Solar energy is predicted to become the cheapest and most preferred source of power in forthcoming decades, with an array of utility-scale projects being launched all around the world. China is paving the road for this solar power investment with more than 5 gigawatts (GW) of photovoltaic (PV) panels, AKA solar panels, being positioned in the Gobi Desert region.
With Australia arguably receiving the most sun than any other country in the world, you would think that we would have instigated more of our own large scale solar products. While Australia has the most expansive household solar power system in the world with 15% of households having PV panels on their roofs, we are certainly lacking in the large scale solar market, not even making the top 20 in the world. Only 240 megawatts (MV) of solar plants have been made, or are approaching completion in Australia compared to over 26,000MW of utility-sale projects underway in the US.
The Renewable Energy Target scheme’s vague policies paired with a lack of government incentives have hindered the market for these large-scale projects in Australia, but this is set to change with the cost of solar power continuing to decline, as well as AGL’s 102MW solar plant in central NSW opening last year.
PRICE DECLINE IN SOLAR
Solar power is set to have high impacts on the electricity industry in Australia. With global movement towards emission-free energy sourcing, it has become clear that solar energy is one of the most cost effective forms of clean energy.
Canadian Solar, a company with several utility-scale developments in Australia estimates that within the next five years the cost of large-scale development projects will fall by half to $75 per megawatt-hour (MWh), making it even more affordable of investors. In comparison, the cost of coal without the carbon tax is currently between $85-100 per MWh, and the cost of wind power is $90 per MWh. This price drop can be mainly attributed to the recent spike in solar cell manufacturing in China driving the price of silicon solar cells down, which would usually account for 30% of production costs.
Ivor Frischknecht, chief executive of the Australian Renewable Energy Agency (ARENA) estimates that solar energy will dominate in Northern Australia and overtime become more competitive.
In September last year, ARENA and the Clean Energy Finance Corporation (CEFC) announced $350million funding initiatives to boost Australia’s utility-scale solar market, on top of the millions of dollars it has put towards projects as grants in the past.
The two solar plants by AGL in Nyngan and Broken Hill are predicted to produce around 360,000MWh of electricity yearly, enough to provide 50,000 households with electricity in NSW. These plants only cost $440,000 and provided approximately 400 people with jobs during development. AGL’s plants marked the birth of large-scale solar development in Australia.
Origin Energy is said to develop a utility-scale project on the roof of an old Mitsubishi factory in Adelaide, expecting to generate electricity for up to 770 homes per year. On top of this, Rio Tinto have begun sourcing off-grid diesel as well as solar power in it’s Weipa mine, producing 2800MWh of electricity per year and reducing the mine’s yearly greenhouse gas emissions by 1600 tonnes when the usage reaches 60-70%.
Lithium-ion battery costs have also been declining recently. With an increase in demand for storing solar energy during times of low demand for electricity, utilisation of these batteries could potentially stabilise the energy grid and reduce our reliance on coal-power. At present, the costs of utility-scale lithium batteries costs approximately $700US per MWh, however this is decreasing with the market for lithium growing by 27% from US$5180/tonne in 2010 to US$6600/tonne in 2015. Large scale lithium batteries are still a fairly new concept in the clean energy market. This increase in the lithium market and technology making the development of lithium-ion batteries cheaper could further reduce carbon emissions through increasing the demand for electric vehicles, and potentially sparking a movement towards electric phones.
GLOBAL CLEAN ENERGY INVESTMENT
Clean energy investment spending hit a global record of US$329 billion in 2015, up from US$316 billion in 2014. To fully encapsulate the demand for clean energy throughout the world, the spending on clean energy investment only reached US$62 billion in 2004. The biggest investor has been China, spending a total of US$111 billion.
This increase in spending has been hindered slightly as a result of the falling costs of PV panels, the strength of the US dollar lowering value for foreign investors, continued weakness in the European economy, and lower fossil fuel prices. It is important to note however that consumer demand for clean energy sources has continued to increase, proven through the continued investment and implementation of PV panels in households.