue between BilB and hermit/Fran is the disputed figure of $1.50 versus $6. That’s the real matter.

    I’d certainly been led to believe it was more like $6 than $1.50. But I’m sure BilB can provide solid links to prove his estimate.

  41. Sam
    March 19th, 2010 at 11:11 | #41

    Hi John, yes your (and Tim’s) deal both involve phantom REC’s. They apply to any home PV system up to 3KW. Here is the link to the 7:30 report transcript. Also the Crikey article I linked to before is good.

  42. Sam
    March 19th, 2010 at 11:17 | #42

    I understand that this policy probably won’t be around forever. However, if it were it would mean that one should never (if one was concerned purely for the environment) get solar PV, unless one chose to forgo government help.

  43. Tim Macknay
    March 19th, 2010 at 11:24 | #43

    Sam @41 is correct. Phantom RECs have been a problem ever since the Federal Government introduced the “solar credits” scheme. Anyone who has installed a PV system under that scheme has created phantom RECs (including me). As I understand it, the phantom RECs, combined with the inclusion of solar hot water systems in the RETS scheme, have depressed the price of RECs to the point that many large-scale renewable projects are unviable. On February 26, the Federal Government announced that it intends to introduce amendments which will get rid of phantom RECs and restore investor confidence in utility-scale renewables. The announcement is here.

  44. Tim Macknay
    March 19th, 2010 at 11:38 | #44

    Sam @42, even with the phantom RECs problem, a solar PV system will still deliver an environmental benefit, albeit a reduced one compared to what the benefit would be if there were honest REC accounting. It was certainly a consideration for me when deciding whether or not to install the system, and I formed the view that it was unlikely the policy would persist, particularly given the fact that its defects were being pointed out quite vigorously.

  45. Sam
    March 19th, 2010 at 12:16 | #45

    I disagree with that last Tim@44. According to my understanding of supply/demand curves, if you create 1 REC and then sell it, the net effect is a displacement of 1 other- just marginally profitable- REC that would have otherwise been supplied. Yes, you do slightly lower the price of the good, leading to a slight increase in overall demand, but (on reasonable assumptions about the price elasticity of REC demand) the net change in quantity is still less than 1 REC. In effect, you give only a slight benefit to the environment, some fraction of 1 REC.

    Now imagine that instead of selling just 1 REC, you sell 5, while still only generating 1. You now have the bad effect of displacing 4 marginally profitable “real” RECs, and only the good effect of some fraction of 1 REC. Hence, the net environmental benefit is negative

    Does anybody disagree with this analysis?

  46. TerjeP (say tay-a)
    March 19th, 2010 at 12:29 | #46

    Ernestine Gross :
    Terje,
    1. You say you have no interest in uranium mining. As consequence I discard my assumption. (Indeed it is telling that I make explicit assumptions rather than presumptions)
    2. Yes, we have Lucas Heights, too. But it is the decommissioned site at Hunters Hill which provides data for longer term consequences.
    3. German politicians are discussing delaying the shutdown of existing nuclear plants. This observation hadly changes my point.
    4. “My point was that public policy should NOT be based on novelty.” Agree; only you introduced novelty and it wearing off.
    5. I assume you agree with my point about future tax and debt contingencies from uninsurable risk associated with nuclear power.

    4. John introduced novelty with his point about how fun it was to watch the meter run backwards . I was merely responding.

    5. You are assuming too much again. Just because I don’t respond to a point that does not mean I agree with it. To be honest I didn’t think your point was that clear in what it was claiming so I elected to ignore it.

  47. Ernestine Gross
    March 19th, 2010 at 13:12 | #47

    @TerjeP (say tay-a)

    4. Not quite.

    5. I can’t find anything unclear.

  48. BilB
    March 19th, 2010 at 13:33 | #48

    Willful, this is a project that I am working with. This is our estimate of how the pricing will come out. There are 3 other projects to be released before that one so it is a little way down the track which pushes it to the back of next year. Still a lot closer than Terges Gen IV (freebie if you listen to Fran) Nuclear reactor. No I am not going to link to the technology, suffice it to say that it is all public. The earlier projects (non solar projects) contain much of the electronic development required to make the PV system work efficiently.

  49. Tim Macknay
    March 19th, 2010 at 13:46 | #49

    Sam @45, I’m no economist, but my comment was based on the intuition that, looking at the MRET scheme as a whole, a plethora of phantom RECs would result in a reduced uptake of renewable energy generation relative to if there were no phantom RECs, but still an absolute increase in the uptake of renewable energy. However, I take your point, which I understand to be that, looking at individual installations, an installation that results in the creation of phantom RECs would result in a reduction in the amount of renewable energy capacity installed compared with an equivalent installation that did not create phantom RECs, notwithstanding that the scheme as a whole still results in the increased uptake of renewable energy.

  50. Sam
    March 19th, 2010 at 16:34 | #50

    Tim@49, I claim that a solar installation funded with phantom RECs is worse than no installation at all. This is because it reduces investment in other renewables to such an extent that it more than offsets the solar investment. However, I do agree that having a REC market with any positive price (even with phantom RECs involved) generates some environmental benefit.

  51. TerjeP (say tay-a)
    March 20th, 2010 at 05:44 | #51

    5. I can’t find anything unclear.

    EG – having your own statements understood by you is necessary but not sufficient for clear communication. As best I can tell this is your comment that you would like me me to agree or disagree with:-

    the insurance premium of $50m for nuclear operators, mentioned by Fran at a post some time ago, is laughable. (To Fran’s credit, she said the rest of the risk is to be carried by the public.) The sum of the personal liability insurance of all the houses in my street (not Parramatta Road but a relatively small suburban street in the leafy North Shore) is about that amount.

    I have no context at all for what Fran said “some time ago”. I don’t know if she was talking about nuclear processing plants, nuclear power plants, uranium mines or what. I don’t know what the insurance is intended to cover and if it is a one off cost or a monthly cost. I don’t know if it relates to construction or operation. Basically you have given no information to show what Frans earlier claim was really saying let alone evidence or argument as to whether it was right or wrong. How am I supposed to agree or disagree with something so vague?

  52. Hermit
    March 20th, 2010 at 08:17 | #52

    George Monbiot calls feed-in tariffs ‘the German disease’
    http://www.monbiot.com/archives/2010/03/12/the-german-disease/
    and in passing has a swipe at offsets, in this case provided by RECs. The single best instrument to force an early shift away from carbon is to make carbon more expensive. Other instruments like MRET, FiT and REC dance around the problem but often with perverse results. I’ve mentioned wind power negative prices upthread. Monbiot suggests that helping well-to-do households with PV is a transfer from the poor to the rich. In Australian terms battlers are not in a position to take advantage of the subsidies. He has also argued that PV doesn’t suit either the UK or Germany I presume referring to cloud cover and northerly latitude.

    I’ve had PV for 5 years (sounds like a disease) and I would describe it as a ‘helper’. We are kidding ourselves if we think a single coal fired power station will be retired as a result of PV.

  53. BilB
    March 20th, 2010 at 12:56 | #53

    Hermit,

    Your end conclusion there is perhaps the most significant of this discussion. In a world of unprecedented technological change your confidence in the permanence of the present in indeed impressive. This is significant because it paraphrases the last 40 years of energy development and transportation technology improvement. “nothing significant will happen because up till now that is how it has been”. The oil era was so successful that it dominated all. The nuclear era came to a grinding halt with the development of the fast breeder reactor when people realised what the hazards were, and several higfh profile failures cemented that thinking in place.

    40 years on and 4 billion more people that oil security which was to last for hundreds of years has become totally doubful, and the mess that the earth might have absorbed if it did infact take hundreds of years to consume the same amount of oil has begun to threaten the stability of our civilisation i nthe most indirect of ways. Meanwhile the marketing of everything has advance to a science and with a simple anme change the untinkable nuclear spectre has arisen again as GenIV.

    We face a world of change. However the only constant, the only essential and unchanging part of our being is that the sun keeps shining. There is something poetic about all of this in that, all that we believe will not change is in fact changing at an unmanageable pace while we completely ignore the fundamental truly unchanging element that underpins our very existence.

  54. TerjeP (say tay-a)
    March 20th, 2010 at 13:46 | #54

    The single best instrument to force an early shift away from carbon is to make carbon more expensive.

    The best thing you can do is remove obstacles that make carbon free energy cheaper. We should end nuclear prohibition.

  55. jquiggin
    March 20th, 2010 at 13:55 | #55

    Terje, you’ve made this bogus claim about 100 times already. Read the Switkowski report, for heavens sake. It shows, absolutely clearly, that nuclear can’t be economic in Australia without a substantial carbon price.

    Until you can come up with a coherent response to this point, please don’t post further along the lines above.

  56. Fran Barlow
    March 20th, 2010 at 14:24 | #56

    And despite my general suspicion that nuclear power is key to any serious industrial scale energy policy aiming at low carbon emissions, Terje makes no sense when he claims that nuclear prohibition is an obstacle that makes carbon free energy more expensive.

    The prohibition is irrelevant to the cost of near zero emissions energy. They cost what the cost and so does nuclear. The chief obstacle is the capacity within a competitive market for fossil thermal to externalise its dumping, transport and harvest environmental footprint costs.

  57. BilB
    March 20th, 2010 at 15:25 | #57

    Fran,
    Your comment there has absolutely nothing whatsoever to do with the topic and discussion.

  58. BilB
    March 20th, 2010 at 16:16 | #58

    Thinking of solar energy in the broader sense I had a little look to see what the world really believes and I came up with some interesting trivia

    From

    http://www.cus.net/news/news4.html

    comes this item

    ““In the 17th century, we had 90,000 windmills in Britain. They were a part of life. What we’re looking to do now is install perhaps 4,000 turbines, making 5,000 in total.”

    And from

    http://cleantechnica.com/2009/07/30/renewable-energy-on-the-rise-fossil-fuels-declining/
    comes this

    In April of this year (2009), renewable resources accounted for approximately 11.1% of total U.S. energy production. At this level, renewable resources have now passed up nuclear power in energy production. Nuclear power accounted for approximately 10.4% of total energy production during that month.

    I know that this is waving a red flag at a bull but I thought that the trends were worth looking at.

    One thing about solar energy, and this has been talked about in various ways is that it enfranchises every one. We can all use it, we can all get involved. And as many commenters have indicated, going energy independent even to a small degree builds awareness about consumption. This in itself is a a CO2 emission mitigation force. It is not just the power produced by ones solar panels, but if awareness leads to energy conservation then the solar is doubly effective.

  59. Fran Barlow
    March 20th, 2010 at 16:47 | #59

    @BilB

    Your comment there has absolutely nothing whatsoever to do with the topic and discussion.

    You obviously read selectively. How embarrassing for you.

  60. jquiggin
    March 20th, 2010 at 16:50 | #60

    Cool it down, please

  61. BilB
    March 20th, 2010 at 18:48 | #61

    I do that sometimes. However, I accidentally hit the wrong button and found this page

    http://cleantechnica.com/

    It is a really good read.

  62. russ
    March 22nd, 2010 at 02:18 | #62

    The cleantechnica blurb a good read? ?t says nothing new or different – just rehashed verbage.

    Storage is the big problem – to make CSP baseline power you need several days worth of storage and today we are maybe up to 6 hours – if the present concept works out.

    The great green google is working on the mirrors as well – hope that effort pays off better than most of their green investments!

    The solar panels on peoples roofs are an absolute drop in the bucket and a very expensive drop! The present model is not sustainable.

  63. BilB
    March 22nd, 2010 at 03:23 | #63

    Russ, Same old blurb? I think not. It depends entirely upon what you are able to extract from the information. For starters for Alcoa, a major aluminium producer and electricity consumer, to be experimenting with CSP technology means that they have their eye on this technology as both a customer and a supplier.

    CSP storage the present methods, concrete blocks, have been in use for many years and work fine for up to 8 hours. Newer installations using eutectic salts will extend that considerably. Storage for days is meaningless as there is no need to store beyond the collector capacity. CSP bridges the gap by using gas and/or biomass to fire the boilers during extended non solar periods. This is the Hybride system.

    Rooftop PV is a minor player at this stage, but to write it off is to not understand the process of development and growth. Distributed power will become 50 to 60 percent of the solution over the next 3 decades I believe.

    As pointed out here

    http://cleantechnica.com/2009/07/30/renewable-energy-on-the-rise-fossil-fuels-declining/

    total energy delivered by renewables is accelerating and has overtaken Nuclear as an energy supply solution. This process can only gain strength as there are far more investors with much more to gain than there are for the traditional energy producers. And as the renewable industry gains strength the market size for the other shrinks further diminishing the appeal of the investment.

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