Energy Matters Forums

[zzsstt]

The arguments you provide for the panels I quoted being a higher price in Switzerland do not change when applied to Australia. We also have transport costs, trader margins, exchange rates etc.

What I suspect you will find, if you investigate, is that your local producers in Europe are protected from too much competition. You will likely find that high import tarrifs are in place, and possibly that other incentives are provided to local producers.

To give you an example (not solar related) of international price manipulation, at one point I owned an identical motor vehicle in the UK and in Australia (actually they were different colours, but other than that they were the same). Both vehicles were made in Europe, at the same factory. On a straight exchange rate, and talking about the price of the vehicle including all taxes etc. on the same day, the vehicle was about 15% cheaper in Australia. That is not a typo, after exporting the vehicle and shipping it halfway around the world, it cost 15% LESS in Australia.

I was also (when younger and fitter!) a keen cyclist. I wanted some Amercian parts for a mountain bike, and as I went to the USA every few weeks I decided to get them over there. I discovered that they were actually cheaper to buy in Europe than in the USA (actually within a few km of where they were made).

The reason? Market protection. The USA has (had?) large import tarriffs on Japanese products, so their local producers could increase prices to match. When they were exported to Europe, they had to compete and so the price was lower. Australia, on the other hand, has no significant punitive tarriffs on imported vehicles, so the European car I bought had to compete directly with the Japanese vehicles and was therefore less expensive than it was in Europe.

Austalia has no market protection of any significance, and therefore everything has to compete. Unfortunately, due to high labour costs, legal requirements, unions, work ethics etc., this is very hard to do. The problem is not limited to solar panels, by the way. There is very little real production of anything in Australia.......

I genuinely wish you luck, by the way, if you are trying to set up some solar panel production in Australia, because I think it would be a great thing to do. But at a time when factories are closing because they cannot compete with imports, and several manufacturers of all kinds of different products have closed Australian factories and open factories in China (and then imported the product in to Australia because it's more profitable), it seems like a hard road!

[Nettlee]

IMHO it's all about the relative cost of electricity. Average consumption in Switzerland is 8,279Kwh/year, in Australia its 11,309Kwh/year. Approx average cost of electricity in Switzerland is US$0.11 versus US$0.0711 in Aus. So, you add those 2 together and compare to solar power costs which would entail an additional 75% in Switzerland, but 181% in Aus. It's a much bigger leap for Australians so demand is limited, especially when governments whip incentives away!

[heliox]

IMHO it's all about the relative cost of electricity. Average consumption in Switzerland is 8,279Kwh/year, in Australia its 11,309Kwh/year. Approx average cost of electricity in Switzerland is US$0.11 versus US$0.0711 in Aus. So, you add those 2 together and compare to solar power costs which would entail an additional 75% in Switzerland, but 181% in Aus. It's a much bigger leap for Australians so demand is limited, especially when governments whip incentives away!

You are right, but the costs for conventionaly produced electricity in Australia tend to rise damaticaly in the near future (heard about 25-30% at some places). Actualy I have to pay more than the US 0.0711 you mentioned here in Queensland. At the end of the day one thing is clear - the time of cheap energy from non sutainable ressources will be over soon - but the sun will shine at the sames "costs" for the next millions of years. So the prices for solar produced energy will only come down compared to the conventional energy. I still think Australians are proud of their own products and there is a good market chance for Australian made solar panels.

[Nettlee]

I agree completely. And thank heavens there are big electricity prices on the horizon, it makes the move that much easier. I suppose the only thing that I worry about is that the generators will increase the price in anticipation of a carbon price, pocket the profits that they will make from that, scream loudly when they have to buy permits, and demand compensation from the government having profited from decades of beneficial policies.

I think your idea of producing pv's is brilliant - please keep going. Most of us would love to go solar, we just need it to be a little more affordable.

[zzsstt]

IMHO it's all about the relative cost of electricity. Average consumption in Switzerland is 8,279Kwh/year, in Australia its 11,309Kwh/year. Approx average cost of electricity in Switzerland is US$0.11 versus US$0.0711 in Aus. So, you add those 2 together and compare to solar power costs which would entail an additional 75% in Switzerland, but 181% in Aus. It's a much bigger leap for Australians so demand is limited, especially when governments whip incentives away!

I'm not sure where that argument is going. And your prices must be for about 1995! In 2005 electricity was costing US$0.15/kWh in Switzerland, and my power in Australia has been at AU$0.16 for a while, but just went up to AU$0.19

But using your figures (I'd guess the ratio is still about the same?)
Swiss power = US$0.11 = AU$0.12
Australian power = US$0.0711 = AU$0.08

That's a ratio of about 1.55

Then compare average salaries, in Switzerland the median gross salary according to Wikipedia is about AU$116000 (AU$81,000 after taxes and health insurance) where in NSW it is AU$56800

By your figures the price of power in Switzerland is 1.55 times the price of power in NSW. But as the average gross salary in Switzerland is 2.04 times that in NSW, the difference could be largely ascribed to salaries! In fact, it would appear that Switzerland has cheaper electricity than Australia in relative terms!

[Nettlee]

Electricity prices and usage from the International Energy Agency and dated 2006. Despite your analysis, usage in Aus MUCH higher, so impact of increased prices still greater in Aus than Switzerland despite the income differential (everything in Switzerland more expensive than Aus). Hopefully though, the way that prices are going, it will encourage efficiency gains and then make the shift to solar that much easier.

[zzsstt]

Electricity prices and usage from the International Energy Agency and dated 2006. Despite your analysis, usage in Aus MUCH higher, so impact of increased prices still greater in Aus than Switzerland despite the income differential (everything in Switzerland more expensive than Aus). Hopefully though, the way that prices are going, it will encourage efficiency gains and then make the shift to solar that much easier.

There are any number of factors involved, and reasons for the differences. Whilst it is true that things are more expensive in Switzerland, overall spending power is still higher than in Australia. I have also decided, after living in both hot and cold climates across many countires, that it is far easier to make a house efficient in a cold climate than in a hot one! It is also far easier to put to another layer of clothing than to..., well I'm not sure what you do when you're too hot! In addition, remember that most houses in Australia have electricity as their sole, or at least major source of power. In Europe it is quite normal to have natural gas for heating and cooking. The removal of that source of power would cause an increase in electricity consumption!

Electricity usage is indeed higher in Australia, and indeed takes a far larger lump of a households earnings, which flies in the face of the concept that making it more expensive will help the uptake of solar. The higher usage and higher price than Switzerland hasn't helped yet, why should it in the future? But there's an entire debate about that in another thread!

At the end of the day, Australia is a very different situation to Europe. It's often very hot, which is harder to deal with than a cooler climate. It's very big, with very few people (even though we may have more people than Switzerland per se, geographically we have no near neighbours and are spread over a far bigger area). We cannot trade easily with our neighbours without sea or air travel. There is no border with another country, yet I worked in a building in Switzerland where a large number of employees didn't even live in that country! Most households do not have access to cheap natural gas for heating, so electricity is the only source of power.

Australia is indeed very well positioned to use solar power, and it is a great shame that we don't embrace it more. But it is very expensive and most people can't afford it. Increasing the price of electricity will reduce the number of people who can afford it (direct and knock-on price increases will reduce the cash available to spend on solar or energy efficiency) and therefore doesn't help. It is based on the false assumption that everybody could afford to install a PV system if they wanted to, and that they choose not to. The reality is that there are far fewer people with that "choice" than many people imagine.

The best way to increase the uptake of solar is to assist with installation costs, and reduce the prices. Increasing electricity prices make solar an interesting option for the wealthy, though not really a priority because they can still afford to squander power. A gross FIT makes it a money making venture for the same wealthy people, and will quite likely increase the prices of the systems.

[Nettlee]

The unfortunate thing about 'assisting with installation costs' is that, like the insulation debacle over the last 6 months, costs increase to match the rebate. That's just a rort. And I'm not sure about GFIT's only helping the rich - I'd like to see the socio-economic profile of households with pv installations in Germany, before accepting that claim.

I find it a bit frustrating that Aus needs the renewable energy, has heaps of sunlight hours, but nobody is prepared to act, specifically the energy generators. They are prepared to pay for any number of non-energy related activities like lobbying government, legal action for compensation for loss of asset value, and nuclear feasibility studies but not to start new pockets of solar energy generation. Filling rooftops with pv units, reducing network wastage, is a fabulous way to start a distributed electricity grid, but they're all standing back bleating "too expensive, no base load power, blah, blah, blah". Where there's no will, there's certainly no way.

[zzsstt]

The unfortunate thing about 'assisting with installation costs' is that, like the insulation debacle over the last 6 months, costs increase to match the rebate. That's just a rort. And I'm not sure about GFIT's only helping the rich - I'd like to see the socio-economic profile of households with pv installations in Germany, before accepting that claim.

Absolutely true and in fact it goes even further than that. The opportunity to get something "for free" is one that is far too good to miss for some people, this becomes obvious in everything from the free calender (pick it up, take it home, throw it away) to PBS medications and old prescriptions being presented at the end of the year (when the patient is on the safety net) because it can be had for free, when the condition that required the drug has long since ended. So not only will companies charge "up" to cover the rebates, but people will take what they can get whether they need it or not!

Unfortunately this applies to any form of rebate - I doubt that the price of PV systems will fall significantly whilst any form of rebate is offered, or whilst a gross FIT makes it such a good investment. The manufacturers and importers can make the same profit either by selling a few systems at a high price, or a larger number at a lower price. A smaller number means fewer staff, lower warehouse costs and less work in general to make the same return.... and if, in the process they can persuade goverments to provide incentives, they can now sell a larger number at the same high price! I am not knocking anybody for doing this, that's what business is about - and when all the eco-bleating is done, this is a business after all! Returning to the original subject of this thread, I've just come across an article in the Wall Street Journal which talks about how the German PV industry is now being undercut by Chinese equipment, and is accusing the Chinese of price dumping. Obviously we'll watch how this progesses, but I'd guess it will result in either the decline of the German PV industry or "measures" to prevent the chinese taking over....... Interestingly they are proposing a reduction in PV incentives, thus making PV systems less profitable to install. They are concerned that the high incentives for PV have resulted simply in "wealth creation"!

On the other hand, there must surely be a way to set up a fund to largely pay for PV installations at minimal cost to the client, and where for example the client simply gets a straight kWh offset of power generated deducted from their bill, and the remainder of the gross FIT is paid straight back to the fund to enable further installations? The homeowner pays a minimal amount for the system, gets a deduction from their bill and the "profit" is used to fund the next install. Much like the original concept behind "building societies". It creates no divide based on the customers socio-economic situation, and minimal opportunity for installers to exagerate prices, as the installation costs could easily be monitored across the board with high charging (or low quality) installer and components being banned.

I find it a bit frustrating that Aus needs the renewable energy, has heaps of sunlight hours, but nobody is prepared to act, specifically the energy generators. They are prepared to pay for any number of non-energy related activities like lobbying government, legal action for compensation for loss of asset value, and nuclear feasibility studies but not to start new pockets of solar energy generation. Filling rooftops with pv units, reducing network wastage, is a fabulous way to start a distributed electricity grid, but they're all standing back bleating "too expensive, no base load power, blah, blah, blah". Where there's no will, there's certainly no way.

This is because nobody believes there is really a problem, at least not a problem big enough to warrant impacting profits or risking upsetting city based voters! This is not limited to solar power. Storm water runoff, water rights, land use rights, development planning, vegetation clearing, the list is almost endless! The idea in Australia, or certainly in NSW, seems to be to give the badly informed and only vaguely interested majority (almost inherently city based) the impression that "something is being done" without negatively impacting those people ("voters"), and ideally without changing the status quo in any way. Most of the time, people with a green tinge will accept that what is being done is a good thing without much question or investigation, and because they don't really understand the issues and will never see the consequences, they'll never know any better.

Of course, if you can arrange a bit more of a profit for the banks and other large commercial interested along the way, that's probably a good thing!

[Nettlee]

This is because nobody believes there is really a problem, at least not a problem big enough to warrant impacting profits

I think that there is a large body of thought that there is a problem, but a fundamental belief that Technology will suddenly ride to the rescue so that we're not in any way indisposed. As you mention, developed countries have become incapable of willingly pursuing policies that lead to discomfort. The CPRS is kind of evidence of that. The belief that it created incentive to invest in low-carbon technologies made people think that it would solve the problem without causing any change of lifestyle but it was voted down because there was a sudden realisation that it might result in discomfort. The reality is that a price on carbon is a sleight of hand to get people to reduce their consumption of carbon without forcing them to, thus encouraging businesses to pursue profits in low-carbon industries.

My frustration is with the cynism of Business, more particularly Energy Business. Whatever incentive/disincentive is created, they're always looking to make even bigger profits, rather than do the 'right' thing. What happened to the motivations behind the social license to operate?

Good old rationing might be a lot more understandable and effective, not to mention making Business really have to work at making their profits, and individuals like me really have to find a way to install solar rather than shrug my shoulders when they tell me that I have trees in the wrong places.