Australia: Generation competitiveness approaching for PV

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Many in government and those more closely associated with conventional energy sources are often pessimistic about the ability for photovoltaics to compete on cost as a generation source with nuclear, gas and coal fired production. However a new report from the Australian government has bucked that trend and predicted that an energy transformation will take place in the country.

Despite this positive outlook, the AETA Report, which was released today by the Bureau of Resources and Energy Economics in Australia, is far from being bullish about photovoltaics as a large-scale generation source of the future. However, the report does predict a significant major change in electricity generation in the future for the country, acknowledging that cost reductions in photovoltaics achieved in recent years has changed assessments of its competitiveness with other electricity sources.

In finding that photovoltaics will be able to deliver a competitive LCOE in the next decades, the AETA report acknowledged that Australia’s energy future is set for big changes. "Australia will experience an energy transformation over the coming decades that will have a profound impact for electricity networks, how energy is distributed," said Quentin Granfton on releasing the report, "and on Australia’s ability to meet its targeted greenhouse gas emissions reductions."

The prediction of the AETA report may surprise many who have long believed photovoltaics and other renewables will remain uncompetitive with other electricity sources in the future. Nevertheless, for many in the photovoltaics industry, the prediction of generation competitiveness occurring in around 20 years’ time appears too conservative.

Key to this cautious prediction, the report accessed photovoltaics based on the assumptions that installed PV costs, for utility scale applications, are AUD3.38/W in 2012 (US$3.36); that PV "is unlikely to be able to sustain continued price reductions without significant ongoing investment"; and that while capital costs for US PV have dropped 23 percent between 2010 to 2011, "this rate of cost reduction is not expected to continue in the forecast period."

The University of New South Wales’ Head of Photovoltaics, Richard Corkish attended the release of the report in Melbourne today. Reacting to its findings, he told pv magazine the report also did not take into account electricity distribution costs when accessing cost and also decommissioning costs. In terms of the favorable LCOEs, the AETA report produced for nuclear, Corkish further observed that a figure for public liability costs was also used in the equation, despite such insurance not being available for nuclear without government intervention.

Despite the cautious predictions regarding photovoltaics, the report’s tone is favorable towards the technology. In its conclusions, the report authors write, "A key finding of the study is that the costs of solar photovoltaic technologies have dropped dramatically in the past two to three years as a result of a rapid increase in global production of photovoltaic modules. As a result of on-going cost reductions, differences in the cost of generating electricity, especially between fossil fuel based and renewable electricity generation technologies, will diminish."