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Clean Power Citi-solar-wind-opportunity1

Published on September 29th, 2013 | by Giles Parkinson

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Will Australia Participate In $64 Billion Wind And Solar Boom

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September 29th, 2013 by  

Originally published on RenewEconomy

Investment bank Citi says there is a $64 billion market opportunity for solar and wind energy installations in Australia, which it says rates as the most attractive market for solar in the world based on costs.

A report by Citi into the global investment opportunity for renewables says $5.6 trillion of wind and solar energy could be invested around the world without added costs for extra infrastructure or back-up – which it describes as its “sensible investment” scenario, or its near term opportunity.

Its estimate for Australia suggests that up to 12GW of solar (an investment of $26 billion) could be absorbed into the Australian grid without added costs, and up to 16GW of wind ($38 billion).

Australia currently has about 2.6GW of solar and just under 3GW of wind capacity. Citi’s estimate is based on a 20 per cent “sensible wind penetration” – which is a global average. It notes that some economies will comfortably absorb 30 per cent with little added cost.

This graph below highlights how Citi sees the “sensible” investment opportunity around the world. “Certain countries such as Japan, Australia, Latin America and the US are better positioned to participate in this investment wave while in other countries such as Italy and Germany the renewables boom should be largely over,” it says.

Screen-Shot-2013-09-25-at-9.18.08-PM

Solar in Australia rates highly because it can compete “behind the meter”, or with residential prices, and because of ability of utility scale solar to displace expensive gas peakers during the day-time. Wind is less attractive in Australia compared to other countries because it has to compete with relatively low-cost wholesale prices, and does not necessarily produce at peak time.

Citi notes that in Australia, households are facing the choice between (a) buying electricity from the socket at a rate of $30ct/kWh or (b) producing solar electricity at a cost of $18.5ct/kWh. “By installing solar panels a household would save $11.5ct for every kWh consumed from solar,” it says.

This graph below shows how Australia compares with other countries in terms of investment opportunities.

Citi-solar-wind-opportunity1

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Stan Hlegeris

    I don’t see where the cost of solar (shown as 18.5c) comes from.

    Here in Queensland you can get a top-quality 5kW system fully installed by a reputable local electrician for $8000.

    That system will produce an average 22.5kWH per day, or 8,212.5kWh in a year, or 82,125kWh in ten years. Make the crazily pessimistic assumption that the entire system will cease operating after just ten years.

    On that basis, the cost per kWh produced is $8000 divided by 82,125kWh = 9.7c per kWh.

    Yes, you have to pay for it all up front. That’s offset by the fact that you are protected from future price rises. Analyse that however you want–you still won’t get a cost anywhere near 18.5c. More like half that amount in the worst case.

    As retail electricity now costs 30.228c per kWh (in Qld), the savings is about 20c per kWh, about twice what you suggested in the article.

    • Bob_Wallace

      The cash price may be 9.7c/kWh, but the “full accounting” price is higher.
      If someone finances a system then the cost will be higher.

      If someone pays cash then there’s also a cost. Those dollars could have been invested somewhere. Whatever returns were not made are part of the cost.

      • Grad

        That would raise cost another 2-3cents, but you still wouldn’t be anywhere near 18cents/kWh, let alone 30c/kWh.

        Here’s a nice solar LCOE calculator, you can put in numbers for interest rate, discount, degradation, inverter cost, etc, and it calculates LCOE.

        http://www.appropedia.org/Review_of_solar_levelized_cost

  • Shiggity

    Either the utilities can build out renewables or people will do it themselves. It won’t take long for their people to get mailers saying how they can lower their electricity bills with solar and pay no money down, like how SolarCity does it.

  • JamesWimberley

    Citi reasons as if everybody else thinks like investment bankers, There are no longer lots of profits to be made in German renewables, so we´ll go elsewhere. That´s a fundamental misreading. German citizens are committed to phasing out fossil fuels: the ¨Energiewende¨. Prices and profits are just a means to this end. German policymakers will continue to tweak prices so that further investment in renewables stays just profitable.

  • Matt

    The graphic is based on a simple assumption, 20% wind 10% PV. About the only useful bit of data from this study is that at those levels of penetration there is no grid cost (on average). I sure they then took a cost/MW for solar and PV and use that to calculate how much each country investment opportunity was. Based on that definition Germany is already FULL. WAG is they didn’t do much work to get those two numbers. And if they did are worthless anyway. Ok India for to have more would require grid upgrades. Big deal show me one real study that say India doesn’t need massive grid, or at least massive micro grid, work to get power to all its people. If it is distributed it is clear that you can go much higher than 10% PV, without grid upgrades. Since it happens during peak and where it is used.

  • Ivor O’Connor

    And my second laugh out of the bottom graph was China. China is rated as the best place by far to invest in wind and solar. Really?! How does one go about investing reliably in China?

    • Shiggity

      Look into mutual funds and ETFs.

    • Bob_Wallace

      By signing a contract.

      Just as all business is done with Chinese companies.

  • Ivor O’Connor

    I got a chuckle out of the graph at the bottom showing zero solar investment opportunity in Germany.

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