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Clean Power Adelaide solar

Published on January 7th, 2013 | by Ronald Brakels

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Solar Electricity Now Under Half The Cost Of Grid Power For Australian Households

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January 7th, 2013 by
 
Over the holiday season, I asked one of our dedicated readers, a solar energy expert from Australia, a few questions about the solar situation in Australia. What I got in return was a full post! Check it out:

The cost of rooftop solar continues to fall and in Australia it has dropped by about a third since September 2011. According to Solar Choice, the average installed cost of rooftop solar for households last month was $2.19 US per watt. As most Australians who own a roof can currently borrow money at around 7% or less, this means the cost of electricity from rooftop solar for the typical Australian is now about 12 cents a kilowatt-hour, which is less than half the average cost of grid electricity in Australia.

Thanks to Renewable Energy Certificates, Australian households don’t pay the full cost of their solar systems. How much they save depends on location, but from the first of this month most people will save about 68 cents a watt. So if the cost of solar power remains the same as last month, this means the full cost of new solar in Australia, including our 10% Goods and Services tax, now averages about $2.87 a watt. This makes the full cost of electricity produced about 15 cents a kilowatt-hour, which is still close to half what Australians pay for grid electricity.

Rooftop solar used to receive extra Renewable Energy Certificates, but in a surprise move this was ended six months early, beginning from the first of this month, and solar now receives the same amount as any other renewable energy project. As a result, solar system prices may go up this month, but there is a good chance the solar industry will absorb most of the increase. If it doesn’t, we can expect a bump in solar system prices before their downward trend continues.

As solar electricity is now about half the cost of power from the grid and is by far the cheapest source of electricity available to households, unless there is a very large drop in the cost of daytime grid electricity, we can expect rooftop solar’s rapid expansion to continue and result in a large decrease in Australia’s CO2 emissions.  Personally, I am hoping solar will expand extremely rapidly, as I have had about all the global warming I can handle. The temperature for tomorrow here in Adelaide is forecast to be 44 degrees Celsius. That’s seven degrees above body temperature. If my air conditioner dies, I may die. So please, I beg you, consider installing a rooftop solar system no matter where you are. If not for my sake, then for all the people in India and Africa and other places who don’t have air conditioning.
 

About Ronald Brakels: I live in Adelaide, South Australia, and I’m really bad at writing short bios about myself. I’m interested in clean energy and protecting the environment, but you probably could have guessed that from the context. While I don’t claim to have any great mathematical skills I am proud to be able to say I have addition, subtraction, multiplication, and division down pat, which appears to be a superpower in some parts of the internet. And in a lot of politics as well. Also, I have vague memories of studying statistics at some point. I enjoy long walks on the beach and so would like them to remain above sea level. I have a blog under the name Ronald Brak, but it’s mostly one bad taste joke after another, so don’t go there.

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About the Author

lives in Adelaide, South Australia. Now that his secret identity has been revealed he is free to admit he first became interested in renewable energy after environmental mismanagement destroyed his home planet of Krypton. He is keenly interested in solar energy and at completely random intervals will start talking to himself about, "The vast power of earth's yellow sun."



  • Don

    Hi Ronald

    I would be interested in seeing your calculations re cost of electricity production from household PV systems in Australia. It is data like this that can help convince me that PV is a real alternative. Data like that is very hard to find.

    • Bob_Wallace

      I’m not Ronald, but let me jump in here with something that you might find useful. It’s a page that will calculate the price of electricity from a system and calculate the average price of grid power over the same period.

      http://www.nrel.gov/analysis/tech_lcoe.html

      What to plug in where:

      Financial

      For discount rate use the interest rate for a loan to install or what you could make in a fairly safe investment. (You’re either going to borrow the money or you’re going to use money you could have invested.)

      System Cost

      Capital cost – dollars per watt x 1,000.

      Capacity factor – your average solar hours per day divided by 24 and multiplied by 100.

      Lots of the US gets 4.2 avg hours / 24 * 100 = 17.5%. There are solar maps for the US, you should be able to find one for Australia.

      Fixed O&M – 0

      Variable O&M – I just leave it where it is. You aren’t likely to have any operating and maintenance expenses.

      Heat Rate – 0

      Fuel Cost – 0

      Today’s Costs

      Put in what you pay for electricity today and what you guess inflation will be for the next 20 years. Something like .12 and 3%.

      Results

      You can compare what you would likely pay, on average, for grid power over 20 years and what your system electricity would cost you.

      Remember, when you install a solar system you lock in the cost of your electricity while grid prices are likely to increase.

      Also remember that your panels are probably going to be producing around 80% as much electricity when they are 40 years old as they did when they were new. After the twenty year pay off period you’re looking at decades of almost free electricity.

      • Don

        Thanks Bob…. very much appreciated!!!
        My calculations (using a 10 year life expectancy period shows solar electricity costs of 10.2 cents per kWh vs Utility Company costs of 31.5 cents/kWh. A clear winner!. (I live in Sydney Australia) I expect the system will last much longer than that so the numbers just get better.

        • Bob_Wallace

          You mean you used 10 year for Period (Years)?

          That’s not actually so much life expectancy as it is a standard used by energy companies, etc. They tend to look at new investments in terms of “What will it cost spread over 20 years?”.

          You got 10.2 cents using 10 years and what price per kWh and what capacity?

          And is 31.5 your current price or the average over 10 or 20 years?

          If I was in the position of dropping my electricity cost from 31 to 10 cents I’d be banging on the installers door before sunrise tomorrow.

          And, yes, you should expect a lot of years of almost free electricity after the system pays for itself.

          Another way to look at this is to use a loan payment calculator like this one…

          http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

          You can use it to see how long it would take to pay off your system if you took the money you would have paid to the utility company and used it to pay down the loan.

          Let’s say you borrow $10,000 at 6% to install. And that once you install you’ll save $200 per month on electricity.

          If you put in $10k and 6%, leave the 60 months that is preset, and calculate, you’ll find the 60 month “payment” $193.

          Now put 58 in the months box and recalc. That will give you a payment of $199.

          So a $10k system financed at 6% will pay for itself in 58 months if it saves you $200 a month in power bills.

          And then it gives you another 35+ years of almost free electricity.

          Another way to look at it is, if you had the cash in your pocket, what would be the rate of return on a cash purchase.

          $10,000 invested. $200 savings per month = $2,400 annual savings (return). That’s a 24% return and a fairly safe investment.

          Even if it saved you only $100 per month it would be an incredibly great investment. A 12% return.

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  • Ian

    Small cottage industries that are electricity intensive and automated will hopefully occur in the home to make use of this cheap electricity ,such as plastic moulding, commercial meal preparation, printing, ice making. We the people should be using all that is in our power to wean ourselves from the big companies be they electricty utilities or retailers or manufacturers.

  • ToddinNorway

    It is no wonder that the coal industry uses every dirty, unethical trick in the book to slow down renewables. But ultimately the coal industry will lose, and the sooner, the better. I suspect we will see a similar situation in the US south-southwest in the next 2 years as the EPA regulations on coal power ramp up, natural gas prices start to approach a higher, more normal level and PV installation costs fall.

    • Ronald Brak

      As there is considerable variation in retail electricity prices between states in the US, I expect solar installation costs will be quickly pushed down in places with high retail electricity prices and then decreased costs will spread to other states. Lower cost installations are already being done for $3 a watt or less in the US. This is a genie that is not going back into the bottle.

      • ToddinNorway

        The wildfire news we get here in Norway from Tasmania/Australia the last few days looks scary and worse. Hope you stay safe and cool.

        • Ronald Brak

          Yes, there are terrible fires in Tasmania and there are bushfires near my sister’s place in New South Wales, but she’s safe. It’s currently safe here in South Australia, although it is awfully dry. As for staying cool, that can be difficult. I saw a $2 coin lying on the ground outside but I left it where it was because I was scared of burning my fingers.

        • macduck@gmail.com

          the wildfires? it happens every summer…

          • Ronald Brak

            Bushfires are very common, but they do vary in severity. In 2009 the Black Saturday bushfires killed 173 people. And once we had a bushfire that apparently killed, either directly or indirectly, one million sheep.

    • http://zacharyshahan.com/ Zachary Shahan

      I’d say the same. Going to be fun to watch… and report on.

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