Retail grid parity Down Under

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In a paper late last month, the Director of the ANU’s Center for Sustainable Energy Systems Andrew Blakers presented the calculations behind his assertion of Australian retail grid parity.

While Australia is a big country and the irradiation levels vary, Blakers told pv magazine that in general, "Australia in a sunny place" and he is confident that the cost of electricity produced by photovoltaics has fallen below that of electricity from conventional sources. In very sunny cities, like Darwin in the north and Perth in the west, according to the ANU researcher, the price of photovoltaic electricity is considerably below fossil-fuel-produced power.

The Australian PV Association also believes that grid parity has been reached, if the price of electrical grid costs is factored into the equation.

The majority of electricity in Australia is supplied by cheap, readily available coal and Muriel Watt from Australian PV Association described the arrival of PV grid parity on the Australian Broadcasting Corporation as contrasting with conventional coal-produced power. "If you add what you need to do to bring the coal fired electricity to where you want to use it. So it’s coal plus the network."

Both Watt and researcher Blakers agree that in light of rapidly rising Australian electricity prices and falling photovoltaic module prices there is little chance of the trend reversing.

"Carbon tax"

The carbon-price legislation that Blakers uses, as an additional cost in his equations, is currently before the Australian Parliament and is expected to pass in the next few months. While it has been keenly debated in public and is opposed by the opposition parties, Blakers says once in place it would be difficult to unwind.

In the previous months, state and territory governments have been rushing to wind-up their feed-in tariff (FIT) programs in light of impending grid parity. While some in the PV industry have lamented the moves and criticized their sudden nature, both Blakers and PV Association are arguing for 1:1 metering as apposed to FITs.

Net metering

Meaning that PV power producers receive the retail rate for their production – the electrical meter runs the same rate forward as it does backwards – Blakers said 1:1 metering is a more sustainable way forward for Australian PV.

"The sooner we get rid of FITs the better," Blakers told pv magazine, "we have not needed FITs for several years now. Some of these FITs were set at absurdly generous levels and that brought the general concept into considerable disrepute."

Singling out the populous state of New South Wales’ FIT program as being particularly generous; Blakers believes that net metering will still result in major gains for households or businesses with PV installations. "In some places, Adelaide, Perth, Darwin, Alice Springs, Brisbane, we have the PV cost now being in the range of 60 to 80 percent of the retail tariff."

The PV Assocation argues for 1:1 metering in its submission to the NSW Government’s FIT review.

Bakers grid-parity calculations factor in an eight percent discount rate, meaning grid parity has occurred even when the upfront money needed for a PV installation is borrowed from a bank.

In this environment, it is no surprise that PV installed capacity is growing at healthy rates in Australia. Blakers said that he expects up to 700 MW of capacity to be installed nationwide in 2011.

In the Novemeber Edition of pv magazine, a feature article will look at the Australian photovoltaic market, industry and research environment.