CEC SolarPV Myths&FactsReport V8[1]

7/30/2019 CEC SolarPV Myths&FactsReport V8[1]

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The Clean Energy Council (CEC) is the peak body representingAustralias clean energy sector. It is an industry association madeup o more than 550 member companies operating in the feldso renewable energy and energy efciency.

visitcleanenergycouncil.org.au Last update: August 2012

Costs are falling fastThe global market price or solar panels ell about 40 per cent last year.The 10 largest silicon panel manuacturers globally doubled their capacity in 20101.

SOLAR PV MYTHS AND FACTSHousehold solar power in Australia

Many myths exist about solar power around what it costs, whatit can do and whether governments should support households

and businesses in going solar. This fact sheet helps set the

record straight.

THE COSTS OF SOLAR TO CONSUMERS

FACT:Solarpanelsareinexpensive

andbecomingmore

aordableeveryday.

Thecostofproducingandinstal

lingsolarpowersystemshasfa

llendramaticallyover

recentyears,andcontinuestoall.

Thesolarpanelsinstalledonrooto

pstodayaremorethan

500timescheapertoproducethan

theirstsolarcellsothemid-1950

sandcostsarestillcoming

downast.Fouryearsagoasolarsystemcouldcostasmucha

sasmallcar;nowitcostsabout

thesameasabigTV.

Buthowdoessolarcomparetotra

ditionalenergy,suchascoalandg

as?

Iyoucountthecostosettingupa

ossil-uelledpowersourcebyinclud

ingthereturnon

investment,operationcosts,uelan

dmaintenanceoveritsentirelie,so

larisclosetothe

costoossiluel-basedenergyand

willbethecheaperoptionwithina

ewyears.

Solarisaninsurancepolicyagainst

therisingcostsoossiluelslikec

oalandgas.

MYTH:Solarpanelsareveryexpens

ive.

1

1 Polysilicon Glut Worsens as Supply Surge Cuts Prices 93%, Bloomberg New Energy Finance, 10/11/11


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FACT: Subsidiesordomesticsola

rpoweraccountoronly

around6percentotheaverageho

useholdelectricitybill

nowandthisisorecasttoallby20

202.

ThecostodeployingrenewablesacrossAustraliaisju

stasmallproportionoelectricityb

ills.

Byarthelargestcomponentoelec

tricitybillsisnetworkcosts(40to50per

centobills)3

thatis,upgradingtransmissionan

ddistributioninrastructuresuchas

polesandwiresto

handlerisingpeakdemandandrep

laceoldequipment.

Thegrowthinpeakdemandthose

ewtimesayearwhendemandor

electricityisthe

highest(usuallythehottestewday

sinsummer)isamajoractordriving

upcosts.More

houses,moreairconditionersando

thergadgets,allbeingusedatthes

ametimeorjusta

ewhoursayear,putsenormousst

rainonthesystem.Toavoidblackou

tsduringtheseew

hoursweneedtobuildextrapower

plantsatconsiderablecost.Thisis

therealissuethat

Australianeedstoconrontiwewa

nttostoppowerpricerises.

Thenextlargestcomponentoelec

tricitybillsisthewholesalepriceoe

lectricity

(20to30percentobills)

4.Solarisaninsurancepolicyagains

ttheserisingcosts.

MYTH:Subsidiesorsolarandgre

enschemesare

whyelectricitybillsaregoingup.

2

Energy Supply Associationof Australia (ESAA):Power prices are rising due to a numbero actors. Population growth requiringnetwork extensions, ageing inrastructurecoming to the end o its 40-year lie and

rising peak demand, caused by higheruse o air conditioning and electronichousehold appliances, are all puttingupward pressure on energy costs.

ESAA media release, 7 November 2011

Energy Users Associationof Australia (EUAA):Network prices the prices chargedto transport power across poles andwires make up hal o the electricitybill and have been by ar-and-away

the main contributing actor to theprice increases.

EUAA media release, 6 November 2011

2, 3, 4 CEC analysis


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MYTH: Solar panels are oten installed badly.

FACT: The solar industry is well regulated and sae.Solar panels and inverters (the component that converts the power generated by the panelsinto a orm compatible with the electricity system) have to comply with the relevant AustralianStandards, and every solar installer must irst be qualiied as an electrician, and then undergoadditional training and accreditation in solar systems.The Clean Energy Council has a ree consumer guide on its website to help people ask the rightquestions and to get a quality product and installation5.

35 www.cleanenergycouncil.org.au/resourcecentre/Consumer-Ino/solarPV-guide

Source: CEC analysis

SOLAR AND THE GRID

2%

Pricebreakdownofave

rage

Australianhouseholde

lectricitybill

Wholesaleprice-ie.thecostof

traditionalgenerationfromsources

likecoalandgas

Networkcharges

Othercosts

Governmentsupportforsolar

Governmentsupportforlarge-scale

renewableenergy

eg.hydro,wind,bioenergy

30%

41%41%

6%

21%


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FACT: Householdsolarishelpingre

duceouroverall

demandorenergy.

Recently,theAustralianEnergyMark

etOperatorreviseddownbyiveper

centitsannualorecast

orenergydemand.

Thedriversbehindthisdeclineindema

ndincludeagreateruptakeorooto

psolarpowerthat

hashelpedreducethecallonthepowernetwork.

ItisagreedbypeopleincludingFede

ralEnergyMinisterMartinFerguson

thatthistrendis

suppressingwholesaleelectricityp

riceswhich,roughlyspeaking,area

roundhalowhat

theywereiveyearsago.

However,unortunatelywhenstate

regulatorssetpowerprices,theya

renottakingintoaccount

thereductioninwholesalepricesca

usedbyactorsincludingincreased

uptakeohouseholdsolar.

Regulatorsneedtoreviewhowthey

setretailpricestobetterunderstand

andrelecttheimpacto

lowerwholesaleprices.

TheSouthAustralianregulatorhasa

lreadystartedaprocesstodothis;

theCleanEnergyCouncilbelieveso

therstateregulatorsshoulddothes

ame.

MYTH:Householdsolarisjusttinke

ringroundtheedges

otheelectricitymarket.

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FACT: Theneedorgridupgradesi

sdrivenbyrisingpeak

demandandinsufcientinvestment

intheelectricity

networkoverthelast20years.

Thesinglelargestreasonorrisingpowerbillsisthecostoupgrades

totransmission

anddistributioninrastructure(ore

xample,thepolesandwireswhichinsomecasesaredec

ades

old).Thismakesupabout40to50p

ercentotheaveragehouseholdpo

werbill,andwouldexist

withorwithouttheadditionosola

rpowersystems.6

Thecallonourelectricitysuppliesa

tpeaktimesduringthedayandyea

r(orexample,onreally

hotdayswhenpeoplecomehome

romworkandturnontheiraircondi

tioners)isakeydrivero

powerpriceincreases.Thisisknow

naspeakdemandanditsgetting

worsethankstopopulation

growthandtherisinguseoenergy-

hungryappliances.7 Itisestimated

that25percentoretail

electricitycostsarecreatedbypeak

eventsthatoccuroverlessthan40

hoursperyear.8Meeting

thisdemandrequiresenormousinve

stmentininrastructurethatissome

timesonlyturnedona

ewtimesayear.

Onrareoccasionsinsomeremotep

laces,networkupgradesareneeded

tohandlesolar.

Butinmostareas,solarcanbeco

nnectedtothegridwithoutrequirin

gnetworkupgrades.

MYTH:Solarsystemsdrivethenee

dorexpensive

gridupgrades.5

6 CEC analysis7 Department o Employment, Economic Development and Innovation, Queensland Energy Management Plan, Queensland Government,Brisbane, 20118, 9 R. Fraser, Demand side management, paper presented at the Australian Institute o Energy symposium, NSWs Electricity Future2020 (and beyond): What will it look like and how do we get there?, 24 May 2010, Sydney

It is estimated that the installationo a 2 kilowatt reverse-cycle airconditioner costs a consumeraround (on average) $1500 yetimposes costs on the energysystem as a whole o up to$7000 when adding to peakdemand. The $7000 system-widecost must then be spread acrossall other customers.9


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FACT: Cuttingemissionsisjustone

osolarsbenefts.

Solarpowerhelpshouseholdsose

ttheimpactsoincreasedelectricity

pricesresultingrom

apriceoncarbon,whilemanyothe

rcheaperormsocarbonreduction

donothingtohelp

householdsadjusttotheimpacto

thecarbonprice.

Comparedtothe

Commonwealths$23pertonnecar

bonprice,theeectivepriceperton

neo

reducedcarbonemissionsthroughsmall-scalesolarpowe

rcanlookexpensive.Butthetwoth

ings

arenotthesame.Solarpowerdoes

twothings:itreducesemissionsandproduceselectricity,

whereasundertheCommonwealths

schemeacompanycanpurchaseac

arbonosetwhich

reducesglobalemissionsbutdoesn

othelpsupplyAustralianswithelec

tricity.

Thesolarpowerin

dustrybringsanotherbeneit:itsup

portsalotolocaljobs.

Whenviewedholisticallysolarstack

supwellasnotjustamethodored

ucingemissions,

butosimultaneouslyprovidingoth

ersocialandeconomicbeneits.

MYTH:Solarpanelsareanexpensiv

ewaytocut

greenhousegasemissions.6

10 Statement o Opportunities, August 2011, AEMO11 AEMO reports power usage dip, Climate Spectator, 6 March 2012

MYTH: Solar can only ever make a small contribution to ourenergy needs because it doesnt produce power at night.

FACT: Solar already makes a signifcant contribution and itsjust getting started.Solar power and energy eiciency schemes are helping cut our overall demand or electricity.Data released in 2011 by the Australian Energy Market Operator (AEMO) shows that overalldemand or electricity in Australia actually ell or the irst time in decades.10

The drivers behind this change vary rom state to state, however it is becoming apparentthat electricity consumers are changing their energy use in response to rising electricity prices,adopting energy eiciency programs and the installation o rootop solar photovoltaic systems,AEMO Managing Director Matt Zema has said.11Solar systems can also be a perect it or many businesses that use a lot o power during theday, but almost none at night.

Finally, battery and other storage technologies are rapidly coming down in price, with somehousehold systems already sold with storage batteries included. Cost-eective large scaleenergy storage technologies are just around the corner.

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FACT: Theossiluelindustryishea

vilysubsidised.

TheenergymarketinAustraliaisno

talevelplayingield.Theossilue

l-basedelectricitysystem

wehavetodayisbuiltongovernmen

tsubsidies,andossiluelscontinue

toenjoygovernment

assistance.Forexample,theTambe

rlinInquiryinNSWrevealedthatthe

government-owned

Cobboracoalminesoldcoaltopow

erstationsatcostprice(roughly3

0percentotheprice

paidbyothergeneratorsontheopenmarket),whichm

eantthat:...State-ownedgenerator

sand

gentraders[had]accesstocoalata

lowerpricethanwouldhavebeenavailabletothemhadthey

hadtosourcesuchcoalthroughat

enderprocess.12

Thisamountstoasubsidyoaround

$4billionoverthelieothecontra

cts,anditisjustone

exampleowheretaxpayersareoo

tingthebill.

Ontopothat,ossiluelshavebeen

subsidisedbynothavingtopayor

thegreenhousegases

theyproduce,andortheotherheal

thandenvironmentalimpactstheyc

ause.

Analysispublished

recentlyintheAmericanEconomicR

eviewcalculatedthattheeconomic

damagecausedbyairpollutantsro

mcoalburning(intermsohealthim

pactsandlocalpollution)

exceedsthevalueotheelectricityp

roduced.13

MYTH:Renewableenergycantcom

peteeconomically

withburningcoalorpower.8

12 Special Commission o Inquiry into the Electricity Transactions, p.9.13 Environmental Accounting or Pollution in the United States Economy, American Economic Review, Vol. 101, No. 5, August 201114 Review o the Australian solar PV industry 2011, Clean Energy Council, p.18.

Due to rounding gures do not add up to 100 per cent.

THE ECONOMICS OF SOLAR

Jobs in the Australian solar industry:Research and Development 3 per cent Manufacturing 3 per centInstallations and customer service* 64 per cent Distribution 6 per centOther (financial, legal, training etc) 21 per cent Utilities 2 per cent

*includes companies perorming installations, though this likely understates the utility stasupporting installations through call centres, billing, system inspection and meter changes.14

MYTH: All the solar panels are made in China so there are ewAustralian jobs in solar.

FACT: Thousands o Australians are employed in the solar industryIt is true that most o the solar panels in Australia are produced overseas. However, there arethousands o Australians employed in the local solar industry. It is estimated that there are 39 jobsdirectly supported in Australia or every 1 megawatt (MW) o solar installed. In 2011, 500MW wereinstalled, taking the national total to over 1000MW. This equates to around 14,000 jobs.

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15 Renewable Energy Technology Cost Review, Melbourne Energy Institute, March 2011, p.1.*500,000 installed systems multiplied by average Australian occupancy rates (2.5) adjusted down (to 2)to account or high prevalence o retiree households with solar but below average occupancy rates.

In 2012 the top 10 solar postcodes are:Dubbo, NSW 28 per cent o houses with solarCaloundra QLD 27.3 per centVictor Harbor, McCracken, Hindmarsh Valley, SA 25.9 per centPinjarra, Oakley, Ravenswood, WA 24.7 per cent

Currency Creek, Goolwa, Hindmarsh Island, SA 24.7 per centAldinga, Port Willunga, Silver Sands, SA 24.1 per centJimboomba, North & South Maclean, QLD 23.9 per centEllenbrook, Brigadoon, The Vines, WA 23.8 per centHallett Cove, Sheidow Park, SA 23.6 per centOrmeau, Jacobs Well, QLD 23.2 per cent

MYTH:Weneedbigbreakthroughsinsolarresearchanddevelopmenttopushthepricedownfurther,sogovernmentsubsidiesinAustraliamakenodifference.FACT:Governmentsubsidieshelpbuildlocaleconomiesofscale,notreducetechnologycost.Whiletherehavebeensomeimportanttechnologybreakthroughsoverrecentyears,theprimarydriverfortherecentcostreductionsinsolarhasnotbeentechnical,ithasbeen

aresultofcompetitivepressuresandeconomiesofscale.AnindependentreportpublishedrecentlybytheUniversityofMelbourneconfirmsthis

assessment:Photovoltaics(PV)andwindpowerhavehistoricallyshownthatalargeproportion

ofcostreductionshavecomefromthelearningsandeconomiesofscaleassociatedwith

large-scaleglobaldeploymentnotjustimprovementsintechnicalefficiency.15

Inotherwords,windingbackorshuttingdowngovernmentassistanceinAustraliawillnothave

muchimpactontheglobalpriceofsolarpanels,butitwillhaveasubstantialimpactonthelocal

installationcostsbyaffectingthescaleoftheindustryandthereforelevelsofcompetitionin

themarket.

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11MYTH: Green schemes help the rich buy solar, subsidised by the poor.

FACT: Lower and fxed income households are driving the solar boom.The suburbs with the highest percentage o solar installations are overwhelmingly low- to middle-incomesuburbs and places with a high proportion o retirees. These are the households that are the most concernedabout rising electricity prices. Over 1 million Australians live in a house with solar panels installed.*

CEC SolarPV Myths&FactsReport V8[1]

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