Solar Panels - What Solar Panels?

This news story was reported today. The British energy group BP will close its solar panel manufacturing plant in Sydney, and move production of its panels out of Australia.

Australia sits at an advantageous position on the face of the Globe. It is in a position where there is a constant source of heat and sunlight from the Sun for most of the year. To that end, you might think that the solar power industry would be booming here. That is not the case at all.

True, solar panels have been around here in Australia since the 70’s. They were first used as a form of heating water for household hot water systems, and it is not uncommon to actually see houses with panels on their roofs. They were a boutique item, and only recently has the use of panels to offset power used from the grid become popular.

As I have gone to great lengths to explain, this is a costly option that provides little actual savings, considering that the panels are only effective during daylight hours, when most household occupants are at work, and as there is no way to store the generated electricity, then that household goes back to using power from the grid during the night, when the occupants are actually in the house.

That’s why the panels are mainly used for hot water systems, one of the largest users of electricity in the average house. One good panel can generate the electricity to power the element to heat the water in that system to provide enough hot water for the house, but legislation provides that the system remain wired to the household supply in case of a protracted cold or a prolonged period of overcast conditions, so the panel is basically an augmentation to the household supply.

In recent times, the use of panels to power more than just the hot water aspect has become attractive, and sales are actually improving somewhat. To supply a house (during daylight hours only) you can install the top of the range solar panel system on your house. It will consist of 16 or so panels, wired to a large inverter to convert it to household supply, and all this is wired into the household. Any excess used can thus be fed back into the grid. The cost of this, the largest system is around $65,000. This type of system will supply the average household needs during the day with some fed back into the grid. If however that house has an airconditioning unit to cool the house in the hot Australian climate, then very little if any will be fed back to the grid. The idea is that the system then becomes revenue neutral. What this means is that even though you are still using power from the grid at night, you have returned enough to the grid during the day to cover that night time usage.

If the average electricity bill is $300 per quarter, then to recover that initial outlay at revenue neutral status, then it would take around 50 years, which, provided the panels are kept pristine, is around 20 years longer than the projected best case life expectancy of those panels.

To that end, there is a proposal for a feed in tariff. This is a little esoteric to explain. Currently, the average cost for electricity in Australia is around 16 to 20 cents per KiloWattHour (KWH) which compares unfavourably with the US average of 10.4 cents per KWH, and most States in the US pay a lot less than that 10.4 cents, some as low as 6 cents per KWH. Even taking into account the current exchange rate, that Australian amount of an average 18 cents still translates to 13 cents US, more than double for some US States.

The idea of the feed in tariff is that any surplus electricity generated by the panels and not used by that house, thus fed back to the grid, then those people actually caring enough to install this system should be rewarded more than just for the amount of the cost of electricity coming into the house. A feed in tariff of around 40 to 44 cents per KWH has been mooted, and something of this nature would then make large scale systems like this attractive, because in the first place, it would act as a reward for people outlaying what is a very large amount of money on the system in the first place, and secondly, it would mean that the system would be paid off a lot sooner than that original time span of 50 years or more. If implemented at this level, then it would also be an added spur for people living in those houses with installed panels to use energy more efficiently, generating greater payments from the grid supplier back to the household.

The Australian Government is currently pursuing the (false) path of hyping the beauty of alternate and renewable energy sources, and also moving down the path of making people believe in the filth of coal fired power plants, so you think it would generate interest in pursuing this path of allowing a greater feed in if they were to approve a proposal like this.

Well, on the contrary, as when the bill was put to the House of Representatives, they voted the legislation down. So now, not only is the installation of solar panels at the household level not attractive, it is downright unattractive.

Probably as a direct result of that, BP has decided to shut down its plant in Sydney, and move that production ‘offshore’. There were so many taxes in play, that the economic production of these panels becomes decidedly less of a profit making venture, which after all is why the Company is in the business in the first place. If they cannot produce those panels at a cost effective rate, and now that demand has been effectively curtailed, the obvious decision is to close the plant down. The end result is that in another Country where they can pay cheaper wages, provide more jobs, pay less Government charges, and will welcome them with as many incentives as they can, then it is a ‘no brainer’.

The end result is that the panels will be manufactured overseas, imported to Australia, and still be sold here, at the same competitive price, with the only difference being that the Company will now make a greater profit.

The feed in tariff legislation defeat is probably a direct result of those State Governments not wanting to lose revenue from the sale of their electricity, and they lobbied the Federal Parliament to not pass that legislation.

This is just a further example of the old adage I have been mentioning for so long now.

It has nothing to do with the environment. It’s just about the money.