Federal Budget Won’t Make Solar Energy Popular

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On another note, the Federal Budget comes out tonight. Whoopee! What a shame modern democracies celebrate with glee when the government redistributes back the money it’s confiscated. The money is methodically doled out to groups whose votes the party in power needs to stay in power. At least the whole fraud has become more transparent in recent years. Voters don’t really question whether the government should be spending money or giving rebates for things like solar panels. Instead, they just ask, “What’s in it for me?”

The key to increased solar adoption is not better government policy. The key is that it has to make economic sense without a subsidy. That means the cost of solar has to come down on a kilowatt per hour basis so it is competitive with coal-generated electricity. Simply shifting the cost of installing silicon-based solar panels on houses to future taxpayers doesn’t change the physics or the efficiency of solar power.

Giving people tax-payer money to buy solar systems for their homes is like feeding crème brulée to malnourished children. It’s not healthy and it’s not effective at solving the problem, even though it might put a smile on the child’s face for a little bit. Besides, sugar makes children hyper. But back to solar…

It’s the private sector, and not the government, that will change the efficiency of solar power (if, in fact, there are real ways to get more energy from the sun than the 8% current solar cells convert into electricity.) From what we’ve gathered here, it will be done through next- generation, organic photovoltaic solar cells.

That’s a lot of syllables. The short version is that current solar panels use silicon, which is costly, brittle, and inefficient at turning sunlight into electric current. That is all about to change.

The best research labs in Singapore and all over the world are looking at organic compounds and dyes that do the job of silicon, but cost less and do it better. At a lower cost and with greater efficiency, the next generation of solar cells will make economic and energy sense for Australian households. And no government, Liberal or Labor, will have to try and bribe voters in order to adopt the technology.

Of course that just means the government will stupidly spend the money on something else. But oh well.

Dan Denning
The Daily Reckoning Australia

Would a subsidy make you more likely to switch to solar power? Leave a comment below.

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. Basically, the subsidy doesn’t make much difference. I won’t go to the trouble of installing a new energy source unless it will save me money in the long run AND prove to be reliable.

    If it didn’t meet the above criteria, then even if the subsidy covered 90% or 100% of the costs, I doubt I’d bother.

    Reply
  2. I agree completely with Jono.

    A solar unit to replace my grid use will cost about $84,000, and break-even ROI is in excess of 40 years, not countaing any repairs or maintenance, or replacement of battery banks.

    It will take an absolute shed-load of carbon taxes to make the equation look any better.

    However, at that stage, I will be long gone (from the country!). People get the Government they deserve.

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  3. Your analysis is lop-sided. Perhaps you should discount the subsidies paid to coal-fired electricity providers first (estimates are as high as $10 billion in Australia). Don’t get me wrong – I detest subsidies, but let’s get rid of all of them and establish the free market price for electricity, otherwise no one is getting what they paid for. BTW conversion factors for solar cells have exceeded 8% for years. You might also ponder TCO. Also you are in the wrong place for the best solar technology – try Switzerland for the next world beater.

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  4. Shifting the subsidy from coal to silicon is a good idea – environmentally and physically. A de-centralised power grid is more reliable and safer. I’m all for it. And in an energy-constrained future, it will be a godsend. This is a good idea.

    Hans Blix
    May 8, 2007
    Reply
  5. The rebates will decrease the ROI on the panels & inverters etc

    Not every solar installation requires battery banks ! Grid connect are the most common in cities.

    Will wait and see how many panels we see on roofs in the next couple of years.

    Solar power is 1 part of the picture. Coupled with Solar Hot water, better insulation and reduced energy usage.

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  6. Waiting for the next technology before taking action is a simplistic attitude.

    Subsidies for PV are not just about directly solving the problem but about demonstrating a political will to change the way we produce energy.

    Without this kind of encouraging economic environment the renewable energy industry in Australia continues to make decisions based on the perception that our leaders are only interested in the coal and nuclear industries.

    If we want the private sector to invest in new technologies we need to show that we are willing to back the technoligies that are already in place.

    We also need to remember that the production of the power is only part of the picture. The equipment that interfaces generaton capacity with the grid is vitally important to any form of solar power. German companies now lead the world in this technology producing millions of dollars in export revenue as well as a vast domestic market.

    Meeanwhile the stiffled Australian industry depends on that German technology because we failed to support our own innovators. Not so much by a lack of research funding but because our government didn’t show a will to support the fledgling market.

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  7. Blog says: “Not every solar installation requires battery banks!

    Okay. I concede that some people may indeed connect the red wire and the black wire directly to a light-bulb, for use during daylight hours only.

    However, as an effective grid replacement, deep-cycle batteries, voltage regulators, and inverters are absolutely essential.

    These are costly items to replace, and the cost must be factored into any rational consideration of the value of the technology.

    Don’t get me wrong – I would love to see off-grid solar in general use. However, the numbers currently don’t stack up. At all.

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  8. I think you are missing the point: the whole exercise of subsidizing
    solar energy is to make people aware of what is coming in the future. We have been thinking about installing solar power for the last twenty years or so. But
    since they have become smaller and much more advanced in terms of utilising solar energy thanks to nanotechnology etc., we will be using it sooner rather than later because of the
    gov. grant.
    And you’ll find that with enough competition the electricity prices should come down as well, in favour of solar energy.

    Agnes Lak

    Agnes Lak
    May 10, 2007
    Reply
  9. Most new high quality solar cells acheive over 40% efficiency, they do this by using mirrors to focus the light onto a much smaller converter making them significantly cheaper to produce and far more efficient.

    Reply
  10. To set things straight a little. The solar panels for domestic and industrial use, and I mean panels that go on rooftops, acheive between 9-18% efficiencies. The best type been the monocrystalline. Mirror concentrated solar systems are huge in size and weight and are only suitable for energy or other larege companies . I have questioned quite a few friends and colleagues and have come to the conclusion that unless there is something less than a 10year payback then solar systems are not a proposition to the average Australian. I wonder how many of you would be interested in a 1 kilowatt grid connected system installed , for a total cost of $1500 after the govt rebate. At current electricity prices you will reach break even at the 9 yr mark. Of course most people would want to invest that $1500 into a new tv or some item that only continues to contribute to the pollution issues we face today. It wont be until we cant breathe clean air or drink clean water that we will consider doing something and more than likely this something will simply be to look for someone to blame !.
    I suggest many of you should wake up and take responsibility for your actions. Money cant buy you clean air or water.

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  11. Blog says: “Not every solar installation requires battery banks!”

    Kaboom says: “Okay. I concede that some people may indeed connect the red wire and the black wire directly to a light-bulb, for use during daylight hours only. However, as an effective grid replacement, deep-cycle batteries, voltage regulators, and inverters are absolutely essential.”

    Not so, Kaboom!!! Batteries are NOT required in grid connected systems. Blog is absolutely correct. Grid connected systems do not require batteries because… well… they are connected to the grid. When the sun is shining your system feeds electricity back into the grid (and some power companies pay you for the service). When the sun is not shining you draw electricity back out of the grid. The grid therefore acts as a kind of ‘battery’ eliminating the need to batteries. This is a huge saving, considering batteries are one of the costliest elements of the system, require the most maintenance, and have the shortest lifespan.

    Reply

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