Energy Matters Forums

[EnergyMatters]

Energy Matters has been pretty active in lobbying for a gross, national and uniform feed in tariff for solar power through our petition at FeedInTariff.com.au.

If you're not sure about what a feed in tariff is, we have some further information here.

In another poll on these forums, we asked for your views on state vs. national feed in tariffs. That thread started to stir up some interesting debate on the general effectiveness and fairness of a feed in tariff system.

A business-as-usual approach to power generation simply isn't possible if we are to address the threat of climate change and other environmental issues.

With the age of cheap energy coming to an end, whatever path we take, electricity is going to cost more until such time the infrastructure is in place and the chosen technologies further refined and made more economical.

While some have raised concerns about the cost of solar power, even so called "clean coal" is terribly expensive.

According to a transcript of an interview with Dr.Chris Spero on the Australian Coal Association's NewGenCoal web site, "the expectation is that the cost increase for clean coal technology will be in the order of 50 to 75% of current power generation costs".

With these points in mind, what are your thoughts? Is a feed in tariff for renewables such as wind and solar power the way to go to boost uptake of renewable energy in Australia and shift us away from coal? Should all consumers help carry the cost of these private systems exporting clean electricity to the mains grid? Are there better solutions?

Share your thoughts.

[lad]

reposted from post1039.html#p1039



Hello ZZSSTT,


Go to page 8 of the pdf at this link http://www.isf.uts.edu.au/publications/ ... _paper.pdf and table 1 is good place to start. This document will give you an in depth look at subsidies and how they are defined and why.

http://www.abc.net.au/news/stories/2007 ... 910116.htm

The whole idea of a gross FIT is to make it not only viable but compelling for everyone to participate. Especially low income earners, who will, without this kind of support, be literally left out in the cold.


Go Gross FIT nationally for a prescribed period, 15-20 years and gradually withdraw the level of returns thereafter, we will moderate and manage our power usage and all will be able to come on board. At the same time the price on solar products will come down or the performance will increase, either making it more affordable and reducing the need for such healthy financial returns.

[lad]

Just to clarify my vote, a Gross FIT with systems in place to enable low income families/individuals to enter the green energy market, IE no up front installation or similar

[AlanM]

As I discussed in the other thread (http://forums.energymatters.com.au/solar-wind-rebates/topic101-20.html#p1003, I'd propose a hybrid version of the gross and net feed-in tariffs, using a time-based system to pay for all energy exported to the grid, varying according to the time of day. Best of both types and the fairest possible tariff.

[lad]

Hello AlanM,

my way of thinking is that in the wind down from a Gross FIT, that a hybrid system as you suggest come into play.

Lets get people onboard and financially stable, before removing the trainer wheels. I would not like to think that the real cost of power continues to not be understood into the future.

[zzsstt]

Hello ZZSSTT,


Go to page 8 of the pdf at this link http://www.isf.uts.edu.au/publications/ ... _paper.pdf and table 1 is good place to start. This document will give you an in depth look at subsidies and how they are defined and why.

That was the very document I was talking about earlier. Unfortunately it is largely unrelated to electricity (it's aim is to define all subsidies that "encourage" the use of fossil fuel, so it also deals with oil, petrol, cars etc.). Personally I do not agree with many of the definitions. For example, the author includes subsidies given to low income families. Well, I suppose that technically such a subsidy could be seen to "encourage the use of fossil fuels", in that it enables low income households to cook, heat their homes etc., but would you really want to see it taken away from them? The report lists the cheap supply of electricity to aluminium smelters as a subsidy. That is indeed a subsidy that increases the use of fossil fuel, but it certainly does not reduce the price of electricity for anyone else (which was your original claim) and in fact could be seen to be increasing the price for the other users who have to make up the short fall. Removing that subsidy is also likely to result in the collapse of the aluminium smelting industry, at the cost of many jobs (I have no details of that industry, so this is simply speculation).

Equally the author includes the fact that various government departments do not fully recoup their costs, this he sees as a subsidy that encourages the use of fossil fuels. Whilst again from a certain viewpoint it may be that a mining company, for example, might be able to obtain some information from a government department more cheaply than if they were to do the research themselves, I personally find it hard to see that as a subsidy - but then I also use various government departments as sources of information that I could not afford to research for myself, so perhaps I am biased!

As I have said, there appear to be very few subsidies, even in that report, that could be seen to reduce the across the board prices of electricity. The report also, by it's own admission, includes many estimates and extrapolations.

When someone sets out to write a report, they do so with a preconceived idea of what they want to demonstrate. Most "facts" can be viewed from several angles, and often (in the right hands) the same "fact" can be used to prove completely contradictory ideas. The report we are talking about here has been written to prove the idea that the use of fossil fuels is encouraged through subsidies. When read by someone that already has that belief it is very convincing, especially because the total figure at the end is so large. As I read it, however, I found much of it to be questionable. Perhaps the "facts" are correct, but they are used and interpreted with a clear goal, and without argument or the provision of alternatives. For example, perhaps the failure of the government to fully charge road users for the entire cost of the road system does, from a certain limited viewpoint, encourage the use of fossil fuels. However without that "subsidy", industry would suffer, food prices would skyrocket, our export industries would fail etc. as transportation costs spiralled upwards, but without any analysis of the extended affects of the "subsidy", the report simply includes it in the total.

So, an interesting but apparently biased report that still does not provide me with details of subsidies that reduce the cost of electricity to the degree that has been suggested.

I'll check out the other link when I get a minute....!

(Future posts will be to the new thread!)

[zzsstt]

I'll try another post in this thread, though the other one seems to still be in use..!

There have been various comments about the future being "carbon constrained", and the cost of electricity "having to rise" because it is "subsidised". Neither of these seem to have been substantiated, and could be taken as regurgitation of the current fashion. My own views are perhaps more pragmatic.

A quick web search gives the cost of installing a 2kW solar system as just under AU$10K after rebates. This system is specified as producing 8.5kWh per day. Given a 25 year life expectancy (as claimed), this equates to 77500kWh generated, at a cost of 12.9c/kWh. This is less than the current price of electricity (20c/kWh). A 40kW system works out at 13c/kWh. Keep in mind that these prices are FIXED for the 25 years, whilst "grid" power will increase with CPI (approximately). With no FIT whatsoever, the system will pay for itself in about 17 years (assuming 5% increase per annum in grid power). However after 25 years it will have made over 100% profit. Beyond this point, for however long it survives beyond it's 25 year expected lifetime, it will continue to make an increasing rate of profit (20%PA by 29 years). The "savings" are based on using and generating 8.5kWh, as opposed to purchasing the entire 8.5kWh, and include a 5% per annum increase in grid cost.

With a 60c gross FIT, and the same assumptions, the system saves a fixed $1861 per annum (8.5 * 60c * 365days). It pays for itself after 5 years, after which it continues to make a $1861 return every year, assuming the gross FIT stays at 60c. Obviously these numbers would change if the FIT were changed, but it is nonetheless a very profitable investment (19% return). The downside is that the high return on investment to the system owner will be funded by additional costs to those without panels, which will of course provide more encouragement to install panels, BUT ONLY TO THOSE WHO ARE ABLE TO. Those who cannot afford panels, or who live in units, apartments, rented accomodation etc. will have to foot the bill.

So, is the idea to encourage the long term uptake of solar or to generate another income stream for those who can afford the up front costs?

My feeling is that a gross FIT will most certainly encourage solar installations, but it will be the chosen few who will benefit at the cost of everyone else. A net FIT (to the majority who will probably struggle to be a net exporter in any significant manner) probably has too long a pay back period to be of much interest to other than the die-hard greenies, though I suspect many will embrace it and then be dissappointed when they discover how little power they actually export.

Perhaps the answer lies with (as in the German model, we are told) a subsidised loan to purchase the system, thus making it available to more people (though still not those who are constrained by location etc.). Linked to a net FIT, such a system would encourage uptake, boost the industry, allow more people to access the system, encourage a decrease in power usage ("to be a net exporter") but not - hopefully - result in the power companies having to increase their charges massively to cover the costs (as has happened in Germany, where the gross FIT is implemented).

For anyone interested, I am an industrial user of electricity who would suffer from any increase in the price of power. However I also have sufficient resources and north facing roof space to benefit massively from a gross FIT - a 19% ROI for doing nothing is a very good deal!

[lad]

Hello ZZSSTT,

I am a family man. I am environmentally aware, but not a greenie. Due to family issues, our family has for most of its existence been in the low income bracket and now after 20 years, climbing above, due to some luck in timing with our first home (always rented until recently) and now dual income. We have done it tough (still others do worse). (in reply to your industrial credentials)

Power costs are going to rise and industry will have to pass those costs on through product prices. You can stand there and say no, but the fact is it is happening.

The recent federally funded systems allowed tenants to get funding for solar installations on rented properties. Gross FIT puts enough profit into installing a system, that providers can arrange finance or in some cases as my parents, where the system was paid for fully by rebates and RECS (admittedly a 1 KW system)

If there is profit to be made, vendors will provide systems for all income levels and accommodation types.

Perhaps the 19% ROI is worth fighting for. You reduce you carbon footprint and make your product more environmentally friendly and with power prices rising, your 19% ROI might be a solid under estimate.

Would a Gross FIT make you more interested in going solar sooner ?

Do yourself and our environment a service, fight for Gross FIT, initially, to get the uptake and reduce pollution, there is plenty of time to dilute the system later, but make sure there is time enough for the lower paid to get an established system.

[zzsstt]

Again, whilst I appreciate what you are saying I'm not sure that it is "real".

No matter how much funding a tennant is given, they are unlikely to be able to put up a solar system on a rented house. Apart from the issues of responsibility, insurance and so forth, what happens when the tennant wants to move house? Do the panels that they have paid for (with rebates) stay? Who foots the bill for the removal and shipping, or any wiring required to fit and remove them?

Would it not be far more likely that the owner of the house will put up the system? In which case, is it not also more likely that the owner (under a gross FIT) will take the return and pass the cost of the electricity on to the tennant? That may have been addressed in legislation, I have not checked, but to me it would seem likely that the owner of the house would benefit whilst the tennant would get stuck with the higher electricity price? Certainly many of the providers of rented housing that I know would have THEIR panels on the roof, and a separate meter for the tennant. The tennant pays the higher cost for power, whilst the owner takes the FIT....

None of this, of course, helps those who cannot physically put up panels because their roof is shaded, or they live in a unit etc.

My own situation, by my estimation, creates even more unfairness. I can, even under the current net FIT, connect a mass of panels to a meter that does nothing through the day. This means I would get 60c for each and every unit I generate. At the same time, I can buy my power through another meter at 20c a unit. Better still, I can (and therefore obviously do) run all the heavy power consuming motors at night, at which time I pay 10c for each unit. I use exactly the same amount of power, almost all of which comes from conventional sources. At the same time my solar investment gives me a 19%ROI even through the net FIT. As far as I can see, this does very little for the environment. It obviously increases the sales of panels, thus providing some additional profit for the solar industry. It may result in a decrease in the price of panels - the "bigger market/economies of scale" theory - though experience suggests that the price of any article that is being heavily government subsidised is unlikely to fall significantly (under a gross FIT, the very high return would seem likely to accentuate this, as there is headroom to increase the prices and still allow a ROI above that which can be made on most low/no risk investments).

Will it make my product more environmentally friendly? My financial break even point is to generate 1 unit for every 6 I use. So overall, I suppose I use it could be said that my "grid" power usage will fall 15%. However all the night-time power I use is still from conventional sources, the power I generate is used by others through the day.

Of course in financial terms it is in my best interest to install as large an array as possible, up to the full 20kW. In fact, at 19%ROI it would pay me to investigate whether the rebate limits are set per person or per meter or watever, and install multiple arrays if possible. After all, with a net FIT and night time usage, or a gross FIT, these will make a higher return than the "risky" stock market, and way more than a "no-risk" bank. Even if the FIT's are removed in a few years, I would still be ahead.

But all this will add to the cost of power for other users, so that I can line my pockets. Is that really fair?

Don't get me wrong, I agree that any FIT will encourage the uptake of solar. However I still believe that it will also disadvantage those unable, for whatever reason, to install a system. Whilst it will in no way prevent me from being part of the group who benefit, something in me is uneasy with the concept of benefitting from an artificial subsidy system that is paid for by enforced costs on others.

I also believe that the ability to generate power at half current grid price is sufficient incentive (certainly for me) to install panels if the capital cost of such a system was sensible, or subsidised so that it was available to all. I also believe that a system of cheap installation but no FIT provides (again, certainly me) greater incentive to keep my usage within my generating capacity, in fact one could argue that a gross FIT would encourage higher usage as it provides "free" power. Let me use my own situation as an example:

Let's say I have an electric motor. For peak loading it is an 8kW motor, but most of the time it runs at far below maximum load. At below design load it is far less efficient than when fully loaded, therefore it "wastes" power. If it is 10% less efficient at 5kW, it will waste (roughly speaking) 12kWh every day. Under no FIT, or a net FIT, my best option (given that I cannot use a smaller motor because I need to cater for those peak loads) is to install a VFD, which will cost AU$10K, but will enable the motor to run at close to optimum efficiency even when partially loaded, hence using 12kWh less power each day. Perhaps I could also install a power factor corrector. However, under a gross FIT my best option is to use the same AU$10K to install panels, as I benefit more from the FIT (8.5kWh generated per day, 3 * 8.5kWh financially) than I would from the reduced power consumption (12kWh total, including 4kWh at off-peak rate). The amount of power I generate would be less than I would have saved with a VFD, but because the FIT is 3 times the price of buying power, I simply don't care - I am financially ahead.........

VFD = $2.00/day saving (8*20c + 4*10c)
Gross FIT solar = $5.10/day saving (8.5*60c)

The environment "suffers" to the tune of 3.5kWh every day, whilst I pocket $3.10 and now I can afford to run another motor!

Just making the point that what is apparently obvious is not always correct.

[bpratt]

Sounds a bit like the story I heard where a home based business can apply for a second tariff 11 (peak) meter for the business for "security lights", and then hook up a 3kw system up to it and with what you make back from it, you could totally pay your household electricity.

I thought that's a sneaky idea, then around 0.0001 seconds later I realised that if I did something like that I'd be caught out, and whilst not strictly illegal, it'd be somewhat unethical.

But what you were saying isn't all that different.