PV or NPV: getting homes and small business to invest in renewable energy

PV or NPV: getting homes and small business to invest in renewable energyEnergy in Western Australia 2008

14 August 2008

Dr Ray Wills

Chief Executive Officer

Western Australian Sustainable Energy Association Inc.

Responding to climate change

The threat of dangerous climate change is not just an environmental issue - underscores the need to build a sustainable economy.

An effective response will change the way we use energy and in so doing, future proof our economy.

Action by government, business and the community must put in place measures that reduce unnecessary use; promote energy efficiency across life cycles; reduce reliance on increasingly expensive traditional

fuels and improve energy security; produce energy through renewable generation; and offset remaining emissions.

Sustainability in a changing climate for the community - and business. All corporates have worked for years or even decades on

pro-environment strategies and corporate social responsibility, and growing awareness of global warming among consumers is accelerating change.

Businesses in green buildings report improved productivity, better staff retention - particular Y Gen, fewer sick days, millions of dollars in energy savings and a reduced environmental footprint.

Property landlords Higher relative investment returns (minimum 14% ROI); marketing advantage (free promotion); higher market value for asset (10% increase); higher rents (5-10% increase); and according to a recent evidence, the cost to build green is less than a 3% premium above the costs of standard construction.

Sustainability

Sustainability

Key attributes include: Dealing transparently and systemically with risk,

uncertainty and irreversibility. The principle of continuous improvement. The need for good governance. A commitment to best practice. No net loss of human capital or natural capital. Ensuring inter-generational equity. Integration of environmental, social, human and

economic goals in policies and activities.


ABS STATISTICAL INDICATORS - WA • 1367.5 • JUN 2007


ABS STATISTICAL INDICATORS - WA • 1367.5 • JUN 2007

Renewable energy generation

Opportunities in resource distribution - wind, wave, solar, geothermal

Biomass productivity

Wind

Spatial relationships

Renewable energy in Western Australia

Solar Energy - Photovoltaics (PV) Grid-connected and stand alone power systems for remote

telecommunications infrastructure and water pumping systems. PV modules also in many niche applications, including emergency telephones, street and other outdoor lighting, and marine navigation buoys.

Solar thermal

Low-Temperature Collectors Used for space/water heating Heat swimming pools Industrial - salt production in

salt farms! Medium-Temperature Collectors

Hot water needed for residential and commercial use

High-Temperature Collectors: Concentrated solar power

Heat storage Heat storage - transfer

the heat to a substance (molten salt, silicon phase change products, pressurized steam) which can hold the heat with a high energy density.


Fossil fuel prices will continue to push up inflation, but renewable energy will continue to shine on us, to wash up on our shores, and to blow past us without additional cost.

Australia is the Middle East of renewable energy and we are failing to harvest the energy bonanza for the benefit of the Australian economy and especially for and in support of Australia’s export industries.


Responding to climate change will create opportunities, establish new businesses, and create new jobs.

Renewable energy generation is generally more labour intensive, and more broadly distributed across regions.

With a better employment factor, a diversity of renewable energy projects can lead to growth of local communities in rural WA.

Any economic analysis must fully assess the benefits to the community – that’s a part of sustainability.

PV or not PV PV Market Development

Production of photovoltaic cells (PV) reached 3,800 megawatts worldwide in 2007, up an estimated 50 percent over 2006.

Cumulative global production stood at 12,400 megawatts,

PV production has been doubling every two years since 2002, making it the world’s fastest-growing energy source.

China tripled PV production in 2006, and more than doubled output in 2007. With more than 400 PV companies, China’s market share has moved from 1 percent in 2003 to over 18 percent by end of 2007.

(Jonathan G. Dorn, Earth Policy Institute 2008)


(Earth Policy Institute 2008)





PV or not PV Australian PV Market Development All

(APVA, 2008)

PV or not PVSome barriers to uptake

A state and national energy policy Incentives for distributed generation and home

generation from a diversity of sources Promoting early movers Removing impediments to market entry PV rebate commenced in 2000 and currently funding

likely to be used by 2009 Householder only rebate Market uncertainty

- 2000 $5.50/Wp then $4, - 2007 $8/Wp, then $8 means tested

PV - or not PV. Australian PV Market Development Watts Installed by

Month

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

JanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJuneJulyAugSeptOctNovDecJanFebMarAprMayJuneJulyAugSeptOctNovDecJanFebMarAprMayJuneJulyAugSeptOctNovDecJanFebMarAprilMayJuneJulyAugSeptOctNovDecJanFebMarAprMayJuneJulyAugSeptOctNovDecJanFebMarAprMayJuneJulyAugSeptOctNovDecJanFebMarAprilMayJuneJulyAugSeptOctNovDecJanFebMarAprilMayJune

2000 2001 2002 2003 2004 2005 2006 2007 2008

Grid Watts SAP Watts

PV - or not PV. Australian PV Market DevelopmentNumber of Systems

Installed

1,8732,076

1,005

3,271

488

2,089

1,176

951

241

64

231798

3

2198

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

NSW VIC QLD SA WA TAS NT ACT

GRID OFF-GRID

Feed in Tariff principles

Electricity buy-back rate which provides payback within the life of the system / scheme

Enhanced tariff is mandated and paid for via a levy on electricity sales (sometimes from Government budgets)

Can be paid on total generation, generation net of customer usage, up to a set limit, time of generation etc

Tariff for the year of installation is guaranteed for a set period

Can attract huge investment in renewables if appropriately structured

Provides advantage to the most efficient technology

(adapted from Muriel Watt, UNSW, 2008)

WA SEA Feed in Tariff model

Nationally consistent FiT above electricity tariff Payment on total generation – a gross feed in tariff Small/medium enterprise should be eligible for systems

under 1 MW. No cap on eligible customers Any renewable energy Initial starting tariff should aim to repay capital cost over

a FiT time period in less than 15 years, preferably half this time.

FiT cost should be covered by customer levy, rather than government budget

Levy should be spread across all customer types


2 Million every 5 minutes

WA SEA – WA’s peak business body for the sustainable energy industries WA SEA Members - the business part of the solution

to climate change - developing and adopting technologies and services that minimise energy use through sustainable energy practices and maximising energy use from sustainable sources.

The inconvenient truth - time has run out for solutions that are simply convenient.Dr Ray Wills

WA Sustainable Energy Association

[email protected]

Future Smart Strategies

[email protected]

School of Earth and Geographical Sciences, The University of Western Australia

[email protected]

Documents

PV or NPV: getting homes and small business to invest in renewable energy