The hidden costs in the switch to solar

2482 power station 1By ERWIN CHLANDA

 

It seems simple but it has a sting in its tail: Switching an average household, fitted with reasonable passive systems keeping out the heat and the cold, to solar for 20 years costs $24,000. This includes installation, a battery ($15,000) and solar panels with switching gear ($9000).

 

But lurking in the dark are contingencies that the current power supplier – in Alice Springs that’s the NT Government – will need to put in place to cope with potentially enormous reductions in demand and income, while remaining able to provide back-up.

 

Every time the sun doesn’t shine for three days or more you’ll have to switch back to grid power, or a back-up generator, because your battery will be flat.

 

In Alice Springs that would be more rare than in most other parts of the world: Sunshine is one of the many things we have in abundance.

 

Local solar dealer Jhana Cowham, of Solergy, says a (much) more expensive battery could stretch the supply to five days.

 

That household would currently be paying $750 a quarter or $3000 a year to the NT Government owned electricity supplier. That’s one-eighth of the cost of the solar equipment.

 

That means, ignoring interest and working on current-day dollars, 20 years of power from solar would cost you $24,000; from the grid it would cost you $60,000.

 

Other considerations are these: Power costs are climbing. The price of solar gear is dropping. And the solar equipment would, during the day when you’re at work and the kids are at school, produce excess power which can be sold into the grid.

 

At the moment the NT Government owned Jacana will buy electricity from you for as much as it sells it to you.

 

That, Mr Cowham estimates, would generate for you, the private producer, $2000 a year.

 

Over 20 years, assuming current prices, that’s an additional $40,000. So what are we all waiting for?

 

2482 wires sunset 1There are a few buts.

 

Twenty years is a very long time in politics when politicians are having problems planning for a month.

 

While as the private producer you are sitting pretty, the government is looking down the barrel.

 

Its income from electricity sales needs to cover two principal activities: Generating power and transporting it.

 

While the first is partly a variable cost (you can shut down engines at times of low demand and not burn gas), the second is not: The wires need to be maintained whether any current flows through them or not.

 

The generators need to be maintained as well. The variable part is the cost of gas which is 55% of the cost of generation, says Tim Duignan, CEO of Territory Generation (TG).

 

So if you reduce your payment to the government, pegged at the amount you are consuming, from – say – $3000 to $500 a year, because you’re needing it only on a rainy day, you’ve also reduced your contribution to the maintenance of the wires and the engines by five sixths.

 

Furthermore, if you are using the wires for selling your excess electricity to the government, this would make its financial position even more precarious.

 

One of the buts is that the current electricity system’s capacity to absorb solar power is limited to around 20%. Alice Springs is getting close to that limit, with Uterne and the other private solar plants already in place here.

 

Well, you may say: “Too bad, I’ll just pull the pin on grid power and sell my excess to my neighbours. And maybe we’ll all get together and buy a big battery and become an independent community generation group and live happily ever after. Hundreds of such residents’ groups have already sprung up around the world.”

 

Nice thought, but this is where things could be getting curly – even nasty.

 

It all turns on this: Whether you need back-up electricity for a day or a year, the infrastructure – engines, generators and wires – is the same and has to be ready at all times. But the consumer would pay only for the one day he uses it.

 

If the weather closes in it would affect the whole town, not just part of it. When the batteries are flat, 100% stand-by generation is needed. All the engines and all the wires always need to be kept in top condition – just in case.

 

A gradual transition can only be in the form of bigger and better batteries being installed progressively. The crystal ball is still pretty cloudy on that score. But during what will need to be a 20 to 30 years process – Mr Duignan’s estimate – there are bound to be surprising developments that could work in our favour – or not.

 

Of course consumers can opt out and forego access to back-up from the grid and its use for selling excess power to it. Your freezer and airconditioning would be the first to go.

 

It would be a brave government that would tax people who get no use from the grid. But those who do can expect some hefty charges for a little bit of power used for back-up once in a blue moon.

 

This could be one way of putting it: It’s a form of insurance. Or: People pay for a fire station just in case there is a fire.

 

The Government is unlikely to insist that TG pays off the $75m for the 10 engines now being installed at Brewer Estate, an initiative of the Giles Government.

 

After all, the government has a “social responsibility” to provide reliable power for the public.

 

But there is no doubt a type of insurance payment would be charged as traditional income falls off. The NT Government owned electricity system – all three branches – has the NT Treasurer as the sole shareholder.

 

“For the moment, thermal power is still the cheapest option for the supply of power when the sun is not shining,” says Mr Duignan.

 

We are not connected to the national grid, but on July 1, 2015, the Australian Energy Regulatory (AER) became the regulator of our electricity network.

 

2482 Owen Springs power stationAER became responsible for the approval of prices for network services.

 

Power networks operate under a licence issued by the Utilities Commission that authorises it to “own and operate an electricity network … connect the electricity network to another electricity network … provides services to network users, including electricity retailers or end-use customers”.

 

While the sun’s power is of course free to anyone wanting to harness it, the AER and the NT Government may take a keen interest in people stringing their own wires across parts of suburbs, setting up shared storage devices, charging their friends and neighbours for electricity and buying only a tiny fraction of their need from the government’s grid.

 

People power may be facing some serious challenges.

 

PHOTOS: Top – Alice Springs power Station in Sadadeen Valley, 1944 • Middle – The sun setting on the wires? • Above – Generating hall at Owen Springs housing three gas-powered MAN generators.

 

 

 

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5 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Posted October 11, 2017 at 8:25 am

    Brilliant ideas and information you have here. Thanks!

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  2. Francis Lovering
    Posted October 10, 2017 at 7:08 am

    May I suggest you Google the smart grid. It helps to overcome the problems mentioned here.
    Distribution of power sources, your roof or a big solar farm, all aggregated, plus and of battery storage, where ever it is, eg your electric car, or the big suppliers.

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  3. David de Vries
    Posted September 29, 2017 at 6:57 pm

    Trying to understand the transition from hyrdrocarbons to solar is like trying to analyze the shift from horse and cart to internal combustion. You cannot use the old yardstick (to give you another anachronistic term).

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  4. Richard Bentley
    Posted September 29, 2017 at 4:53 pm

    Thanks for raising relevant issues Erwin. I am confident there are plenty of answers out there with some of them coming in the pathway to renewable energy due for release soon.
    As more enrgy is generated at homes or business the demands on TG generators will reduce thus reducing operation and maintenance costs.
    If transport moves to electric power there will be an increased power demand thus balancing the solar that has been installed.
    If gas generators are determined to be redundant they may be saleable to other locations requiring gas back up.
    The gas generators have been reported to require substantial rebuilds after as little as 10 years.
    This may be a good time to determine if we require less gas generation. Hopefully this report will encourage beneficial debate.

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  5. Mark Wilson
    Posted September 29, 2017 at 11:52 am

    A very interesting article Erwin. Thank you and glad that someone is awake. You achieve much with little. Others should be embarrassed. Alas, they are not.
    I’ve never seen the value in installing rooftop solar unless you plan to live at the address for a very long time.
    Because really it’s the house that owns the asset and not you. Further, government feed-in subsidies are not guaranteed in the long term.
    They may even go BELOW the cost of supplied electricity if it all goes bad. There are rumblings in that direction already.
    A few years back I wrote the relevant Minister in the Giles Government about my suggestions, but, rather predictably, received a “Dear John” response that referred me back to the troglodytes at PowerWater!
    Politicians keep taking advice from the same sources! It was simply a waste of my time and effort.

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