Success of solar energy electricity prices is frightening power generator industries
Why power generators are terrified of solar http://www.crikey.com.au/2012/03/27/why-generators-are-terrified-of-solar/ Crikey.com by Giles Parkinson, of RenewEconomy, 28 March 12, ”….. the merit order effect and the impact that solar is having on electricity prices in Germany; and why utilities there and elsewhere are desperate to try to rein in the growth of solar PV in Europe.
It may also explain why Australian generators are fighting so hard against the extension of feed-in tariffs in this country….. that solar PV is not just licking the cream off the profits of the fossil fuel generators — as happens in Australia with a more modest rollout of PV — it is in fact eating their entire cake…..
Deutsche Bank solar analyst Vishal Shah noted in a report last month that EPEX data was showing solar PV was cutting peak electricity prices by up to 40%, a situation that utilities in Germany and elsewhere in Europe were finding intolerable. “With Germany adopting a drastic cut, we expect major utilities in other European countries to push for similar cuts as well,” Shah noted.
Analysts elsewhere said one quarter of Germany’s gas-fired capacity may be closed, because of the impact of surging solar and wind capacity. Enel, the biggest utility in Italy, which had the most solar PV installed in 2011, highlighted its exposure to reduced peaking prices when it said that a €5/MWh fall in average wholesale prices would translate into a one-third slump in earnings from the generation division……
The NSW government — which owns the state’s generators, if not their output — doesn’t want to find out, and has abolished the feed-in tariff, on the basis that it costs too much. But here’s another interesting graph…..
It comes from the Australian Energy Market Commission’s report on its “Power of Choice Review”, looking at range of demand management and energy-efficiency opportunities, that was released on Friday. It suggests pretty clearly that the cost of green energy incentives — the renewable energy target, feed-in tariffs, and demand management and energy efficiency schemes — in Australia is minimal. They total just 6% of the cost.
The average power bill is dominated by transmission, distribution, wholesale and retail costs. This is what the AEMC report is trying to address — what measures can be introduced that can help consumers protect themselves against rising electricity costs? — and it canvasses a whole range smart grid and smart appliance opportunities that could be introduced……
The arrival of solar PV, and the achievement of parity against retail prices, means that consumers do now have a choice. As Jeff Bye, the head of solar at CBD Energy told RenewEconomy last week, he is fielding dozen of calls each week from consumers asking how they can install solar and be taken off the grid.
“People are annoyed by their growing bills — even if they reduce their usage, the bills are still going up,” he says.
Bye is advising his customers to stay connected to the grid, but to use it simply as a back-up, a sort of battery of last resort. This can be done, he says, by using a 3-5kW system on the roof, battery storage and a power router — which can set excess PV power to go into the battery instead of the grid, and can source energy from the grid to top up the batteries when they get low.
“Customers are making decisions on what they are spending — 20-30c/kWh — not on what they export,” he says. On a larger scale, the City of Sydney is planning on achieving its own independence for the 300MW of capacity used within its boundaries through a network of cogeneration and tri-generation installations, backed up with distributed energy such as solar PV and battery storage.
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