Solar output driving energy prices down in Europe

The increasing price of electricity and rising energy bills have become a common theme in many Australian newspapers. Although many articles point to ‘gold plating’ of the network as the source of the increases, a concerning number also identify residential solar PV owners as a contributing factor.

Indeed, as part of the Queensland Competition Authorities (QCA) investigation into a ‘fair and reasonable’ feed-in tariff, it was stated that solar PV owners drive up the price of energy for other consumers by avoiding ‘a disproportionate amount of network costs by minimising their reliance on grid-sourced electricity’. Although it cannot be denied that energy prices in Australia continue to rise, evidence from Europe and data on the cost to consumers of fossil fuels versus solar suggests that this need not be the case.

Solar Power in Europe

Germany, which has far fewer sunshine hours than Australia, has implemented numerous policy reforms that actively encourage solar PV and other renewable energy developments. These policy decisions have resulted in a strong, diverse economic climate that is more resilient to changes in the global market, Germany is experiencing record-highs in employment when the rest of the EU is veering sharply towards record-highs in unemployment.

In France, as well as Germany, contracts to deliver energy for 2014 have fallen due to rising solar output. Research conducted by UBS’s Paris office revealed as much as 18 percent of electricity demand may be replaced by solar panels, reducing demand for other sources by 6 to 10 percent by 2020. Per Lekander, of UBS stated “unsubsidised solar growth should drive wholesale power prices further down”.

In Australia the AEMO recently published a report showing that energy consumption has fallen for a fourth consecutive year, with 2012 showing the largest decrease to date.

The cost of energy in Queensland

The QCA report, which originally suggested a gross metering set up for solar PV owners across the state, met with fierce opposition from almost all stakeholders – including energy retailers. What the energy retailers were not willing to concede to, in financial terms, was the benefit solar brings to the grid. Research calculated by Peter Fries, the man who coordinated the first grid connected solar PV system, has revealed that when Federal and State subsidies are combined households are paying over $3,500 to use fossil fuels.

The cost to the consumer for solar energy? $100-$200 per household per year at the federal level and an additional $54 per household per year in Queensland. Analysis of electricity demand between 2008 and 2012 in the state actually shows that solar PV can save non-solar households by around $65 a year, further to this the feed-in tariff would have to rise to around 96¢ per kWh before it cost consumers extra on the energy bills.

Arguments will continue to rage for some time to come, as those in favour of coal continue to argue their case by attacking solar. The final report by the QCA, and the actions taken by the Queensland Government in its wake, will be a real indicator of how the solar market will develop in the state in the next few years, and potentially what the Australian solar PV market can expect to come.

© 2013 Solar Choice Pty Ltd


Rebecca Boyle