Home > Economics - General > My response to Grattan on solar PV

My response to Grattan on solar PV

June 1st, 2015

Crikey has published my reaction to the Grattan Institute’s Report on solar PV (over the fold). My summary

the headline finding of the Grattan Report is totally wrong, even ignoring all the criticisms that have been made of the analytical framework. The report should be retracted and rewritten.

The Grattan Institute’s Report on solar PV , written by Tony Wood and David Blowers, has received plenty of adverse reactions . That’s not surprising, considering its sensationalist presentation, tendentious arguments and dubious analysis; in all these respects it’s well below the standard I’d expect from Grattan.

I’m a little reluctant to pile on further, but I don’t think the criticisms I’ve seen have really focused on the fundamental problem in the Grattan analysis. Although the summary suggests the report is about subsidy schemes designed to promote renewable energy and particularly solar PV, this is highly misleading. The core of the Grattan analysis relates to the electricity distribution network. The analysis is both conceptually unsound and empirically weak.

The approach used in the Grattan report is to compare the cost of rooftop solar PV with that of (mainly) coal-fired electricity, adjusted for a carbon cost of $30/tonne. No allowance is made for distribution costs, and any difference is regarded as a subsidy. That’s defensible, though dubious, in relation to feed-in tariff schemes (all of which have now been closed), but the big numbers in the Grattan analysis come from applying the same analysis to self-generation. According to the report, someone who installs PV and uses the electricity themselves, saving the retail price (say 25c/kwh) is being subsidised by the amount of the difference between the retail price and the wholesale price of the electricity they would otherwise have bought (say 5c/kwh, for a subsidy of 20c/kwh).

This reasoning is bizarre, to put it mildly. Grattan’s reasoning is equally applicable (almost) every time you turn off an appliance or lightbulb: by saving 25c/kwh, you are robbing society of 20c.

The underlying argument is that electricity distribution charges are levied on a uniform basis per kwh, but the costs of the electricity distribution network depend, to a large extent on peak demand. This mispricing reflects the mess that was called ‘electricity market reform’, dating from the 1990s, and has nothing to do with solar PV or renewables. The real subsidy here is to airconditioning which produces a demand peak in the late afternoon and early evening. Stretching a bit further, you could say that electricity mispricing subsidises hot dinners and ‘Who Wants to be a Millionaire”, which produce electricity demand at or near the evening peak.

The Grattan argument is that consumers who reduce their electricity use at times other than the evening peak, for example by installing solar PV, or simply by being careful, are thereby shirking their obligation to fund the costs of meeting peak demand. Apparently, consumers are supposed to make decisions based on the prices that would prevail under ideal pricing rules, rather than those they actually face.

But, even granting all these assumptions, the Grattan analysis is both theoretically and empirically unsound. The errors are such as to make their estimated subsidy to solar worthless, even accepting their analytical framework.

The empirical error is to assume, on the basis of misleading and inadequate data, that solar PV makes no contribution to meeting peak demand. The data on which this assumption is based is derived from just five days, and one state: the second Tuesday in October, in South-East Queensland from 2009 to 2013. For this data set, they find increased use of solar power at midday, reducing demand, but no change in the peak demand, which occurred at 6pm, when most people are at home, settling down for dinner, and when airconditioning demand is strong.

This is a startlingly convenient choice of observation. It happens that sunset in Brisbane in early October takes place around 5:50 pm, just in time to rule out any contribution from solar PV. In choosing this date to request data from Energex, it may have escaped the Grattan team’s attention that;

* Brisbane is close to the easternmost point in Australia, implying an early sunset

* Brisbane is the most northerly state capital, implying less seasonal variation in daylight times

* Sunset is later in December than in October

* Queensland does not have daylight saving

If the Melbourne-based researchers had sought data from local sources, for December, they might well have found that the peak demand occurred well before sunset (8:40 pm).

It is, of course, true that, given the pricing distortions noted by Grattan, many solar panels are located suboptimally from a social viewpoint. But it is absurd to claim that this constitutes a subsidy.

Important though the empirical error is, it is less significant than the theoretical error. In treating the entire avoided wholesale cost as a subsidy, Grattan assume that the optimal distribution charge for off-peak use is zero, and that the entire charge should be imposed at peak usage times.

This is an elementary confusion of marginal and total effects. If such a policy were adopted, the distribution charge at the current peak time would have to be increased to something like$5/kwh. But of course, with such a pricing structure, the peak would turn into a trough, when only the most essential uses of electricity continued.

A more reasonable assumption would be that the peak charge should be something like double the current value. Assuming that the peak charge applied to 10 per cent of total usage, that would permit a reduction of 10 per cent in charges at other times, or around 2c/kwh. But with that pricing structure in place, the social value of solar PV would be around 23c/kwh, at least four times the value imputed by Grattan. Recalculated on that basis, the alleged subsidy would disappear almost completely.

To sum up, the headline finding of the Grattan Report is totally wrong, even ignoring all the criticisms that have been made of the analytical framework. The report should be retracted and rewritten.

fn1. This is way below most economic estimates of the social cost of CO2 emissions. The credibility of the report isn’t helped by the citation of the Warburton Committee as an authority.

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  1. June 1st, 2015 at 22:03 | #1

    It may not be relevant, but I remember reading that power generators in Queensland were struggling precisely because solar pv was feeding in lots of power at peak demand. Apparently it is those extreme peak periods where the wholesale price of electricity skyrockets that make all their money. Solar pv kicks in during those times, and the power generators struggle.

  2. Collin Street
    June 1st, 2015 at 22:44 | #2

    But that’s the consequence of taking pareto efficiency seriously, isn’t it? A method of avoiding having to pay to someone becomes a cost to that someone.

  3. June 1st, 2015 at 23:25 | #3

    Well thank you for this, JQ. I have been pretty disgusted by the Grattan Institute on solar for some time now (they brought out their first dubious report some time ago), and it’s good to see someone with your public profile telling it straight. Will have to tweet about this one.

  4. Newtownian
    June 2nd, 2015 at 08:07 | #4

    No allowance is made for distribution costs, and any difference is regarded as a subsidy.

    But its consistent with the NSW IPART rationale for providing a very poor return to PV in NSW after the subsidy if dropped next year even during the peak period when prices are 7 to 9 times higher. Still the latter shock with push people to battery banks which are emerging happily just in time ….. until they are made illegal.

    The approach used in the Grattan report is to compare the cost of rooftop solar PV with that of (mainly) coal-fired electricity, adjusted for a carbon cost of $30/tonne. ”

    This is called economic rational rationalization. You start with the position that you the consultant are rational and/or your paymasters are rational because the market is never wrong and instantaneously understands the right price. The job of the plague rat consultant then becomes to explain to the ignorant peasants why their masters are right whatever they do. Ergo you start with the answer they want which must by definition be right and then jump through hoops to show their position is correct much like the scholastic theologians of old.

    Models are great for this purpose. The method is called backcasting as I’m sure you know and really easy now with Bayesian Networks. You start with where you want to end up and then fiddle the inputs so they line up, though not so transparently as to make your analysis laughable. And so you get this $30 per tonne derived rationalizationly as though the cost of climate change and planetary ecosystems can be reduced like everthing else to a short term willingness to pay based figure invisibly subsidized by cheap coal and existing infrastructure.

    So its great to see you come out here pointing to their errors John. Unfortunately Grattan’s game is not balanced analysis but bad faith propaganda or prejudice.

    ps A secondary motive may be that these guys are vying for a fellowship at the Bjorn Lomberg Centre for truth dissimilation. Tic 1 for this addition to their CV. Or maybe Grattan is trying for that 4 million in spare cash?

  5. Newtownian
    June 2nd, 2015 at 08:08 | #5

    oops- sorry about not closing the block quotation.

  6. Ken Fabian
    June 2nd, 2015 at 08:19 | #6

    How much ‘subsidy’ did fossil fuel generation, and fossil fuels generally, get during this period of PV ‘profligacy’? I’ve seen multi billions a year figures but have wondered how comprehensive and valid some estimates have been.

  7. Ikonoclast
    June 2nd, 2015 at 08:51 | #7

    A few points, starting with a minor point first:

    1. “That’s defensible, though dubious, in relation to feed-in tariff schemes (all of which have now been closed),” – JQ. Shouldn’t the statement in parentheses read “(all of which have now been closed to new entrants)”?

    2. With regard to air conditioning in a place like Brisbane, it is my contention that solar power could drive all air conditioning needs for a house or building with the correct passive design or modifications. This correct design would include good insulation and heat ballast. The solar panels can drive an air-conditioner all day in hot sunny weather. The conditioning effect cools the internal heat ballast (any combination of tiles, stones, slab base, walls of block or stone, or internal heat ballast water tanks which can actually be rainwater tanks in some designs). The house interior stays cool all night due to the heat ballast effect.

    So it not the case that solar power cannot provide cooling at night without batteries. It can provide cooling at night via heat ballast. I know this works because I have one large downstairs area (a granny flat area which also includes a large rumpus) which is kept cool in this manner. The fact that it is on a concrete slab with ceramic tiles means there is sufficient heat ballast right there without going to any extra modification cost. The rumpus room has a lot of glass and no double-glazing which of course is less than ideal for insulation and yet the process still works wonderfully.

    In theory, Brisbane could, by a correct fit-out say over 20 years, move to a position of nearly 100% solar powered air-conditioning for all of its buildings private, commercial and industrial. This could be achieved with very little need for battery storage. Thermal ballast is the way to go: water, rocks, cement and tiles are pretty cheap stuff compared to batteries and most are construction materials anyway.

    3. I agree with Newtonian that the current fossil-fueled capitalist orthodoxy essentially rigs study outcomes to denigrate and diminish the full possibility set of renewable power. Since our political economy system is unresponsive to majority interests (only being responsive to capitalist interests) we have to rely, for the time being, solely on new capitalists in this arena displacing old capitalists and becoming the new dominant force. As we have seen over the last 20 years, this is a slow process and maybe too slow to save us from dangerous climate change.

  8. Hermit
    June 2nd, 2015 at 09:23 | #8

    I’m waiting for a precis of the report to come out on free media so this is just a couple of quibbles based on second hand info. I seem to recall news stories of people escaping 35C heat at midnight on Melbourne beaches. That suggests plenty of others are using aircon.

    In January sunset is about 8.30 pm local time. However PV output declines from about 6 pm. West facing fixed panels might delay this but give less output in the morning. When a demand region has high PV penetration it means dispatchable power sources have to ramp up even more quickly to meet the early evening peak. This could be done with energy storage but batteries aren’t there yet, gas peaking plant is costly to run and coal plant needs to be kept hot all day. Perhaps PV owners should pay more for grid electricity in the mid evening to compensate.

    Ideally we want an energy mix which is low CO2 but the players can do what they want without overt or unintended cross subsidies. I’m not sure if this was the aim of the Grattan report but a a free synopsis would help. However at 1.5% of our electricity PV is not the big issue.

  9. Ross
    June 2nd, 2015 at 09:29 | #9

    John
    Notionally, you are correct in your assessment of the impacts of solar and the comparison to traditional generation rather than larger scale renewables however, in your analysis there is also a flaw.

    The cost of managing a demand in a localized area when there is insufficient peak demand within the distribution network to accommodate the load being fed-in.

    In the very early stages of the QLD scheme, Energex identified some significant issues with load on localized network areas that warranted augmentation to manage because it was occurring at the peak solar generation time not the peak demand time. At the time it was believed that there were a large number of transformers installed to manage this at a cost of $70k each.

    So as much as there may be a benefit on one hand for avoided coal generation there is an equal negative impact in network augmentation and forgone revenue at the network end that removes the benefits.

    I would also suggest looking at the VCEC analysis of the economics in 2012, link below, that considered the costs associated with the network as much as the generation. The conclusion was also factoring in that there had to be some benefits for consumers installing these systems otherwise there would not be any future investment and the price of panels would be uneconomical.

  10. Ikonoclast
    June 2nd, 2015 at 09:48 | #10

    @Hermit

    Have you not read and understood my point about thermal ballast? A room, house or building which is air-conditioned all day by solar power, which is reasonably well sealed and insulated and which has internal thermal ballast CAN stay adequately cool all night. Under these condition there is ZERO requirement to run the air-conditioner at night from solar-generated electricity or any other generation source.

    Your assumption that electricity always has to be available at night to drive air-conditioners is 100% false and demonstrably so in practice. I air-condition essentially the entire lower level of my house by solar power in summer by day and then it stays comfortably cool all night with the heat ballast effect and the air-conditioner off. Every residence could do this on any floor with adequate seals, insulation and heat ballast.

    I am beginning to wonder why you don’t absorb these rather simple concepts and why you repeat the same endless, unfounded objections to solar power and the possible ways to use it. I don’t think it is because you lack the intellectual ability to understand and absorb such concepts. I think it is because you don’t want to understand and absorb these ideas. You might do well to analyse yourself and ask where this emotional resistance is coming from and what lies behind it. It is interfering with your capacity for logical analysis.

  11. Doug
    June 2nd, 2015 at 10:04 | #11

    In inland areas and areas with relatively low humidity evaporative air cooling is adequate and places little demand on electricity

  12. Collin Street
    June 2nd, 2015 at 10:24 | #12

    I don’t think it is because you lack the intellectual ability to understand and absorb such concepts.

    Why not? That would be the charitable assumption, I feel. Where does your certainty that he could come from, is there some other area you’ve seen him demonstrate the needed insight?

  13. Ikonoclast
    June 2nd, 2015 at 10:29 | #13

    @Doug

    Good point. What demand would it place on water resources though? I am just asking. I don’t know if the demand on water resources would be significant. It might be significant for people who survive mainly with rainwater tanks.

    OTOH, solar powered air-conditioning with heat ballast providing cooling at night is eminently feasible in any sunny place which is all of Australia.

    As an aside, I note that on days with complete cloud cover, not too many of the deep gray storm-type clouds and little actual rain, my 5.5 kW (nominal) solar panels still push out a variable 1,500 to 2,000 watts. That’s not bad. On sunny day peaks they push out 4,500 to 5,000 watts. At my end of my suburb about 1/3 of houses have solar pV systems varying in capacity from about 2.5 kW to 5.5 kW nominal. I have noticed no problems with supply (i.e. no problems with integration with the grid). If anything, the slight but noticeable problems acreage residences have with voltage drop appear to diminish by day with solar panels as part of the mix. Then again I might be imagining that. Certainly, nothing has got worse.

  14. Ikonoclast
    June 2nd, 2015 at 10:46 | #14

    @Ikonoclast

    I am sure Hermit understands that it doesn’t rain all the time and yet people can live for long periods on the water from rainwater tanks and cattle can live on water from waterholes and dams. It’s simply the concept of accumulating a store from an intermittent flow. He needs to transfer that concept from water to energy. (From Hermit’s general facility with language I have inferred that transferring this concept from water storage to energy storage is not beyond him intellectually. Hence I wonder where his resistance to the concept comes from.)

    The next step with energy is understanding that energy storage can take a number of different forms and each the various forms can be efficiently matched to intended use. When heat energy (or a temperature differential) is involved it is usually better to shift heat and store heat energy or “store” cold. Of course you can’t store cold but you can set up an insulated temperature differential. Then you “direct use” the heat or the cold as it were. Losses do occur during heat differential storage but these are usually less than converting heat or radiation energy to electrical energy then that to chemical potential energy in batteries then that back to electrical energy and then that back to heat transfer work. Phew, just saying that long chain suggests the big losses involved.

  15. Ikonoclast
    June 2nd, 2015 at 10:48 | #15

    Oops I meant to link that reply to Collin Street. Even in the blogging world, talking to oneself is not a good sign. 😉

  16. Hermit
    June 2nd, 2015 at 10:48 | #16

    @Ikonoclast
    Silly me I go on statistics, namely that annual peak electricity demand is associated with heatwaves. If your remedy was both available and acceptable to all then it could revoltionise power supply. Therefore you’d better direct your ire at the greater public not me.

    As it happens I’ve solved the heatwave problem by going underground (with LAN connections) at 16C when it is over 40C up top. On a point of principle I refuse to use air conditioners and some other types of high wattage appliances. I decline interstate wedding invitations as I don’t want to waste fuel. However I realise the underground option is not available to everybody so no point in berating others for failing to implement what works for me.

    If your solution is widely applicable you must promulgate it to prevent deaths and heat stress this summer. Expect a reminder a few months from now.

  17. June 2nd, 2015 at 10:54 | #17

    Doug, evaporative heaters were a competive option for home cooling in places like Adelaide, but with the decreased cost of solar PV and decreased solar feed-in tariffs that’s not so clear anymore. This means the incentive to install electrical air conditioning has increased. Time of use tariffs will encourage people to cool the house down during the day while the sun is shining and lay off during peak grid demand (peak total demand will still be in the afternoon as usual). Of course, time of use charges will encourage people to install on-grid energy storage. If we could actually get our hands on 7 kilowatt-hour Tesla Powerwalls they could potentially pay for themselves for on-grid storage for people on time of use tariffs in NSW, WA, SA, and QLD. (They would be marginal in Queensland, but some people would still find them a worthwhile investment.) If 1% of Australian homes had 7 kilowatt-hours of energy storage it would have a large impact on electricity markets.

  18. Moz of Yarramulla
    June 2nd, 2015 at 11:04 | #18

    Ken Fabian :
    How much ‘subsidy’ did fossil fuel generation… get during this period of PV ‘profligacy’?

    Using Grattan assumptions that rational consumers have PV and battery systems, the entire cost of the grid is a subsidy to those irrational people who depend on the state-provided grid. Is that what you were asking?

    The real answer is smaller (for the grid component), but I think it’s probably complex because the legislated rate of return is pulled out of someone’s proverbial and that has distorted grid investment to the point where “how much grid should we have” is now a political question answered by politicians rather than anything to do with electricity demand.

  19. Cicero
    June 2nd, 2015 at 11:56 | #19

    Who benefits from the Grattan Report? Perhaps we should follow the money. The Origin Foundation is an Affiliate Partner of the Grattan Institute. Origin Energy founded the Origin Foundation.

  20. Hermit
    June 2nd, 2015 at 11:58 | #20

    Running aircon off a battery was previously the domain of submarines and space stations. In theory the 7 kwh Powerwall should keep you cool past midnight. The output is apparently limited to 1 kw presumably for 7 hours. A 2.5 kw output aircon with a COP of say 3.6 draws 0.7 kw and presumably could run for 10 hours. Then recharge with daytime solar or post midnight offpeak.

    However I’d like early adopters to report back by 2020 or so whether they’ve actually achieved this since it is unprecedented. As usual battlers miss out.

  21. Ikonoclast
    June 2nd, 2015 at 12:34 | #21

    @Hermit

    You can’t go by statistics (by definition what happened in the past) and then assume that no new developments will ever or can ever change the picture. This is what you seem to do.

    It is within every person’s financial reach in Australia (if they are middle class or better off) to make the changes necessary to run an air-con system (if they want air-con) with solar panels, home insulation and heat ballast in the manner I advocate. The costs are not prohibitive. Clearly the most economic way for this to occur nationally is a phased changeover period of about say 20 years. People will make individual decisions based on costs. It would be within government power to assist elderly battlers to do this.

    It would also be possible for government to mandate by regulation that all new houses pass environmental passive design and insulation standards. I am sure we are already at least part way to that. In addition, government could easily mandate that if you install air-conditioning then you must install solar panels system such that the nameplate capacity is 120% of the maximum draw of the air-con unit. Subsides for installing thermal ballast could be added with information on the thermal ballast concept. To get the subsidy, you sign up to a tariff that does not allow you to use mains power at night on the air-con circuit. There are a hundred and one ways to tackle these issues. The one way that won’t work is to throw up our hands and say “It doesn’t happen now, therefore it will never happen.”

    I am an early adopter of the thermal ballast concept. I simply discovered that my home fortuitously had enough insulation and thermal ballast on the ground level without even being designed for the idea. I am reporting back to you right now that the idea works and that one doesn’t need batteries to make it work.

  22. Moz of Yarramulla
    June 2nd, 2015 at 12:52 | #22

    Ikonoclast :
    It is within every person’s financial reach in Australia (if they are middle class or better off) to make the changes necessary

    I think you misunderstand what “middle class” actually means today. The 1960’s and 1970’s “middle class” expectations are now the upper classes.

    Just for example, those people in their 30’s who own their house typically have a poorly constructed second hand one, or a really poorly designed and built new one. They’re also not middle class in the 1970’s sense – they both have jobs, they are doing pretty well in those jobs, and they don’t have a lot of financial freedom. Sure, they can buy stuff that was either ridiculously unaffordable or flat-out unavailable in the 1970s. Cellphones, for example.

    The other 50%+ of the “middle class” either don’t own a house, or don’t own a dwelling of any sort. So the notion that they have any control over their home is laughable. If they’re lucky they’ll be allowed to buy a better air-con than the one installed, if there is one. And have it installed at their own expense, and leave it behind when they get booted out because with the improvements the landlord can demand a higher rent.

  23. Moz of Yarramulla
    June 2nd, 2015 at 12:55 | #23

    @Moz of Yarramulla
    It might be interesting for you to read this thread at The Conversation: https://theconversation.com/without-affordable-housing-we-wont-have-a-society-worth-living-in-41962

    In one of my comments there I ran some numbers:

    Unaffordable means a couple needs to save most of the average wage every year to build a deposit so they can pay interest on a mortgage instead of rent. CPI-adjusted house prices in Sydney go up ~10%/pa which last year was about $400k – so to maintain a 20% deposit you need to save $8k/year just to break even. Average full time wage is about $70k but the median is only $50k… all those people on millions of dollars push the average up. At $50k a single person is paying abut $10k in tax, so they have about $40k to live on. They need to save 20% of that after tax income just to keep up with rising house prices!

    For a median couple, assume they pay ~$300/wk in rent in an apartment and live modestly (no drinking, smoking, driving or meat-eating), they’ll be getting about $800/wk each after tax, spending perhaps $200/wk each on daily (living food, clothes, transport) and another $100 on bills (insurance, phone, electricity etc), so they’ll have $1600 – $300 (rent) – $400 (living) – $200 (bills) = $700/wk in savings. If they live like uni students that could save a bit more, enough to cover HECS repayments, perhaps. Ooops. Anyway, that’s $35k/year, almost 50% of their after-tax income! $35k/year is $27k to the deposit, $8k to the house price increase, and we’re counting inflation by removing it from the house price increase above. They need $80k for a 20% deposit on a $400,000 median Sydney home… about an hour from the CBD by train. $80k/27k/year is only three years. Plus another year for stamp duty and other transfer costs.

    If people insist on having wasteful habits like HECS debts, friends or supporting a car those savings drop and the time to save a deposit blows out. Likewise if they don’t want to spend 10 hours each every week commuting. Move from a bit past Cabramatta to Punchbowl and the cheapest house will be $600k instead of $400k. Likewise, if you don’t want to live in the nastiest house in the nastiest part of the suburb, a slightly nicer house in Wiley Park instead of Punchbowl is $700k+. On the upside, it’s been a few years since anyone was shot in Wiley Park.

    But a $700k house is appreciating at $70k/year, so the 20% deposit is going up by $14k instead of $8k. To save $140k at $35k/year (again, $21k after the capital gain) takes 7 years. And that’s pretty much what my partner and I have done. We tried living an hour away from work and it wasn’t sustainable. I was taking a week off a couple of times a year from sheer exhaustion, my partner “just” shed friendships and any pretence of a non-work life.

    (Sorry, The Conversation prevent me from linking directly to that comment so I’ve pasted it here)

  24. Aidan
    June 2nd, 2015 at 13:13 | #24

    Ikonoclast :
    @Doug
    Good point. What demand would it place on water resources though? I am just asking. I don’t know if the demand on water resources would be significant. It might be significant for people who survive mainly with rainwater tanks.

    I have evap air-con in Canberra. Works a treat. Power use is very low. I once measured the water consumption, but I can’t recall the exact figure. It wasn’t a lot. Less than 1L/hour? Not sure, but it would depend on temperature and relative humidity in any case.

    My system keeps recirculating the water until salt levels get too high and it dumps it, every few days I think. So the water consumption is just what is evaporating.

    I totally agree that passive solar is the way to go, but retro-fitting thermal mass (concrete?) into a wood frame hour like mine is a major expense. Some sort of phase change material is the go, but it is way too pricey at the moment

    http://www.phasechange.com.au

  25. Doug
    June 2nd, 2015 at 13:36 | #25

    Iconoclast – Water usage on evaporative coolers is very limited – no noticeable impact on our water consumption. On the economics of electricity I defer to Ronald – though my recommendation would be to check out the actual consumption on its operation as the operation of the technology has improved over time.

    Certainly they are very popular in Canberra

  26. totaram
    June 2nd, 2015 at 13:50 | #26

    @Ikonoclast
    Your “ballast” method works in winter too with a reverse-cycle aircon. Heat up the house using solar PV output and it will remain warm until you get to bed.

  27. totaram
    June 2nd, 2015 at 13:59 | #27

    Getting back to the Grattan report, it (one 64 page version) can be downloaded from their web-site.
    On p13 we find
    “2.2 Subsidy two: network tariffs that do not properly reflect
    costs
    A second subsidy associated with solar PV is related to how
    electricity is priced. Peak demand determines the cost of the
    network, which in turn determines the amount of our power bills.
    Yet the cost of meeting peak demand has no effect on the bills of
    households and small businesses, which are typically charged the
    same or a similar amount for each kilowatt hour of electricity,
    regardless of when it is consumed.”

    This clearly wrong, as there is a fixed “connection charge” (at least in Victoria) which is the same every day irrespective of how much energy you consume, and this is supposed to reflect the cost of the grid. So how can they insert a para like that ?

    Then on p16 we have:
    “Lowering wholesale prices does not constitute a net economic
    benefit to society, which is why it does not appear in the costbenefit
    analysis presented on page 15. Instead, it is a short-term
    financial transfer from existing generators to electricity retailers,
    who may then pass these savings onto consumers. In economic
    terms, society as a whole does not benefit.”

    Not being a trained economist, I cannot tell under which “school” of economics this is true. In common-sense terms, it says that if the govt. makes an investment, which lowers the wholesale cost of electricity, then society does not benefit. Will someone please explain?

  28. Jim Birch
    June 2nd, 2015 at 14:05 | #28

    @Ikonoclast

    What demand would it place on water resources though?

    One litre of water takes 2270 kJ or 0.63 kWh to evaporate. So providing the equivalent of a 3.5 kW home system at full capacity would use like 6 litres of water an hour. For comparison, this is about full flush of a reasonably modern toilet or 50 seconds of showering with a water saving shower head.

    So, within the capability of most household water supplies. The bigger problem with evaporative aircon is that the increased humidity reduces the body’s own evaporative cooling capacity.

  29. Moz of Yarramulla
    June 2nd, 2015 at 14:38 | #29

    @totaram

    there is a fixed “connection charge” (at least in Victoria) which is the same every day irrespective of how much energy you consume,

    And for some people that’s most of the cost of their electricity. And if those people fall for the Powershop scam where there’s no supply charge, they discover that their unit cost goes up to the point where even a small increase in consumption becomes ridiculously expensive.

    My understanding is that the actual grid cost is a bigger part of the electricty cost than the current supply charge indicates. So to some extent smaller users are being subsidised by larger ones. There may be an equity argument in that, or an argument that those who have low consumption due to smart use of PV should pay extra. But the latter runs into the “solar death spiral” problem where higher connection charges make going off grid more attractive, and at some point in the near future it will likely become economic for those people to drop off the grid entirely.

  30. June 2nd, 2015 at 14:44 | #30

    @Newtownian

    Nicely said!

  31. June 2nd, 2015 at 14:50 | #31

    @Moz of Yarramulla

    It should not be impossible to work out what fraction of the total cost of poles and wires each user should pay for the actual poles and wires that deliver electricity to their house.

    That would be a fun exercise.

  32. June 2nd, 2015 at 15:14 | #32

    I think this tweet says it all. Grattan know who they’re playing to.

  33. derrida derider
    June 2nd, 2015 at 15:21 | #33

    Geez, Ikonoclast, you might persuade more people with your arguments if you didn’t start off by assuming they are wicked or stupid.

    But then I do think that, as a critique of the Grattan report (which I’ll take John’s word for it is technically crap), your paean to the wonders of thermal ballast misses the point. The Grattan report is not concerned with how cost-effective domestic PV would be if done right, but about how cost-effective an actually existing scheme is. I’m sure you’re absolutely right that things like smart meters, better house design and water ballast could fix that load matching problem, but that does not bear on the question of whether or not we currently have such a problem or how much it currently costs.

  34. Ikonoclast
    June 2nd, 2015 at 16:48 | #34

    @totaram

    Yes, exactly. Of course, it is not “my” thermal ballast idea. Humans have been using the idea in one form or another for thousands of years.

  35. totaram
    June 2nd, 2015 at 16:53 | #35

    @John Brookes
    “fun” is the right word. It would vary from month to month according to what happened historically in the electricity market at those 5 minute intervals, where the generators bid for despatch etc. and you would need to know the energy flows in the entire grid in each of those blocks etc. etc. Just not worth the effort I guess. That is why they leave it to the retailers and distributors to fix it up amongst themselves and come up with some tarrifs. A true monument to the ideology of trying to have a “market” where there is a natural monopoly.

  36. Ikonoclast
    June 2nd, 2015 at 16:56 | #36

    @derrida derider

    The Grattan report is not concerned with how cost-effective domestic PV would be if done right, but about how cost-effective an actually existing scheme is.”

    Maybe, but they can’t even get that assessment right as J.Q. demonstrates. It calls into question their analytical ability or their intellectual honesty or their vested interests. And these are, in the Boolean sense, “ors” not “exlcusive ors”.

  37. June 2nd, 2015 at 18:47 | #37

    Just so people aren’t mislead, the characteristics of the Tesla Powerwall are easily available on the Australian Tesla site:

    http://www.teslamotors.com/en_AU/powerwall

    As it clearly states under Specs its output is 2 kilowatts continuous and 3.3 peak.

  38. Ikonoclast
    June 3rd, 2015 at 08:22 | #38

    @Moz of Yarramulla

    I agree that the modern middle class is under pressure especially in the younger cohorts. Uni student who graduate will graduate into a difficult job market. The signs are that at least 30% and maybe higher of 2015 graduates will still have no jobs by May 2016. The signs also are the Australian economy is heading for recession.

    They will also graduate with HECs debts. I do not consider it fair that they begin their working lives with such debt when my age cohort got a free tertiary education. (I intend to pay my kids’ HECs debts for this reason).

    In addition, they graduate into an economy where house prices are so inflated young people in their 20s might as well forget about buying a house. People in their 30s appear to be taking huge loans to afford the prices of our inflated housing stock in the current bubble. Yes, it is a big bubble. Houses cost at least double and maybe treble what they cost a generation ago relative to wages. Unemployment edges ever higher and the young are particularly badly affected by unemployment.

    I am not sure what the statistics say about your assertions. If your assertions are correct, the age 30s cohort and age 20s cohort will experience a shrinking middle. That is to say the middle class for those cohorts would be shrinking with most falling into the lower classes of working poor and unemployed. I suspect this is happening. Certainly the statistics in related areas show that wages are stagnating and a greater share of national income is going to profits. This is occurring even though labour productivity has been improving.

    On the one had, our government says we are the wealthiest we have ever been as a nation. On the other hand, we force HECs debts, unaffordable housing and very high youth unemployment on our young. And here we need to debate whether the age 20s and age 30s cohorts can afford what older middle class cohorts take for granted. As the saying goes, something does not compute.

  39. Hermit
    June 3rd, 2015 at 11:15 | #39

    @Ronald Brak
    The text part of the ad doesn’t mention costs. I think a typical household with kids might need two of the 7 kwh units. Then there’s the extra roof panels that might be needed, a new or different inverter and installation costs. Some outside walls might not take the weight. Suppose it cost $10k+ that’s years of operation to recoup the cost. If the payback period was over 10 years as suggested by Climate Spectator you would have already replaced the battery in that time. If the homeowner is making a statement that statement is ‘we have lots of money to throw around’.

  40. Collin Street
    June 3rd, 2015 at 11:43 | #40

    > I think a typical household with kids might need two of the 7 kwh units.

    [i]basis?[/i]!

    You’ve come to a conclusion: show your working. Not hard, if you’ve done things properly.

  41. Ikonoclast
    June 3rd, 2015 at 11:51 | #41

    @Hermit

    I think whether a Powerwall (or two) makes sense for households will be very situation dependent. In time, we can also expect the price to come down. So more households may then find a Powerwall makes sense.

    At the same time, the nature of the renewable energy, energy storage and energy saving revolution is not that it will provide one “killer app” which will solve all problems everywhere for everyone. Rather it will provide many micro, middle and even macro solutions which when added together and networked in a synergistic fashion will provide the overall solution.

    TBH, I find you use the “divide and criticise” principle. Sequentially, you point to each one component of a multi-component solution and say ” that won’t get us anywhere much”.

    Also, you assume us to be frozen in time with no more technical advances to come and no price reductions to come as new technology gains market share and benefits from production volume (and also benefita from entering the phase where R&D costs are essentially recovered and further sales are all profit bar immediate manufacturing costs).

  42. June 3rd, 2015 at 12:06 | #42

    Hermit, it is easy enough to look up the price on the internet. (The internet is an amazing funhouse full of both information and people who ignore the fact that information is right at their fingertips.) The 7 kilowatt-hour Powerwall is $3,000 US. That’s about $3,800 Australian. A compatible inverter for on-grid use can be had for around $1,000 Australian. (Note this is not an islanding inverter. Even remotly satisfactory islanding inverters cannot currently be had for that price.) So if you think it through, for a new on-grid solar installation, there should not be a great deal of extra expense over the cost of the Powerwall itself.

    Hermit, why would the typical household with kids require two units? The typical household with kids in Australia is on-grid so one would always be sufficient for such households, although they could get additional Powerwalls if they wanted to if they were weird or something. For off-grid use more than one could be very useful, or for use as an uninteruptable power source, but those two things are very different from on-grid energy storage without an islanding inverter. It’s very important to be clear about these things otherwise confusion can result. The Tesla Powerwall is too large to be cost effective for the majority of Australian households when used for on-grid energy storage. It will be cost effective for a portion of households that have time of use tariffs and sufficent electricity consumption in the late afternoon and evening. But only a very small proportion of households could save money by having two powerwalls.

    Hermit, if the battery is used over 10 years, why would the battery already be replaced at that point? The Tesla Powerwall’s warranty is for 10 years, so it can be expected to operate for at least 10 yeears even when used at high capacity. (The warranty period is right there on the page I linked to under Specs.)

  43. Hermit
    June 3rd, 2015 at 13:16 | #43

    I’ll refrain from using links as it requires too many for this site. I assume the aim is to be independent of the grid using onsite solar. I’ll give broad parameters and you do the maths. Australian per-capita residential electricity use is about 6.6 kwh per day. For a family of four in an all electric household that is 26.4 kwh. A 5 kw peak solar array can generate over 20 kwh in mild sunny weather but as little as 3.5 kwh in overcast rainy weather. A single 7 kwh battery and an average solar array won’t be enough.

    Tesla say the wholesale cost to installers will be $US3,500 for the 7 kwh unit. I suggest here in Oz the installed price could be 2 X $4k = $8k maybe less for just one. Then there’s the inverter which must be compatible with the Powerwall…another $2k? Maybe more for a ‘smart’ internet connected inverter. You might want extra roof panels for winter ..remember the aim is not to use the grid.

    I suspect builders will have drill through exterior walls to find structures to take the 100kg weight of just one module. More expense. There’s probably other hidden costs which are discussed on the web if you look. An Australian estimate (Climate Spectator) for the payback period for a Powerwall is 11 years. That heroically assumes we know future fixed and variable grid charges. Suppose you get one in 2016 and recoup that original outlay by 2027. However in 2026 you had to fork out another say 7 X $300 = $2,100 for a replacement battery.

    That’s why I think the Powerwall is like Windows 10 in that I’d let others discover the bugs or perhaps in this case the hidden costs. Glossing over them may lead to tears.

  44. Ikonoclast
    June 3rd, 2015 at 13:52 | #44

    @Hermit

    What are you saying? The Powerwall will;

    (a) never suit anyone?
    (b) never suit you?
    (c) never pay for itself?
    (d) never come down in price?

    I am not exactly sure what your argument is.

  45. Tom Davies
    June 3rd, 2015 at 13:52 | #45

    Here’s a graph of solar output for one particular installation in QLD on 26/12/2011

    http://www.uq.edu.au/solarenergy/pv-array/filething/get/679/Sunlight-2.JPG

    It looks as though daylight saving would make a big difference to PV’s contribution to a 6pm peak — the curve is very steep before 6pm.

  46. Tim Macknay
    June 3rd, 2015 at 14:05 | #46

    @Ikonoclast

    I am not exactly sure what your argument is.


    I think the gist is “renewables bad”.

  47. Aardvark
    June 3rd, 2015 at 14:44 | #47

    The only merit in the report is to highlight that on balance investment in PV (at least on homes) is not really NPV positive in its own right. The other point is as Newtonian notes is that the feed in rate promotes grid bypass through investment in even less efficient batteries. Presumably, if household aren’t priced on time of use then their feed in rate should also not reflect time of generation (as determined by QCA and others). I would assume that grid owners would prefer the feed in rate to be the same rate as the take out rate to make the householder indifferent to grid bypass (expect where they want to shift the timing of consumption of their own generation which would be more related to the materiality of the difference in peak and off-peak rates). Happy to accept $0.08 cents if thats also what I’m paying to buy in (subject to some form of TUOS adjustment for the retailer).

  48. Hermit
    June 3rd, 2015 at 14:59 | #48

    I should point out I’ve had PV since 2005, make my own biodiesel, cook and heat on wood stoves and help on microhydro projects. My conclusion is that all of it will barely make a dent in our fossil fuel dependence. Just look at the official stats rather than listen to dreamers.

    I’m in a dilemma about what to do when my FiT runs out in 2019 hence the critical look at Powerwall. At this stage I’m more inclined to build a small shed with nickel iron batteries. While they last 20 years they are not ‘set and forget’ and require active management. Call me sceptical but builder mates go through lithium batteries like lollies for their cordless drills so can it be so much better.

    That’s why I’ll wait to hear reports back but not from uncritical supporters. Like pink batts it might not go as smooth as hoped. I wouldn’t be too upset if they nationalised the grid and gave us all cutprice power so households wouldn’t even have to bother with batteries.

  49. June 3rd, 2015 at 20:34 | #49

    Hermit, I’ve just had a long and frank discussion with the imaginary people in your scenario above and they are very upset that you have tried to make them go off-grid using the Tesla Powerwall. They said they never had any intention of going off grid and they were only interested in saving money and protecting the environment. They have no interest in being independent from the grid, and in their own imaginary words, “We don’t want to spend more money on an energy storage solution that would less beneficial to the environment than staying on-grid and using our surplus solar generation to displace fossil fuel generation. Staying on-grid would be far better for the environment and more ethical than going off-grid and simply curtailing a large portion of our solar production.”

    But once I explained to them how the Powerwall could potentially save them money when used for on-grid storage, depending on their time of use tariff and electricity consumption, they seemed pretty excited about that.

  50. Hermit
    June 4th, 2015 at 08:48 | #50

    RB I’m not denying that Powerwalls could help some people. I agree it would be insane for people in the suburbs to go off grid particularly if they got a diesel generator for backup. I suggest that the cost of the Powerwall, new inverter, extra panels for winter and possible building work will be at least $10k. I’ve seen US estimates several times that amount. It means the poor need not apply, nor renters nor flat dwellers.

    Therefore I think home batteries will have limited uptake unless the power companies themselves install and maintain them. I predict there will be no utility ‘death spiral’. That leaves us with coal and gas making 87% of our electricity even before electric transport goes prime time. The major solutions if any must lie elsewhere.

  51. Ikonoclast
    June 4th, 2015 at 09:06 | #51

    @Hermit

    I should point out that since I had solar pV and solar hot water (evacuated tube) installed in 2012, I have been astonished at how good and effective solar power is, especially in Brisbane’s climate. Now, this statement requires some qualifications about the finances and economics of solar power but no qualifications about the pure physical effectiveness of solar power except for the storage issue.

    The storage issue should not be looked at in isolation (no pun intended). For houses already connected to the grid, the grid essentially functions as a giant battery. It is not a free service. People pay for the connection. For houses not connected to the grid, battery storage or generator backup is necessary. As technology and economics change, battery storage might soon become a better solution cost-wise than a generator.

    For sure, solar pV on suburban houses might prove to be a detour in our energy journey. It might turn out that solar concentrating thermal power stations with molten salt heat storage, being a macro solution, will prove more cost-effective. However, with all current renewable technologies there is no doubt that solar power and wind power (mainly) can supply 100% of Australia’s stationary electricity needs.

    Looking at current stats tells us nothing about future possibilities in this arena. It’s like looking at the first automobile on the road and saying “Look at the stats. It will never replace all the horses.”

    There is no doubt in my mind now that a grid can run on 100% renewables and that load management and 24 hour power will be achieved with a combination of technologies and techniques.

    In the long run, good economics (without subsidies but with negative externality costs imposed) will determine the micro-generation / macro-generation mix just as it will determine the micro-storage / macro-storage mix. I don’t think we have to worry about this issue from the technical end (economics and technology). It will sort itself out with technology progress and good economics. What we have to worry about is the political issue of removing the massive subsidies to fossil fuels and then imposing genuine negative externality costs on fossil fuels. This task is still not achieved and yet renewables are already showing they can win even when the playing field is tilted heavily against them. This gives me hope.

    Final note for Hermit:

    Living off-grid has a long and venerable history. My aunt and uncle’s farmhouse in the Wide Bay District circa late 1950s – early 1960s had a 36V DC electrical system and they used appliances and lights designed to run on that power. A lead-acid battery bank was recharged by a diesel generator. When my aunt wanted to use the washing-machine, the generator had to be started as the batteries alone could not run the washing machine without being rapidly depleted. Of course, they had a wood stove.

  52. Ikonoclast
    June 4th, 2015 at 09:29 | #52

    @Hermit

    I also predict “there will be no utility ‘death spiral’”. But why do you think “that leaves us with coal and gas (plants) making 87% of our electricity”?

    Why do you think for example that CSP (Concentrated Solar Power) stations with molten salt heat storage will not replace coal fired power stations? I predict large utility power will remain and it will come from solar and wind power. Indeed, it is already happening.

    “CSP is being widely commercialized and the CSP market has seen about 740 megawatt (MW) of generating capacity added between 2007 and the end of 2010. More than half of this (about 478 MW) was installed during 2010, bringing the global total to 1095 MW. Spain added 400 MW in 2010, taking the global lead with a total of 632 MW, while the US ended the year with 509 MW after adding 78 MW, including two fossil–CSP hybrid plants.[4] The Middle East is also ramping up their plans to install CSP based projects and as a part of that Plan, Shams-I the largest CSP Project in the world has been installed in Abu Dhabi, by Masdar.[5]

    CSP growth is expected to continue at a fast pace. As of January 2014, Spain had a total capacity of 2,300 MW making this country the world leader in CSP. Interest is also notable in North Africa and the Middle East, as well as India and China. The global market has been dominated by parabolic-trough plants, which account for 90% of CSP plants.[4]” – Wikipedia.

    The physics and economics of these plants are working now. All that remains to be done is the physical build-out.

    “Renewable energy in Spain represented 42.8% of total energy generation in 2014. Overall 27.4% of Spain’s electricity was generated from wind and solar in 2014” – Wikipedia.

    I assume the difference above is mostly from hydro power.

    Please tell me how these numbers are not significant. Please tell me how other overall sunny countries like Australia or the USA cannot manage a performance like this if poor old recessionary Spain can manage it? I think your assessments are based on early 1990s data. You need to read up on recent rapid developments.

  53. June 4th, 2015 at 09:31 | #53

    Hermit, because the 7 kilowatt-hour Tesla Powerwall can give a better return than the sharemarket average to households with time of use tariffs and high electricity consumption in the late afternoon and evening in New South Wales and Western Australia, I think the take up of the Tesla Powerwall and other home and business energy storage systems that are comparible on price and reliability will be very rapid. It will only take 1% of household having 7 kilowatt-hours of storage to have a major effect on electricity markets. Their combined output could be well over 0.2 of a gigawatt during periods of peak demand and since they are very well suited to providing ancillary services it would be enough to greatly reduce the amount fossil fuels burned to provide spinning reserve.

  54. Fran Barlow
    June 4th, 2015 at 11:24 | #54

    @Ikonoclast

    [Renewable energy in Spain represented 42.8% of total energy generation in 2014. Overall 27.4% of Spain’s electricity was generated from wind and solar in 2014? – Wikipedia.

    I assume the difference above is mostly from hydro power.]

    This link

    http://cleantechnica.com/2014/08/15/38-of-spains-july-electricity-demand-was-met-by-wind-and-solar-power/

    cites 21.1% to wind, 21% to nuclear. Solar PV was tracking around 3.3%.

    Renewables (solar PV, solar thermal and wind) accounted for 49% of new capacity in 2013.

  55. Ikonoclast
    June 4th, 2015 at 12:23 | #55

    @Fran Barlow

    Hang on Fran, nuclear is not renewable if that is what you are claiming or implying somehow.

    The numbers are unequivocal and the statement is unequivocal.

    “Renewable energy in Spain represented 42.8% of total (electrical) energy generation in 2014.” – Wikipedia.

    I think your post is muddying the waters rather badly.

    In 2013, renewable sources provided 42.2% of Spain’s electrical power broken up as follows;

    Wind 21.2%
    Hydro 14.2%
    Solar pV 3.1%
    Thermal 2.0 %
    Solar Thermal 1.75%

    For comparison, nuclear (from NON-renewable fission) delivered 21.2%.

    As I say, I think your post muddies the waters badly.

  56. Hermit
    June 4th, 2015 at 13:18 | #56

    RB for home batteries to reduce peak grid generation somehow the system must take energy from battery owners (at the ‘right’ price) and send it to others. That will require smart inverters which do exist notably in Hawaii. It would reduce overall grid demand if homeowners powered their own aircons or heaters at night. Since Australia uses 249,000/365 = 682 Gwh per day or 28.4 GW continuous average power consumption I think the storage requirement must be large. That’s to ride through multi day wind lulls and solar grey-outs not just for transient ancillary services.
    http://www.wattclarity.com.au/2015/03/approaching-62-hours-becalmed-on-the-mainland-what-would-this-mean-for-battery-storage/

    If we could replace coal and gas baseload we could perhaps eliminate 150 Mt of our 536 Mt net emissions. That would be the biggest single emissions saving.

  57. Ikonoclast
    June 4th, 2015 at 14:29 | #57

    @Hermit

    As I have already noted, a really smart total energy system for our country will not have much requirement for electricity to be used at night for heaters or air-conditioners. The smarter and cheaper way to go will be to use thermal ballast as heat storage or “cold” storage.

    Solar energy by day is used to heat or cool the house including heating or cooling the thermal ballast. The thermal ballast then keeps the house comfortably warm or cool all night (depending on the season). It’s worth noting that the entire interior of the house (including the air) in a well-insulated and well-sealed house is thermal ballast and humidity control ballast anyway. Some additional thermal ballast might need to be added either in design and construction or even by retro-fitting. This can take the form of stones, blocks, tiles or finned or corrugated water tanks for example.

    What I am trying to show here is that battery (chemical potential) energy storage is not the only option. At the same time, battery storage will be useful for certain purposes and certain situations.

    The thing to get one’s mind around is the fact that there are many complementary solutions for renewable generation and energy storage which can completely solve the intermittency problems of solar and wind power generation in particular. All energy for domestic use (for example) does not have to be made as electricity and stored in batteries as chemical potential when not used immediately.

    The premise of your argument seems to be that there is no way around needing electrical energy at night for heating and cooling residences. This simply is not the case. Even ruling out fossil fuel heating (oil and coal heating at the premises for example) this is still not the case. Thermal ballast “powered” by solar and wind power will be a large part of the solution in this area.

  58. June 4th, 2015 at 15:00 | #58

    Hermit, if people have home energy storage they will use it and this will reduce peak grid demand whether or not they export electricity to the grid from their batteries. (If you think about it you’ll realise that people will store solar electricity during the day and draw on it in the evening instead of using grid electricity and this will reduce the peak.)

    The Tesla Powerwall comes with software from Reposit that allows it to sell electricity to the grid when the price is high and buy it when the price is low or negative. This could be moderately profitable for early adopters as sometimes the grid is willing to pay over $13 a kilowatt-hour for electricity. However, as more energy storage is installed opportunities for arbitage will decrease, although accelerated closure of fossil fuel generating capacity could offset this somewhat.

  59. Hermit
    June 4th, 2015 at 15:04 | #59

    @Ikonoclast
    You have to convince Joe Public this is the way to go. So far the main group to shun summer air conditioning are the Coober Pedy opal miners with their dugouts. I suggest that even after some efficiency measures we’ll need more electricity not less for several reasons. Gas will be priced too high for heating and cooking, both at home and commercially. The gas replacement will mainly induction cookers and heat pumps for water and air. When electric cars go prime time most homes might need an overnight topup of say 10 kwh for 40 km driving. We have 18m cars perhaps half could be replaced by EVs. That could eventually add 25% to residential electricity demand.

    Then there’s our 1.6% annual population growth. Each new Aussie will need 2-3 Mwh of electricity each year just at home. I also speculate that if a 47C week on the east coast takes out scores of seniors we will get a Brit style heating allowance except it will be for air conditioning. What we’re seeing now is a reduction in electricity demand but an increase in coal burning. At some point that will have to reverse.

  60. Ikonoclast
    June 4th, 2015 at 16:15 | #60

    @Hermit

    Physical and economic reality will eventually convince Joe Public. I won’t have to do anything. 🙂

  61. Fran Barlow
    June 4th, 2015 at 16:38 | #61
  62. John Turner
    June 4th, 2015 at 17:30 | #62

    I do not believe the report will damage the Grattan Institute’s credibility as it really doesn’t have any anyway.

    Take their argument to it conclusion and it is a bit like saying that anyone who does not use a car is being subsidized to the extent that roads are being built and they don’t use them except to walk or cycle on for which they are not charged. A total absurdity.

    As someone who manages a general medial practice, I look forward to the day when it will be acceptable to charge every patient a monthly “facility fee” for providing the health infrastructure and an off peak and peak fee for seeing a doctor. Actually, with regard to the latter I shall give it serious thought.

  63. Ikonoclast
    June 4th, 2015 at 18:44 | #63

    @Fran Barlow

    My bad mistake. I misinterpreted your comment.

  64. Collin Street
    June 4th, 2015 at 19:43 | #64

    > You have to convince Joe Public this is the way to go.

    Nothing to do with you, of course.

    [the words you say reflect the thoughts you think: even if you lie, the lies you tell are shaped by your actual thoughts, not the ones that you want people to think you have. By-and-large people understand themselves less well than they are understood by others.]

  65. Hermit
    June 5th, 2015 at 08:58 | #65

    Ikon uses daytime PV to cool his house in hot weather. I retreat to a cellar. Neither of us are using the mainly coal and gas fired grid which goes into overdrive in summer.

  66. Ikonoclast
    June 5th, 2015 at 11:02 | #66

    @Hermit

    Indeed, and by retreating to a cellar in Coober Pedy you are using the exact principles that I mention and that all passive design experts advocate, namely insulation and thermal ballast.

    Going below ground is a good idea if the “building” costs do not become excessive. I can see more underground or semi-underground houses being built in future in Australia to escape extreme heat and bush-fires as such events will increase with global warming.

    I will post more on this topic later.

  67. Tim Macknay
    June 5th, 2015 at 15:47 | #67

    Some wag over at Reneweconomy.com.au suggested that the folks in Coober Pedy should go in for geothermal rather than solar, since they’ve done most of the necessary digging already. 😉

  68. Hermit
    June 5th, 2015 at 16:57 | #68

    I’m quite pleased with my underground lair that cost me about $3k at mates rates when others spend over $20k. Not only does it have ethernet cable but coaxial should I want to watch telly. To use a laptop on the (surface) solar charged battery a simple dashboard converter 12v to 21.5v works perfectly. The main thing is drainage and water proofing. While always cool inside the negative is lack of windows to see what’s going on eg approaching smoke for which I listen to ABC FM.

  69. Collin Street
    June 5th, 2015 at 23:19 | #69

    I retreat to a cellar.

    Exactly. “You have to convince Joe Public this is the way to go.”, my emphasis: doesn’t even occur to you that there’s anything you could/should be doing.

    There’s a word for this sort of attitude, and the word is “selfish”.

  70. Ikonoclast
    June 6th, 2015 at 07:53 | #70

    @Collin Street

    I disagree. “Be the change that you wish to see in the world.” – Mohandas Karamchand Gandhi.

    Hermit is being the change. Hermit, by his reports, is doing a lot of work to ensure he has a low carbon footprint. Some of us still worry about his support for nuclear power and try to argue him out of that… but that’s another issue.

  71. James
    June 15th, 2015 at 19:43 | #71

    The worst thing about the Gratton report was its treatment of sunk costs. The grid is sunk. It should be ignored from all the cost benefit analysis.

    The argument that solar panels should be forced to pay for the grid because otherwise the price will increase and drive others out of the market is also false. The regulator sets the price maximum not the minimum. If the energy companies want to be so stupid then they are well within their rights to drive themselves into bankruptcy, but the marginal costs of sustaining the network is very low. The capital charge is the bulk of the cost and the capital charge is a sunk cost.

    The argument that consumers should pay for the obsolete network because otherwise it will increase the risk premium is also stupid. It will only increase the risk premium on industries that rely on pork barreling to sustain a profit, not the general risk premium.

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