Australia is a global leader with solar PV generation and there are massive forward commitments for large scale arrays and large forward marketing estimates for roof-top solar as at January 2018. The sun is free and solar panels seem to be inexpensive and getting cheaper, so, why are electricity prices rising so much? Electricity prices have nearly tripled in a decade and, despite some political and pundit comments, it seems inevitable that they will continue to rise. We often hear that solar electricity is the least expensive sort of electricity available, so, how can that be?
There is a great deal of media reporting about the demise of coal fired stations, the building of new solar stations, home batteries and battery farms, virtual power plants and the like. Some of this reporting is unfortunately rather biased by ideology or astute marketing and it is sometimes difficult to get a realistic view.
We are not trying to comment on the ideological aspects but simply relate the objective and technical facts about the state of the art and invite your comments on our website.
In this article, we will talk about solar PV (photovoltaic) energy.
Australia is a global leader with solar PV generation and there are massive forward commitments for large scale arrays and large forward marketing estimates for roof-top solar as at January 2018. The sun is free and solar panels seem to be inexpensive and getting cheaper, so, why are electricity prices rising so much? They have nearly tripled in a decade and, despite some political and pundit comments, it seems inevitable that they will continue to rise. We often hear that solar electricity is the least expensive sort of electricity available, so, how can that be?
Firstly, the cost of electricity is not just the cost of the energy. That costs about one-quarter of the wholesale cost of household electricity bill. The remainder of the wholesale cost comes from:-
- the distribution costs of the poles and wires required to get it from the generating station to your house (about half),
- subsidies for wind and solar and other taxes (about a quarter), and
- a new component, stabilisation cost arising from the increasing penetration of intermittent energy sources such as wind and solar.
To get to retail cost, there are other a variety of other costs, including, metering, billing, connections and disconnections and a variety of services.
The problem with solar is really in two parts:-
- It is intermittent. In Sydney, the “Service Factor,” which simply means the percentage of each day that solar power is available is only 18%. That means that you need some other energy source the other 82% of the time…and worse, you do not know which 82% that is. You can have weeks of rain in Sydney. By comparison, the Service Factor of wind in good locations is about 30% and it is likewise unpredictable.
- It is low density and panels are low efficiency. There is a lot of sun but, at best, the incoming sunshine is only about 1 kilowatt/ square metre at noon, in the tropics when the panel is facing the sun squarely. What you get out is determined by the amount of dirt on the panel, the age, the panel and air temperatures and other factors but 150-180 watts is about the best you can get. Remember that this is with a new clean panel on just one day of the year at noon in tropical latitudes.
Furthermore, it is estimated that at any one time, approximately 15% of domestic solar panels are not operating thanks to faults and other operational issues.
So, when you say that solar power is the lowest cost electricity available, that is a bit like saying your car is very fuel efficient when rolling down a steep hill. In reality, you have to consider what happens when the hill ends and the sun is not shining. And that can be for long periods. I can recall many instances weeks of rain and no sun in Sydney. For these periods, we need ‘despatchable’ (guaranteed-to-be-available) power. Wind is useful in helping but it is not dispatchable either. The only dispatchable sources are, currently coal, gas, diesel, nuclear and some stored hydro which is OK till the water runs out. Tasmania used a massive amount of diesel generation in recent years when it was short of water for the hydro stations and South Australia is currently using a large amount of diesel generation to fill the gaps made by closing coal-fired generation in both South Australia and Victoria.
So, what about batteries? Can these plug the gap? Maybe eventually, but not even close at the current state of the technology. I know many people do not want to hear this, but this is the reality.
Batteries are batteries. You have to charge them, which, means putting about 20% more in than you get out, when they are new…..and they age, as anyone with a Smartphone or lap-top PC knows. And they are low energy density and very expensive. The $80M, 100MW system recently installed in South Australia will assist the Grid during short-peak events, but the energy storage is relatively tiny. The entire system would only keep 7 typical Pooled Energy customers powered for 1 year. The cost of using batteries to power Australia’s ~12 million dwellings powered….never mind industry or commercial buildings through a week of rain using batteries, would cost trillions in foreign exchange, need replacing every 8 years or so and still need charging.
Pooled Energy likes solar and batteries and we will integrate them with our systems. Please see our new Solar Optimiser Algorithm, which you can get for free and which is described in the New Technology/Product Release section. This optimises the use of solar PV, solar heating and batteries.
On a scale of benefits, the most energy efficient thing you can do with a house with pool is to get a Pooled Energy system as it reduces electricity use by about 30% per household, depending on the pool and house. Reducing energy use is obviously better than using the same amount and generating it using PV for example. (and less expensive
The effectiveness of solar heating or generating your own power using PV depends on your consumption pattern, your roof, where you live and other factors. We are happy to help you assess these. We will also do an engineering assessment of the return on batteries if you ask us, but, in general, the costs are very high in domestic applications and the returns are negative for most installations during the life of the batteries.