The Receding Horizons of Renewable Energy

15 07 2018

Another excellent article by Nicole Foss…  also known as Stoneleigh.

Renewable energy is best used in situ, adjacent to demand. It is best used in conjunction with a storage component which would insulate consumers from supply disruption, but FIT programmes typically prohibit this explicitly. Generators are expected to sell all their production to the grid and buy back their own demand. This leaves them every bit as vulnerable to supply disruption as anyone who does not have their own generation capacity. This turns renewable generation into a personal money generating machine with critical vulnerabilities. It is no longer about the energy, which should be the focus of any publicly funded energy programme.

nicolefoss

Nicole Foss

Stoneleigh: Renewable energy has become a topic of increasing interest in recent years, as fossil fuel prices have been volatile and the focus on climate change has sharpened. Governments in many jurisdictions have been instituting policies to increase the installation of renewable energy capacity, as the techologies involved are not generally able to compete on price with conventional generation.

The reason this is necessary, as we have pointed out before, is that the inherent fossil-fuel dependence of renewable generation leads to a case of receding horizons. We do not make wind turbines with wind power or solar panels with solar power. As the cost of fossil fuel rises, the production cost of renewable energy infrastructure also rises, so that renewables remain just out of reach.

Renewable energy is most often in the form of electricity, hence subsidies have typically been provided through the power system. Capital grants are available in some locations, but it is more common for generators to be offered a higher than market price for the electricity they produce over the life of the project. Some jurisdictions have introduced a bidding system for a set amount of capacity, where the quantity requested is fixed (RFP) and the lowest bids chosen.

Others have introduced Feed-In Tariff (FIT) programmes, where a long-term fixed price is offered essentially to any project willing to accept it. Tariffs vary with technology and project size (and sometimes inversely with resource intensity) with the intention of providing the same rate of return to all projects. FIT programmes have been much more successful in bringing capacity online, especially small-scale capacity, as the rate of return is higher and the participation process much less burdensome than the RFP alternative. Under an RFP system accepted bids often do not lead to construction as the margin is too low.

The FIT approach has been quite widely adopted in Europe and elsewhere over the last decade, and has led to a great deal of capacity construction in early-adopter countries such as Germany, Spain and Denmark. In Canada, Ontario was the first north American jurisdiction to introduce a similar programme in 2009. (I was involved in negotiating its parameters at the time.)

Renewable energy subsidies are becoming increasingly controversial, however, especially where they are very large. The most controversial are those for solar photovoltaics, which are typically very much higher than for any other technology. In a number of countries, solar tariffs are high enough to have produced a bubble, with a great deal of investment being poured into infrastructure production and capacity installation. Many of the countries that had introduced FIT regimes are now backing away from them for fear of the cost the subsidies could add to power prices if large amounts of capacity are added.

As Tara Patel wrote recently for Bloomberg:

EDF’s Solar ‘Time Bomb’ Will Tick On After France Pops Bubble:

To end what it has called a “speculative bubble,” France on Dec. 10 imposed a three-month freeze on solar projects to devise rules that could include caps on development and lowering the so-called feed-in tariffs that pay the higher rate for renewable power. The tariffs were cut twice in 2010. “We just didn’t see it coming,” French lawmaker Francois- Michel Gonnot said of the boom. “What’s in the pipeline this year is unimaginable. Farmers were being told they could put panels on hangars and get rid of their cows.”…. ….EDF received 3,000 applications a day to connect panels to the grid at the end of last year, compared with about 7,100 connections in all of 2008, according to the government and EDF.

Stoneleigh: The policy of generous FIT subsidies seems to be coming to an end, with cuts proposed in many places, including where the programmes had been most successful. The optimism that FIT programmes would drive a wholesale conversion to renewable energy is taking a significant hit in many places, leaving the future of renewable energy penetration in doubt in the new era of austerity:

Germany:

Half of the 13 billion euro ($17.54 billion) reallocation charges pursuant to Germany’s renewable energy act was put into solar PV last year. The sector produced about 7 GW of electricity, surpassing the 5-GW estimate. The government deemed the industry boom as counterproductive, pushing it to reduce subsidies and narrow the market.

The Czech Republic:

In an attempt to get hold of what could be a runaway solar subsidy market, the Senate approved an amendment April 21 that will allow the Energy Regulatory Office (ERÚ) to lower solar energy prices well below the current annual limit of 5 percent cuts. At the start of 2011, the state will now be able to decrease solar energy prices up to 25 percent – if President Klaus signs the amendment into law. Even with a quarter cut, the government’s subsidies for feed-in tariffs remain so high that solar energy remains an attractive investment.

France:

The Ministry of Sustainable Development is expected to cut the country’s generous feed-in tariffs by 12 percent beginning September 1 in an effort to rein in demand and curb spending, according to analysts and news reports from France.

Italy:

Incentives for big photovoltaic (PV) installations with a capacity of more than 5 megawatts (MW) will be slashed every four months by a total of up to 30 percent next year, said Gianni Chianetta, chairman of the Assosolare industry body. Incentives for smaller PV installations will be gradually cut by up to 20 percent next year. One-off 6 percent annual cuts are set for 2012 and 2013 under the new plan, the industry source said.

The UK:

The U.K. government signaled it may cut the prices paid for electricity from renewable energy sources, saying it began a “comprehensive review” of feed-in tariffs introduced last year. Evidence that larger-scale solar farms may “soak up” money meant for roof-top solar panels, small wind turbines and smaller hydropower facilities prompted the study, the Department of Energy and Climate Change said today in an statement. A review was originally planned to start next year.

The move will allow the government to change the above- market prices paid for wind and solar electricity by more than already planned when the new prices come into force in April 2012. The department said it will speed up an analysis of solar projects bigger than 50 kilowatts and that new tariffs may be mandated “as soon as practical.” “This is going to put the jitters into some market segments,” Dave Sowden, chief executive officer of the Solihull, England-based trade group Micropower Council, said today in a phone interview.

Portugal:

The Portuguese government has announced that it will review the existing feed-in tariff mechanism following calls that the subsidies are excessive and contribute to the increase of electricity prices to final consumers.

Ontario

Initial enthusiasm among ratepayers for the scheme is flagging in the wake of perceived links between the FiT and increased energy prices. The FiT passed into law in May 2009 as part of the Green Energy Act, which aims to promote the development of wind and solar generation in the province. With provincial elections slated for 6 October next year, the opposition Progressive Conservative Party is threatening to substantially revise and possibly even scrap the FiT should it win. Even if it the subsidy scheme were to be revoked, the legal implications of rescinding the over 1500MW in existing FiT contracts would be highly problematic.

Stoneleigh: Spain is the example everyone wishes to avoid. The rapid growth in the renewable energy sector paralleled the bubble-era growth of the rest of Spain’s economy. The tariffs offered under their FIT programme now come under the heading of ‘promises that cannot be kept’, like so many other government commitments made in an era of unbridled optimism. Those tariffs are now being cut, and not just for new projects, but for older ones with an existing contract. People typically believe that promises already made are sacrosanct, and that legal committments will not be broken, but we are moving into a time when rules can, and will, be changed retroactively when the money runs out. Legal niceties will have little meaning when reality dictates a new paradigm.

Spain:

Spain’s struggling solar-power sector has announced it will sue the government over two royal decrees that will reduce tariffs retroactively, claiming they will cause huge losses for the industry. In a statement, leading trade body ASIF said its 500 members endorsed filing the suit before the Spanish high court and the European Commission. They will allege that royal decrees 156/10 and RD-L 14/10 run against Spanish and European law. The former prevents solar producers from receiving subsidized tariffs after a project’s 28th year while the latter slashes the entire industry’s subsidized tariffs by 10% and 30% for existing projects until 2014. Both bills are “retroactive, discriminatory and very damaging” to the sector. They will dent the profits of those companies that invested under the previous Spanish regulatory framework, ASIF argued.

Austerity bites:

The government announced soon after that it would introduce retroactive cuts in the feed-in tariff program for the photovoltaic (PV) industry in the context of the austerity measures the country is currently undergoing. According to this plan, existing photovoltaic plants would have their subsidies cut by 30%, a figure that would go up to 45% for any new large scale plants. Smaller scale roof installations would lose 25% of their existing subsidy, while installations with a generating capacity of less than 20 KW would have 5% taken from their tariff.

Spain is too big to fail and too big to bail out:

Spain has been forced to cut back on solar subsidies because of the impact on ratepayers. But Spain’s overall economy is in much worse shape and the subsidies for feed in tariff are threatening to push the country into bailout territory or, at lease, worsen the situation should a bailout be needed.

FIT and Debt:

The strain on government revenue is in part due to the way Spain has designed its feed-in tariff system. Usually, this type of subsidy is paid for by utilities charging more for the electricity they sell to consumers, to cover the cost of buying renewable energy at above-market prices. Therefore no money is actually paid out of government revenues: consumers bear the cost directly by paying higher electricity bills.

In Spain, however, the price of electricity has been kept artificially low since 2000. The burden has been shouldered by utilities, which have been operating at a loss on the basis of a government guarantee to eventually pay them back. The sum of this so-called ‘tariff deficit’ has accumulated to over €16 billion (US$ 20 billion) since 2000. For comparison, Spain’s deficit in 2009 was around €90 billion (US$ 116 billion) in 2009 and its accumulated debt around €508 billion (US$ 653 billion).

Stoneleigh: Ontario threatens to take the Spanish route by instituting retroactive measures after the next election. For a province with a long history of political interference in energy markets, further regulatory uncertainty constitutes a major risk of frightening off any kind of investment in the energy sector. Considering that 85% of Ontario’s generation capacity reaches the end of its design life within 15 years, and that Ontario has a huge public debt problem, alienating investment is arguably a risky decision. FIT programmes clearly sow the seeds of their own destruction. They are an artifact of good economic times that do not transition to hard times when promises are broken.

Ontario

The outcome of an autumn election in Ontario could stunt a budding renewable energy industry in the Canadian province just as it is becoming one of the world’s hot investment destinations. If the opposition Progressive Conservatives win power on Oct. 6, the party has promised to scrap generous rates for renewable energy producers just two years after their launch by the Liberal government. That could threaten a program that has lured billions of dollars in investment and created thousands of jobs.

The Conservatives, who are leading in the polls, have yet to release an official energy manifesto. Even so, the industry is privately voicing concern, especially after the party said it would scrutinize contracts already awarded under Ontario’s feed-in tariff (FIT) program. “They are going to go through the economic viability of the energies and review all of the past contracts … I think that is going to cause a lot of delays, a lot of problems and a lot of risk to Ontario,” said Marin Katusa, chief energy analyst at Casey Research, an investor research service.

George Monbiot, writing for The Guardian in the UK, provides an insightful critique of FIT programmes in general:

The real net cost of the solar PV installed in Germany between 2000 and 2008 was €35bn. The paper estimates a further real cost of €18bn in 2009 and 2010: a total of €53bn in ten years. These investments make wonderful sense for the lucky householders who could afford to install the panels, as lucrative returns are guaranteed by taxing the rest of Germany’s electricity users. But what has this astonishing spending achieved? By 2008 solar PV was producing a grand total of 0.6% of Germany’s electricity. 0.6% for €35bn. Hands up all those who think this is a good investment…. .

As for stimulating innovation, which is the main argument Jeremy [Leggett] makes in their favour, the report shows that Germany’s feed-in tariffs have done just the opposite. Like the UK’s scheme, Germany’s is degressive – it goes down in steps over time. What this means is that the earlier you adopt the technology, the higher the tariff you receive. If you waited until 2009 to install your solar panel, you’ll be paid 43c/kWh (or its inflation-proofed equivalent) for 20 years, rather than the 51c you get if you installed in 2000.

This encourages people to buy existing technology and deploy it right away, rather than to hold out for something better. In fact, the paper shows the scheme has stimulated massive demand for old, clunky solar cells at the expense of better models beginning to come onto the market. It argues that a far swifter means of stimulating innovation is for governments to invest in research and development. But the money has gone in the wrong direction: while Germany has spent some €53bn on deploying old technologies over ten years, in 2007 the government spent only €211m on renewables R&D.

In principle, tens of thousands of jobs have been created in the German PV industry, but this is gross jobs, not net jobs: had the money been used for other purposes, it could have employed far more people. The paper estimates that the subsidy for every solar PV job in Germany is €175,000: in other words the subsidy is far higher than the money the workers are likely to earn. This is a wildly perverse outcome. Moreover, most of these people are medium or highly skilled workers, who are in short supply there. They have simply been drawn out of other industries.

Stoneleigh: Widespread installed renewable electricity capacity would be a very good resource to have available in an era of financial austerity at the peak of global oil production, but the mechanisms that have been chosen to achieve this are clearly problematic. They plug into, and depend on, a growth model that no longer functions. If we are going to work towards a future with greater reliance on renewable energy, there are a number of factors we must consider. These are not typically addressed in the simplistic subsidy programmes that are now running into trouble worldwide.

We have power systems built on a central station model, which assumes that we should build large power station distant from demand, on the grounds of economic efficiency, which favours large-scale installations. This really does not fit with the potential that renewable power offers. The central station model introduces a grid-dependence that renewable power should be able to avoid, revealing an often acute disparity between resource intensity, demand and grid capacity. Renewable power (used in the small-scale decentralized manner it is best suited for) should decrease grid dependence, but we employ it in such a way as to increase our vulnerability to socioeconomic complexity.

Renewable energy is best used in situ, adjacent to demand. It is best used in conjunction with a storage component which would insulate consumers from supply disruption, but FIT programmes typically prohibit this explicitly. Generators are expected to sell all their production to the grid and buy back their own demand. This leaves them every bit as vulnerable to supply disruption as anyone who does not have their own generation capacity. This turns renewable generation into a personal money generating machine with critical vulnerabilities. It is no longer about the energy, which should be the focus of any publicly funded energy programme.

FIT programmes typically remunerate a wealthy few who install renewables in private applications for their own benefit, and who may well have done so in the absence of public subsidies. If renewables are to do anything at all to help run our societies in the future, we need to move from publicly-funded private applications towards public applications benefitting the collective. We do not have an established model for this at present, and we do not have time to waste. Maximizing renewable energy penetration takes a lot of time and a lot of money, both of which will be in short supply in the near future. The inevitable global austerity measures are not going to make this task any easier.

We also need to consider counter-cyclical investment. In Ontario, for instance, power prices have been falling on falling demand and increased conventional supply, and are now very low. In fact, the pool price for power is often negative at night, as demand is less than baseload capacity. Under such circumstances it is difficult to develop a political mandate for constructing additional generation, when the spending commitment would have to be born by the current regime and the political benefits would accrue to another, due to the long construction time for large plants.

Politicians are allergic to situations like that, but if they do not make investments in additional generation capacity soon, most of Ontario’s capacity could end up being retired unreplaced. Large, non-intermittent, plants capable of load following are necessary to run a modern power system. These cannot be built overnight.

Many jurisdictions are going to have to build capacity (in the face of falling prices in an era of deflation) if they are to avoid a supply crunch down the line. Given how dependent our societies are on our electrified life-support systems, this could be a make or break decision. The risk is that we wait too long, lose all freedom of action and are then forced to take a much larger step backwards than might other wise have been the case.

Europe’s existing installed renewable capacity should stand it in good stead when push comes to shove, even though it was bought at a high price. Other locations, such as Ontario, really came too late to the party for their FIT initiatives to do any good. Those who have not built replacement capacity, especially load-following plants and renewables with no fuel cost going forward, could be very vulnerable in the future. They will be buffeted first by financial crisis and then by energy crisis, and there may be precious little they can do about either one.

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Carbon bubble toil and trouble

27 03 2014

There has been of late quite a few articles on the blogosphere about the potential for a Carbon bubble.  A bubble about to burst.  That this will occur is utterly undeniable, but the outcomes featured by different writers are a bit off the mark in my opinion……

First, let me start with Paul Gilding.  I have a lot of time for Paul.  I’ve even published some of his writings here; but his optimism often leaves me flabbergasted…….

In Carbon Crash Solar Dawn, published in Cockatoo Chronicles 

I think it’s time to call it. Renewables and associated storage, transport and digital technologies are so rapidly disrupting whole industries’ business models they are pushing the fossil fuel industry towards inevitable collapse.

Some of you will struggle with that statement. Most people accept the idea that fossil fuels are all powerful – that the industry controls governments and it will take many decades to force them out of our economy. Fortunately, the fossil fuel industry suffers the same delusion.

gilding

Paul Gilding

I don’t think the oil industry is under any such delusion.  Unable to make a profit with oil floundering around $100 a barrel, a price the market forces on them to accept, that industry is taking to selling its assets to prop up its bottom line, even borrowing money to pay shareholders’ dividends….

The only idea I struggle with Paul, is that “renewables, electric cars and associated technologies build the momentum needed to make their takeover unstoppable“.

Take here in Australia for instance; the coal fired power lobby has twisted the politicians’ arms (I don’t think much twisting was required either…) to thwart any further growth in the development of renewables.  In Queensland where I still live, the Newman government has indicated that the paltry 8c feed in tariff that the poor beggars who installed PVs on their roofs after the frankly overgenerous 44c feed in tariff was terminated, will become a zero FiT after July 1.  We who are on the overgenerous 44c FiT are ‘safe’ (until TSHTF that is – then all bets are off), because we are on a contract that lasts until 2028….. but everyone else misses out.  Why are they doing this?  It’s all explained very well here on The Conversation, but basically it’s to protect the dinosaur industries’ shareholders.  There’s no way they are borrowing to pay their shareholders like Shell had to do….  Money rules, and f*** you the consumer.

Paul also further writes:

I think it’s important to always start with a reminder of the underlying context. As I argued in my book The Great Disruption, dramatic economic change is not a choice we get to make it, but an inevitable result of physical science. This is because business as usual, with results like ever increasing resource constraint or a global temperature increase of 4 degrees or more, would trigger economic and social collapse. So the only realistic outcomes are such a collapse or an economic transformation that prevents it, with timing the only big unknown. I argued transformation was far more likely and, to my delight, that’s what we see emerging around us today – even faster than I expected.

In parallel, we are also seeing the physical impacts of climate change and resource constraint accelerating. This is triggering physical, economic and geopolitical responses – from melting arctic ice and spiking food prices to the Arab Spring and the war in Syria. (See here for further on that.) The goods news in this growing hard evidence is that the risk of collapse is being acknowledged by more mainstream analysts. Examples include this commentary by investment legend Jeremy Grantham and a recent NASA funded study explained here by Nafeez Ahmed. So the underlying driver – if we don’t change in a good way, we’ll change in a very bad way – is gathering acceptance.

Hang on……..  is he saying the Arab Spring is about people demanding “renewables, electric cars and associated technologies”?  Because collapse is exactly what is happening in Egypt and Syria.  Collapse does not begin in boardrooms, it begins in the streets when people run out of food, water, and petrol….

And where is the debt problem mentioned in this “dramatic economic change“?  How exactly will the “renewables, electric cars and associated technologies” be paid for?  More growth?  Has he never heard the saying “the best way to get out of a hole is by not digging any deeper”?

Over at Nature Climate Change, I found this too……

…major players in the financial markets are becoming increasingly uneasy about the extent of the impact of future climate policies on power companies. A supposition — fostered by the Carbon Tracker Initiative — is that fossil fuels may be nowhere near as profitable in the future as they have been so far. This is not simply because the costs of prospecting and drilling for oil, for example, are increasing, or that the fossil fuel resources that give the oil, coal and natural gas companies their value are about to run out — they are not. The problem is more that a large portion — perhaps as much as 80 per cent — of these reserves will have to be left untouched if society has any chance of limiting global temperature rise to 2 °C this century.

So, pray tell, what will we build the new energy system with…?  Let me remind you of just how many resources it takes to build wind turbines… or a solar thermal power plant

Paul ends his article with:

So, as I see it, the game is up for fossil fuels. Their decline is well underway and it won’t be a gentle one. Of course they won’t just be gone in few years but once the market and policy makers understand what’s happening, it will become self-reinforcing and accelerate rapidly. Markets come into their own in situations like this. They rarely initiate change, but once they’re racing down the hill, it’s time to jump on board or get out of the way. It’s an ugly and brutal process for those involved, but it gets the job done quickly.

When that occurs, we may find that those forecasts by myself and others like Tony Seba from Stanford University, that the oil, coal and gas companies will be all but obsolete by 2030, might turn out to be conservative after all. Interesting times indeed.

Yes, it is game over.  But not for the fossil fuel industries alone.  When they go down, everyone goes down.  Even the central bankers, to whom the global debt which has soared more than 40 percent to $100 trillion since the first signs of the financial crisis, will go down….. why do so few people see the big picture…….?  For someone who claims to understand the “inevitable result of physical science” as the driver of economic change, Paul truly puzzles me.





Will they tax the Sun next……..?

16 12 2013

As my followers would know, I don’t consider solar power to be a civilisation saving technology.  However, I do think it has a place at a domestic level combined with drastic energy consumption reduction as part of a relocalisation drive and to keep a modicum of comfort where future people will work, their homes…….

When the electricity networks were privatised (more like pirated really!) the distribution of electricity became less of an essential service, and more of a money making device for ‘shareholders’.  So when we who do the right thing and feed the grid clean energy and destroy shareholders’ profits……  they want to penalise us and are starting by spreading disinformation in the media.  Read on…….

 
Time to get facts right on solar, and reap the benefits

When the Queensland government fed news of the latest rises in electricity bills to their favourite media outlets on Wednesday, it  was quick to lay the blame for the rises on two culprits – the carbon price and solar. Even though two of the biggest single culprits were soaring gas and network costs.

It is part of a long campaign by the Campbell Newman government to demonize rooftop PV and other renewables. The irony is that at least part of the problem is Newman’s own mismanagement of the solar bonus scheme, but the anti-solar stance is also framed to protect the interests of state-based generators and network operators, both of which are having their business models challenged by the arrival of a new disruptive technology and delivery system.

The danger of this tainting of solar PV, however, is that it is spreading through policy-makers, regulators and public perception. Because of this, bad decisions could be made about the structure of future electricity tariffs – at the expense of consumers and even network operators. The solar industry is concerned that poor policy making shouldn’t stand in the way of change that is inevitable, necessary and popular.

To promote this, the Centre for Policy Development is about to release a report researched by the Australian Photovoltaic Institute (APVI) – Getting the Facts Right on Solar – which seeks to point out that solar PV is bringing a clear benefit to the network, particularly in offsetting the impact of air-conditioning, and the report is challenging the favoured solution on electricity tariffs, time of use pricing.

The first point the report makes is that solar is having an impact by reducing the level of peak demand, which has been the network’s biggest challenge. Critics like to republish this “duck chart” from Energex, which shows an October Tuesday over the last few years. It appears to suggest solar has reduced demand during the day, but not at the critical point in the evening.

energex feeder1

Actually, in presenting this graph, Energex executives say that the evening peak would have been far greater without solar, given that so much air-conditioning has been added in the past few years. But others say that using  a single feeder for a single day is potentially misleading. It’s more constructive to look at the annual peak (which is what determines the size of the network), and this generally occurs around 5 to 5.30pm, which is well before the average (and smaller) peak, and is in summer when PV is still producing around 20% of it’s rated output. This graph below from the APVI illustrates that point.

apviThe next question is how to structure tariffs to reflect this benefit. The favoured response in recent years has been time of use tariffs. These are already being introduced in many regions – with people paying around 50c/kWh during “on-peak” and 11c/kWh in off-peak – and the push for such tariffs to be introduced more widely is reaching a crescendo.

Much of this is coming from electricity retailers, who stand to benefit most from such a structure – but the APVI research warns that it could disadvantage electricity consumers, particularly solar households, and it could also penalise distribution networks as well.

It says this could actually result in an increase on the cost impact of air-conditioning for households that don’t own air conditioners, limit solar’s ability to reduce this impact, and accelerate the so-called ‘death spiral’ for networks worse by reducing their revenue, or increasing household bills.

The APVI research argues that for a tariff to be truly cost reflective, it should be a combination of time of use (when you use the electricity), and a capacity or demand charge (how much you can use at any particular point of time).

It is important to note that a capacity component is different to the “fixed” network charges, which governments are busily raising to recoup lost revenue (these charges were lifted by more than 60% in Queensland’s draft ruling). Higher fixed charges provide no incentive to moderate demand or change behaviour. Time of use can, but demand charges are seen as a critical component because they require heavy users to pay a higher fee, and moderate users to benefit from reduced costs.

Laura Eadie, from the Centre of Policy Development, who edited the report, says a demand charge should be a critical component within network pricing. “If you are a customer that puts a lot of demand on the network when it is congested, then you should pay a higher capacity charge.”

In effect, she argues, such consumers should pay for the size of the “electricity pipe”. It is similar to how broadband works, and it is also getting some support from distribution networks.

Among the key findings of the report:

·       Under a demand charge tariff, if 20 per cent more customers installed air-conditioning this would add around $37 per year to other households’ bills, compared to $80 per year or higher on a standard or TOU tariff.

·       A demand charge is more likely to encourage all consumers to smooth annual peak demand, make more effective use of existing infrastructure, and deferring new network capital investment. By comparison, a TOU broadly targets daily peaks in demand, rather than annual peaks. A standard tariff targets neither.

·       ·  A demand charge caters for the full range of emerging distributed energy technologies which are popular with consumers and may prove to collectively provide the most cost-efficient electricity supply and delivery options, as decisions about network capital replacement are made.

·       A demand charge can be designed to reduce the impact on low-income households and low- energy using households of recent investment in network upgrades, or falling demand, or both. They can do this by reducing their costs directly (where households make smaller contributions to peak demand), and by deriving more of the required network revenue from other households with large and peaky loads.

This graph below illustrates how the combination of demand charges and solar PV can actually reduce the impact on bills on “other consumers” – challenging the current “received wisdom” that solar is simply passing costs from one household to another that doesn’t have solar arrays.

Screen Shot 2013-12-12 at 11.06.17 am

Eadie says that the importance of solar, and ultimately battery storage, on the network is that these can help reduce the capacity required by households at critical points during the day. This benefit should be reflected in revenues for networks, and it should be reflected in reduced costs for those households.

“Because of the politics of solar, and the complexity of regulation, there is a risk that if we don’t get this right, then solar consumers could be hit with higher charges than they deserve. And this would be a backward step.

Footnote:  I believe it will be more than a backward step, lots of consumers will ‘secede’ and go stand alone.  Like us.





Why our next project is off-grid

17 10 2013

“Off-grid” or “off the grid” can mean lots of things to different people, especially if they are as diverse as Americans versus Australians.  I think the term probably started in the US.  I’ve always thought of the term as meaning not involving or requiring the use of mainstream sources of energy, but some definitions have wider meaning….

Off-grid is a new adjective which describes the situation of not using public utilities such as electricity, gas, water and mains sewerage. A truly off-grid home or building is completely autonomous in that it operates independently, not relying on any central supply of power or water.

I have to say that after seeing how much it costs now to be connected to the water grid and sewerage, I am very pleased we are not hooked up to either of those…  According to the definition above, we already are off-grid to a large extent, but for the purpose of this essay, I will mean not being connected to the electricity grid.

When we first connected to the grid with our first solar array, I wanted  to make a point.  Being the 400th grid tied solar house in Queensland makes us pioneers.  Today, there are 285,000!  Had we built at Mt Nebo as originally planned for the system which I bought before I even started building, we would have been even further up he list.  Compared to the cost of solar today, back then it really was an extravagance.  Like $500 for 64W panels, when today that sort of money will buy you 500W!  Or a 1500W inverter (that admittedly was also a stand alone inverter and battery charger) costing $5000…. when today you can buy portable inverters of that capacity for under $100, and grid tied devices for $350…!

The main reason, however, for my wish to go off-grid after being a campaigner for grid tying, is that I can see the writing on the wall for the grid once the brown stuff hits the fan.

Recently, Tristan Edis wrote in Climate Spectator:

The ‘Declining Demand Death Spiral’ is a story that has captivated many involved in the electricity sector. Imagine a downward spiral where electricity businesses chase their tails increasing prices to recover large fixed investments, which prompts customers to install solar and reduce demand, which is followed by further price rises followed by further demand drops and ad infinitum until the rich start going off the grid with batteries leaving the poor like pensioners behind.

He then adds….

It is massively overblown for two reasons:

1) The foreseeable change in network charges due to solar demand reductions is not big enough to spur other people to spend several thousand dollars on solar and batteries;

2) The available evidence suggests a small difference in uptake of solar according to income levels.

That’s all very well, but I know quite a few people who hate the way Campbell “can’t do” Newman has trashed the Feed in Tariff in Qld, and the power companies themselves so much, they are already contemplating waving their middle fingers at the grid very soon….  One commenter who is obviously also an installer left this comment”

I’ve received numerous enquiries from rural households wanting to disconnect from the main-grid. Interestingly, even when advised it is not economic, some households still want to proceed as they ‘dislike’ their electricity provider so much that they are prepared to pay a premium to not have to deal with them anymore. Hopefully, the retailers will continue to confuse and annoy consumers, so this niche market keeps growing.

For me who wants to move to Tasmania, however, the clincher was this little news item which I have seen nowhere else:

THE state government must consider selling Hydro Tasmania ahead of costly maintenance demands and sliding profits, a Tasmanian energy consultant has warned.

and….

Despite posting a record $238 million profit last week, Mr White said the business was likely to soon be faced with huge repair bills for its ageing infrastructure and had already flagged a drop-off in profits due to plans to axe the carbon tax.

But will this be a problem for just Tasmania?  As the financial system grinds to a halt over the next few years (boy I wish I had a crystal ball…) and fuel, or rather cheap fuel runs out to power the helicopters which fly the HT power lines in the valley below us all the time to monitor potential high tension grid problems,  how long will the grid remain reliable?  Of what use is a grid tied solar array when the grid is down?  What is the point of generating all that power, the costs of which you have already paid for, if you can’t use it when you need it most?

Until recently, we had back up batteries for the odd time this happened, and as luck would have it, no sooner had I sold the batteries, we had to endure a five and a half hour blackout while we waited for the power lines that were all over the road just a few hundred metres away to be fixed….  After nearly ten years of uninterrupted power, it came as a rude shock, believe me…!

All sorts of things go wrong in blackouts.  We couldn’t get water from our taps.  The fans in the compost toilet stopped working, slowly filling the house with unpleasant odours, and of course no lights apart from candles and torches….  Luckily for us, our fridges are so efficient that when the power came back on, the main fridge didn’t even cut in!  Imagine what might happen to the eggs in our incubator though if we suddenly had a lengthy blackout in the middle of an incubation?  How compromised would those eggs be if they were allowed to cool down for any length of time…..?  While I had good reasons to ditch the old battery/inverter system, I miss the security of uninterruptible power already.

As the price of grid power goes up, and renewables come down, Tristan’s “death spiral” may well become real.

And yes, I acknowledge that even if we do end up with a good stand alone system in Tasmania, eventually it will all end up being for nought as post collapse it will become impossible to repair or replace failing components.  That will be our children’s problem I’m afraid……..





More power of Energy Efficiency

21 11 2012

Just when we thought we could not lower our electricity consumption, along comes the next “bill”…..

Honestly, I was blown away……  never in a million years did I ever think we could get under 2 kWh per day, without even trying.  The only thing that occurred during this billing period is that the old upright freezer in which we kept the goat meat was converted to run as a fridge at 10°C for the cheese……  but all the same, the graph on the back of the bill shows we were going downhill for an entire year.  And there was I telling people we “only” consumed 2.4 kWh/day.  I am baffled.  Yes, the little freezer could quite conceivably use half a kWh/day running at 20 below, but this doesn’t really make sense.

The new bills are a little more sophisticated than they used to be now.  That neat little graphic that compares your consumption with that of other households “in your area” is eye opening.  Two person households “in our area” consume 1,255 kWh a quarter, while we only used 166…….  I’m justly proud of that.

What was disappointing though is that we only exported 903 kWh of excess solar generation, which over 90 days is a neat 10 kWh/day.  From 3.5 kW of PVs, that’s less than 3 hours of peak power.

This is due to my ageing SunProfi inverter putting a lot of power into the backup batteries, and the new PVs running very inefficiently when the weather’s hot, rarely producing more than 1800W from their rated 2200W…….  it’s because of a little understood phenomenon called thermal de-rating.

Panels are rated at X kW @ 25°C.  Some manufacturers must be ashamed of their Temperature Effect figures, as they don’t tell you what they are.  But they normally range from 0.2% to 0.5% per degree C above 25°C.  A panel would have to just about be in Antarctica to run at 25°C in full sun!

So if it’s 35°C outside (and it often is here), your black panels on the roof could be running as hot as 70°C, a temperature difference of 70 – 25 (degrees) = 45 degrees.  If your de-rating number is 0.5% (worst case scenario), then your panels’ power output could be de-rated by 45 x 0.5 = 22.5%.  On 185W panels like ours, that means they actually only produce 145W, so 12 of them would only produce 1740W……  which is pretty close to the truth!

I could complain, but I’m waiting for my $460 cheque…….

For advice on how we achieved this, visit this page…..





Austerity coming to a town near you

25 06 2012

After years of being told Australia’s economy is world’s best practice, it comes as a shock to see the unravelling beginning, even if you’ve been waiting years for this to occur like I have.  But it started last night when our Moron in Chief, Campbell “can’t do” Newman appeared on our TV screens last night in prime time to announce we are screwed.

In the one-minute advertisement, Newman urged Queenslanders to read the Commission of Audit’s interim report produced by his Liberal mate Costello, a minister in the Howard government.

Without referring to job cuts in the public service or indeed any specific programs which have been given the chop, Newman says the government has to tighten its belt and ‘‘tough’’ decisions must be made.  That’s it, Greece all over again.  This is the man who promised to “cut the cost of living”…..!

He actually had the nerve to say the previous government had overspent, when he himself spent billions on tunnels that will will be abandoned as soon as Peak Oil bites us all on the bum.  The buck passing is truly amazing.  But wait, it gets worse……

The Queensland Government has today announced that from 10 July 2012 the Queensland Solar Bonus Scheme feed-in tariff will change from 44 cents to 8 cents for new Scheme customers.  So that’s it then, if you’re poor and can’t afford the skyrocketing electricity prices, forget about screwing some solar panels on your roof, the government just screwed you instead!

Mark O’Connor recently pointed me to an article at http://www.crispinhull.com.au/2012/06/23/two-wrong-commentary-streams-on-oz-economy/  There, he points out that when annual population growth approaches 2%, the infrastructure costs become in practice unpayable.  Why?  Because as a civilisation reaches maturity, new infrastructure has to be built while the old one has to be simultaneously replaced.  That’s why the Bligh government in Queensland, which was not that incompetent or corrupt, was forced to sell off assets and cut services, even while seemingly riding the mining boom.  The entire Traveston Dam fiasco was nothing more than a symptom of overpopulation in the middle of a drought.  But of course, there’s no such thing as overpopulation, let alone Climate Change freaking the weather out…..  Just ask the Moron in Chief.

It’s enough to drive you to drink.  Actually……..





Home Solar Power Electricity Price Rise Myth

21 06 2012

Whenever I mention the fact we make money from selling power to the grid on certain forums, I get attacked for being partly responsible for the recent (and looming) electricity prices.  It doesn’t really matter how often the anti solar morons perpetuate the myth that panels on my roof, subsidies and rebates are a major reason for electricity price hikes; it still won’t make it true…..

And it’s not just the luddite rednecks out there spreading this disinformation… some career journos still fall into the trap of repeating these myths as fact – as do some politicians; which is a bummer given the Carbon free energy future of our nation is at stake.

Energy Matters recently released a study proving this is all hogwash here.  But to save you navigating away from this interesting website, I’ll repost the data….

Home solar contribution to power prices

Home solar power and electricity prices

The report was prepared by the AEMC for the Ministerial Council on Energy following a request from the Council of Australian Governments (COAG).

Solar is but a bit player in recent, current and future price hikes – that is really all there is to it. The next time you hear or read of someone perpetuating myths of home solar power being the electricity price rise bogeyman, you can help set the record straight by pointing those wayward souls to this page.

* Tables from AEMC, Possible Future Retail Electricity Price Movements: 1 July 2011 to 30 June 2014, Final Report, 25 November 2011, Sydney.