The age of free solar
The cost of solar PV has fallen so dramatically in the last few years that industry pundits have begun playing a new game – identify the spot where the price of PV finally hits a floor. But what if it never did?
That tantalising prospect was raised by the International Energy Agency in its Solar Energy Perspectives report released last week, when it said that building-integrated PV – a thin layer of PV-active material – will become almost a standard feature of building elements such as roof tiles, façade materials, glasses and windows, just as double-glazed windows have become standard in most countries. Because solar PV would be crucial to the value of such buildings, the IEA argues that the cost of PV could “almost vanish” in the very market segment where it currently costs the most. “PV roof costs may never meet a floor price,” it says in the report.
The idea that PV costs will “vanish” into the value of the building is potentially revolutionary for a technology that is supposedly hamstrung because of its high up front capital costs. Commercial building owners, however, are comfortable with the concept of “vanishing costs”, because it is a fundamental part of the “green building” push that has rewarded higher investment in energy efficiency and low emissions technology with greater yields. And now the concept been taken up by the Sustainable Energy Association of Australia, which argues that adding a standard 1.5kW rooftop solar system could actually reduce the size and the term of a home mortgage, and thereby “vanish” into the value of the home.
SEA chief executive Ray Wills says that the price of PV panels has fallen so far in the last two years that they offer a payback of 10-12 years without subsidies, and four to seven years if the remaining federal government incentives (a much reduced multiplier) are taken into account. But if the cost of a 1.5kW system (around $3000 after the current subsidy) was added onto a $100,000 mortgage, and the energy savings it produced applied to mortgage repayments, then the term of the mortgage could be reduced by as much as four years.
The SEA says this calculation assumed a set of solar panels installed for $3,000 – net price with Solar Credits multiplier – for a 1.5kW system yielding around $600 saving a year in generated electricity costs (at 22c/kWh), adding the purchase price to a $100,000, 25-year mortgage to $103,000. If the entire energy saving is reinvested instead to fortnightly repayments of $350 on a mortgage with a 7.5 per cent interest rate to $375, the $103,000 mortgage would be paid off in 21 years.
Investing more in a larger solar system of, say, 2.5kW would have an even bigger impact (assuming the household uses more than $1,100 worth of electricity in a year). For a $100,000 mortgage, adding a 2.5kW solar installation would add $9,000 to the mortgage, but would shave more than five years off the life of the mortgage, assuming all electricity savings were spent on repayments.
Wills says this is a better outcome than a 0.25 per cent interest rate cut on the loan. "Of course, if electricity prices rise, the value of savings increases, and your ability to pay off your mortgage would not be compromised by rising energy bills," Wills says. "And you can eat into bank profits by putting solar on the house."
AGL Energy, meanwhile, has also moved to hide the upfront costs of solar PV by teaming up with financial services firm FlexiGroup to offer a leasing product for commercial-scale solar PV, anticipated to be the next big growth market for PV in this country. The product will allow business owners to install a 10kW system valued at up to $35,000 on their rooftops for an upfront cost of just $899.
Such a system would be capable of offsetting up to 42kWh of grid consumption a day and offer the usual tax advantages of a leasing product. AGL anticipates that the commercial interest in solar is set to expand rapidly – and other solar businesses also report a significant lift in corporate inquiries.
Depending on a range of factors, such as the location, whether much of the electricity generated on the roof is consumed or exported, and the presence and scale of any feed-in tariffs, AGL estimates that the investment could offer internal rates of return of 15 per cent to more than 30 per cent. “This product enables business owners to obtain the benefits of solar without the need to tie up valuable cash,” it says.
Sunlight test
The concept of “no cost” solar contrasts sharply with some of the nonsense about solar costs and footprints currently being circulated and getting traction with certain media. The government-funded thinktank the Australian Strategic Policy Institute has produced a paper entitled “Keeping the Home Fires Burning” that is riddled with errors, but the most egregious is its claim that it would cost each person $100,000 to have enough solar energy to meet their annual energy needs.
That estimate is based around the assumption by the ASPI, which describes itself as an “independent, non-partisan policy institute … set up by the government,” that each person would require 200m2 of solar panels to satisfy his or her annual energy demand. The IEA, which ASPI clearly relies upon for its oil forecasts, suggests in its Solar Energy Perspectives publication that just one tenth of that – 20m2 of solar panels – should be enough for a family of two or three people.
Nigel Morris, of Solar Business Services, one of the leading industry consultants, says that in solar rich Australia, an average home would require 43m2, and assuming three persons per home, this reduces to 14m2 per person. This translates into an array of 6.515kWp costing around $26,681 per home – or around $8,872 per person.
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Comments on this article
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I'm not so sure John
In response to John Bennetts:
My current boss is pretty rich.
He doesn't like to lease, so he owns the two industrial units we work in. They share a common roof and a wall.
He is getting some seriously good quotes to put in a 120kW system on the roof.
That is too large for a RET subsidy.
Even without factoring in any recompense for feedng power back to the grid - just in cutting our current energy bill - he thinks it should pay for itself in 8 years.
In one set of calculations we did, we used an average of 7c/kWh for feeding power back, and that reduced the payback down to 4-5 years.
My boss has lots he can invest his in. He may find something more exciting?
I was very surprised by the numbers - so would you.
PVA prices havent bottomed yet, because panel prices are still coming down.
John - I think you are being dogmatic in your assertions that PVA cannot ever be cheap enough to be considered viable without subsidies.
Please be fair, John, when you talk of subsidies.
Coal and nuclear power stations are given large indirect and direct subsidies.
I hate that energy (and water) are subsidised. The result is that people take them for granted and waste both of them.
If the NSW government, eg, made us pay the true cost of our sewerage, storm water, and fresh water systems, they would become yet another 1-term government.
Energy is the same - they are electoral bribes.
Solar in Perth is 7.58 cents per kw
In Perth a well orientated solar will generate 4.67kw day average for every 1kw of panels installed. A typical 3.29kw system costs $10,621 fully installed without any STC rebates and will over its 25 year lifetime generate 140,099 units of power at a cost of 7.58 cents a kwh. This is very competitive with all forms of generation. You could not sign a 25 year power supply agreement for this low cost with any generator using fossil fuels.
Thomas
"Right wing anti-solar folks"
What does that mean?
Spin Away Thomas
Thomas: Read it:
http://www.aemo.com.au/
This is what the retailers pay.
By the way this is a real website, not hearsay
“You might be pleased to read how wind and solar have assisted to lower the average price / MWh as a result of lopping the peaks off the price curve.”
Please quote your references
“Please quote your references regarding the following:
“The middle class welfare thing is wearing thin - most policies have a disproportionate immediate benefit and an overall societal benefit. For example, considering only one set of facts, I don't think private schools should get one cent of funding, but likewise, I don't think university should be free. Why? because disproportionately these are attended by upper middle class kiddies (exceptions exist) or these people will soon become upper middle class.”
I am getting disappointed by the proportion of opinion and hearsay.
And, where do you think the students would go, if they could not go to a private school?
The Commonwealth funds about $13,000 a year to a private school per student, and the Govt schools suck up about $17,000 a student. I think that people work to send their children to private schools saves you money.
And any way, why do we have to accept mediocrity in education from badly run schools?
Middle class welfare is a fact , taking up about $90 Billion of the budget. Hey I have benefited by the subsidy for the solar cells on my roof.
Spinning reserve
Right wing anti-solar folks often claim that as reserve capacity (as spinning reserve - or readily despatchable hydro) is needed with renewables, then renewables have no value.
BUT don't the generators also keep reserve aside to pickup slack from any generation source that might fail?? That is to say, isn't backup kept ready in case of a failure of a coal plant?
In response to 5 cents
You can't reasonable quote 5c without quoting the Distribution Loss Factors, and a portion of network losses. It makes no more sense to benchmark solar production to wholesale price, than to benchmark the savings you make when turning off a light to the varying wholesale price.
Solar in general raises the voltage of the local grid (which can be positive or negative depending on the situation), but is coming on at unity power factor and is generally considered to improve power factor.
The middle class welfare thing is wearing thin - most policies have a disproportionate immediate benefit and an overall societal benefit. For example, considering only one set of facts, I don't think private schools should get one cent of funding, but likewise, I don't think university should be free. Why? because disproportionately these are attended by upper middle class kiddies (exceptions exist) or these people will soon become upper middle class.
BUT
universities provide the society as a whole with an excellent talent pool for innovation activities, and (in theory) a talent pool for entrepreneurial activities. And these benefit everyone.
You might be pleased to read how wind and solar have assisted to lower the average price / MWh as a result of lopping the peaks off the price curve.
5 cents worth
Current
Wholesale
price is 2.6cents per kw in NSW and 5.8 cents per Kw in Qld.
http://www.aemo.com.au/
5 cents per kWh???
John Bennetts, are you for real? You say:
. “never were and probably never will be economically justifiable”
. ROI “is actually negative unless these gadgets are subsidised”
. By way of fair comparison, wholesale electricity …5 cents per kWh or less”
Well John, I have not invested in PV’s but if I was calculating the ROI, with or without subsidies, I need to factor the cost savings into my model and I sure as hell would be using the real cost of my electricity (22/Kwh) and the likely increase in future years. Maybe John you could enlighten me as to where, as a residential consumer, I can buy electricity at 5c/Kwh?
You also might consider there are a number of companies in Australia making good profits supplying and installing PV’s into non-subsidised commercial environments where the bean counters look very closely at ROI before approving any investment decision.
John, would you have been saying years ago about those silly mobile phones or those even more useless, expensive GPS thingies “never were and probably never will be economically justifiable”. Come to think of it, early motor cars were prohibitively expensive compared to horses
John Bennetts
You are spot on, without subsidies it would not exist.It is toally middle class welfare.Why should the less well off subsidise me.
It makes little sense as you still have to provide capital to provide the backup, which shows you the real cost.
Aussie adults that count
Aussie adults that count aren't dumb. It's just that the graduazzi have found another avenue to exploit, all in the name of saving the planet and what could be more self gratifying than that? Except that there are some who can see clearly what's going on. Business as usual-http://www.youtube.com/watch?v=5Wx5PYZIWcQ&feature=player_embedded#!
How often do I have to repeat it?
Subsidies, including everything that the Federal Government pays your suppliers, is middle class welfare, with nothing at all to do with solar panels. These subsidies were provided so that politicians could win elections, even though renters, home unit dwellers, the poor, public housing housing tenants and anybody who does not have a disposable couple of thousands of dollars have no similar way of sucking thousands of dollars from Consolidated Revenue.
Solar panels are not now and never were and probably never will be economicaly justifiable. This whole subject is just a sham and a fraud.
Giles, it is past time that you did your homework and rejected the waste and folly of this BS called solar photovoltaic power. It is wasteful in the extreme and is not at all a service to either the community or the planet - it is purely a rip-off.
The economic rate of return on investment is actually negative unless these gadgets are subsidised. For goodness' sake, man - wake up and stop publishing this cr_p.
By way of fair comparison, wholesale electricity in NSW, Qld, Vic, Tas and SA during the past couple of years has averaged 5 cents per kWh or less. The quoted 22 cents figure is fiction - it includes transmission, backup, voltage control, 24/7/365 reliability and much more. This story is fiction. It is BS. It is embarassing to see otherwise sane folk believe that PV is cheap. It is is not. Australian educators, please teach our students, because Aussie adults are dumb.
Cost is a second order issue
Cost is a second order issue compared to extreme variability and the fallacy of composition that we can all enjoy feed-in pricing, rather than the boutique, middle class welfare being enjoyed at present. Anyone who owns solar for the pure after tax return, due to taxpayer/power bill payer subsidy knows implicitly they are free-riding on fossil fuel base load. Those who are ignorant of the variability problem can best appreciate it playing around with the graphs so superbly provided online here- http://htpc.avenard.org/power/about
Whilst battery storage could even out some of the gross discrepancies between average and marginal output with solar, to attempt to do so on the scale suggested here would quickly make the ubiquitous smartphone a luxury for the rich only.
David
It is called hearsay.If you believe what you read on unsuitable sites go for it.
Regards
Area confusion
Giles the confusion over the 200 m2 per person arises partly because the authors are talking about total electricity used per person, not just electricity used in the home. I also suspect they are talking about total energy consumption per person not just electricity.
We use about 240 TWh of electricity per year for 22 million people. That comes to 11,000 kWh per year per person = 30 kWh per day per person. Most homes probably use less than 10 kWh per day per person (some much less). We tend to forget that our domestic use of electricity is less than a third of the total electricity consumed per person.
The next issue is they have assumed 40W/m2 average for PV panels for the whole of Australia. This is not the peak (which is at best 200 W/m2) but the average over the full year day and night. So they have assumed a capacity factor for solar PV of 20% which is not totally unrealistic.
40 W/m2 is 350 kWh/m2 over the year. Based on my 11,000 kWh per year per person this would mean 31 m2 per person not the 200 quoted if it is just to generate all our electricity.
I suspect the authors must have used total energy consumption (not just electricity) in their calculations by assuming the average power consumption per person is 7,812 W. I suspect the figure should be 1,250 W per person if we are just talking electricity.
unsuitable website?
"Welcome, PVOutput is a free service for sharing and comparing PV output data"
It contains actual generation data from installed systems, from people who sign up to the website. It is not a marketing web site containing potential or made up figures.
Three of the four systems I linked to have all been up for a full year, and averaged between 6-7.5kWh/day for the entire year. The best one has produced 2,663kW in its first year, which is $585 worth of electricity @22c, pretty close to the $600 that the article quoted and that you suggested was an outrageous claim. Perhaps the $600 claim is a bit on the high side, but there are many PV systems that have done better.
On a good day these systems produce over 10 kWh/day. Perhaps you could upload the data from your system, compare it to the data from other systems, and find out if there are specific periods when yours is underperforming. That is one of the best things about this web-site. Yes, there are many 1.5kW systems that are only averaging 5kWh/day, but that is usually because of shading issues, being in a region of poor solar resource or perhaps being a lower quality system.
Or you could choose to believe that the 2500+ people who upload data to this web-site are part of a conspiracy...
Conspiracy
Apart from unsuitable websites you qoute, I said AVERAGE" 5kw a day over 2 years. It may indeed reach 7.5 kw on a single day.
On the coast we have such things as clouds and rain on a regular basis.The insolation is not great.
And then their is something called winter.
As I said previously quoted potemtial figures are a scam.I know, I get at least one sales call a week promising me the world with the latest.
In addition, the solar cells imported directly that we install on new houses as part of a package are Suntech.Top quality.The inverters are not made in China. Our research showed average of 5kw average on the coast in SE QLD.
By the way you would not believe the amazing array of substandard and cheap cells available in China and coming into this country.Some very sorry consumers in years tto come.
It's the efficiency stupid...
The real trick of owning PVs is to use the energy efficiently. To Phil the architect, I designed my own house and BUILT IT myself to prove it was easy to do, entirely out of off the shelf materials, steel, concrete, and wood. We live on the Sunshine Coast (no sunshine today, pissing down, filling up the 50,000L storage for later) and we NEVER heat or cool. NEVER. Never boost the SHWS either. We have two PV systems here, a seven yr old 1.28kW hybrid grid feed + battery storage/uninterruptible power system (all neatly managed with one inverter). Last year we added a 2.2kW array, grid feed only, just to make money. Our last "bill" was $642 in credit!
Our power consumption is ~2.5kWh/day, and we have all the bells and whistles except a swimming pool (which are totally unsustainable).
Learn all about it here http://damnthematrix.wordpress.com/2011/09/04/the-power-of-energy-effici...
(The age of free solar) and the free insulation it too gives !
I have 14+14 Kanekas on my 40 degree east/west pitch roof in Perth - so they also act as insulation during the heat of the day - ie. no radiation goes to the roof space under the 28 cells.
I also have smartpower - which means when required I can run the aircon between 2100 hr to 0700am on cheaper base load power from SecWa.
Because we've had 36mm rain from the clouds and only 2kwhr from Dec av. of 14kwhr/day - I have boosted the sola HW for 90mins with baseload - but my 13000 litre Wtank has again overflowed from the 12mm required - Perth has a Dec av. 12mm (none last year)
My PV feed-in also helps save Perth's valuable drinking water in the hills catchments. - So my household is close to energy neutural, and $ positive I hope.
no evil conspiracy here
OK, I admit plenty of people only achieve 5kWh/day in QLD. However, many people do still achieve 6-7.5kWh/day from ~1.5kW systems. Here’s some examples from QLD and one from WA (if you are prepared to believe that this web site and the 2000 people who upload data from their inverters aren’t part of some evil conspiracy).
http://www.pvoutput.org/aggregate.jsp?id=1360&sid=1042&v=0&t=y
http://www.pvoutput.org/aggregate.jsp?id=922&sid=726&v=0&t=y
http://www.pvoutput.org/aggregate.jsp?id=2908&sid=2225&v=0&t=y
http://www.pvoutput.org/aggregate.jsp?id=389&sid=311&v=0&t=y
Output
Luckily I did not pay anything for mine.
Thanks, and Mike I agree with you.
Oh, and Toowoomba has Weiss's Restaraunt.Oh bliss.
Regards
Solar panel output
Richard Simpson, You are correct. A 1.5 kW system will deliver around 5kW-h a day. That's exactly what my system delivers in Toowoomba on a north facing roof, no shade on the range side of town (the cloudy, rainy side). This is exactly what my research before purchase told me it would.
I got my system for $2000 after subsidies. This is a good return on investment but the investment is risky so it would want to be. I too work from home but manage to export around 2kW-h a day.
I did this not out of some stupid urge to "save the planet" but to save me money. I realise it is totally absurd for the country as a a whole but I figure if the stupid bogans, including those commenting here, keep voting for parties which won't build coal fired power stations or nukes then they can pay to subsidise my electricity bills.
That CO2 is anything but an insignificant bit player in determining the climate of this water planet at anything like current concentrations is a sick joke and , yes, stupid bogans, I do know something about this.
Real Data
Do we need to give you alesson in how to assess web sites?
Suggest you start here.
http://www.lib.berkeley.edu/TeachingLib/Guides/Internet/Evaluate.html
Real data
Richard, look at the data at:
http://www.pvoutput.org/
This is data that PV owners have uploaded to the web from their inverters. There is data from thousands of systems. It is not marketing figures, nor is it made up. Most people are getting much better production figures than you are.
Figures
Ask a qualified and licensed electrician.
THe marketing figures are wrong
Regards
still poor figures
I don't know where you live in QLD, but Brisbane averages more hours of sun per day than Canberra (7.9 vs 7.7 according to the BOM).
Additionally, most PV systems get closer to 90% of their rated output, so your 1.5kW should be getting closer to 1.35kW at peak.. Hence my suggestion that your system is not performing optimally.
You questioned the figures quoted in the article, by giving the stats for your system. However your system seems to be substantially underperforming.
Sure of your Figures
We install them in new houses.We have checked the figures and 5kw is the norm for such a system on a daily basis.
How anyone can advertise 1.5 kw systems which only produce 1.1kw is beyond me, sort of like the supposed size of your hard disk.
This is not Canberra, but the coast in Qld.We have things called clouds, which is why I mention the word Insolation.Clouds appear with amazing regularity and then it rains.
No it is not shaded.