A review by the Australian PV Association (APVA) has found that the government’s carbon price negotiations are founded on emissions data for solar PV that may underestimate its cost effectiveness by up to a factor of 10.
The APVA has done analysis of the recent Productivity Commission report being used by the government, Greens and independents in negotiations about a carbon price. Its findings show that solar PV could be between four and 11 times more effective as a way to cut greenhouse pollution than the Commission has calculated.
The Commission claims that the cost of emissions reduction achieved via solar PV is $432-$1043/tonne CO2. According to the APVA, the true figure is $90-$95/t CO2, depending on the installation location. This discrepancy is explained by the following errors in the Commission report:
1. The Commission has failed to note the rapidly declining costs of PV over the past four years. The cost of solar modules averaged $3.20/Wp (Watts peak) in 2010 and total prices for small systems averaged $6.50/Wp. Total costs have fallen from $9 in 2009, and $14 in 2001. The Commission overstates the true costs of PV by about 100 per cent.
2. The Commission assumes solar systems are an average size of 1.5kW. This is completely incorrect. Using more accurate figures from the Office of the Renewable Energy Regulator (ORER), solar generates 453GWh, 32 per cent higher than the 344GWh estimated by the Commission.
3. Solar’s contribution to emissions reduction is calculated by the Commission is 317kt. Using the ORER corrections, the true figure is calculated to be 415kt.
4. The Commission fails to include extra value that solar electricity has by virtue of being produced at the point of consumption, which negates losses in transmission and distribution (and, where relevant, sse-of-system charges).
5. The Commission wrongly assumes that 50 per cent of solar electricity is exported to the grid and is thus subsidised by net feed-in tariffs (in the relevant states). In fact, the amount of power exported from 1.5kW systems typically ranges between 17-28 per cent. Households that use more power, export less. Bigger systems export more.
6. The Commission counts all the subsidies to solar but fails to count all the electricity generated. It appears to assume that the electricity is only being generated for as long as the subsidy lasts! In NSW the subsidy lasts for seven years, meanwhile the International Energy Agency uses 30 years for its life cycle analyses.
The fact is that solar PV electricity will almost certainly reach cost crossover in four years. At this point, it will be cheaper than grid electricity for the consumer, in major population centres. Crossover could reach Sydney as early as 2018 and Brisbane by 2015, depending on how quickly grid power costs continue to rise. Once this happens, the cost of abatement will be negative. Cutting emissions will save on electricity and thus become a positive stream of income for households.
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