More solar panel subsidies die

solar panels

Waste of money in Spain, USA, Britain and Germany and now Australia

Aussie solar panels suck money from the poor and hand it to the rich

• Adapted from The Australian (behind paywall) – H/T John McLean

The cost of climate-change-inspired subsidies to boost the installation of rooftop solar systems has forced consumers who don’t have solar panels (the poor people) to pay $14bn to the rich people who do, but the Aussies are coming to their senses.

With 1.4m households having solar panels, Australia has the highest proportion in the world of households with solar panels, but the ill-advised subsidies that allowed them, plus presumably their marketing, outweigh any good they do by $9 billion. Unbelievable.

A report on the electricity market by the Grattan Institute think tank reveals that solar feed-in tariffs, which over-pay owners of solar panels for the power they supply to the grid, have created “a policy mess”. Well, that’s hardly surprising, considering the subsidies were the only financial reason to instal the things.

Anyway, it wants pricing reforms. The electricity price does not increase at peak times, so consumers who don’t have solar panels subsidise those who do, even though solar owners place the same strain on the distribution network. That’s because peak use of power usually occurs in the early evening when (surprise) the sun goes down.

While solar panels have cut emissions they have proved very costly—the equivalent of a carbon price of $170 a tonne. Emissions could have been reduced more cheaply and fairly. The Australian carbon price right now sits at $13.95 a tonne. The electricity regulator will require those with solar panels to pay more than before, so the installation of new solar panels in most capital cities will no longer be profitable.

Climate sceptics have been asking about discrepancies in the economics of solar panels for years. We still have questions about their carbon footprint, but they become moot as solar panels are killed off by economics.

Solar panels are fine in deserts, coral atolls and yachts, but they’ll never securely run a household or a steel mill—especially at night.

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17 Thoughts on “More solar panel subsidies die

  1. Alexander K on 26/05/2015 at 8:37 am said:

    Many years ago, a friend (whose dad owned a small engineering works) and I became fascinated with using solar power to heat water. We (mostly he) built a unit that was considerably more eficient (about 60% more, from memory) than a comparable unit made by the then DSIR, except that our unit did not use a pump and was constructed from very light guage stainless steel sheet rather than the copper tubing used by the DSIR engineers. We were very pleased with the performance of our design as, if one places copper on a conductivity scale, copper is scored at ten while stainless steel barely gets on the scale.
    Our unit sat on his dad’s factory roof (later his factory roof) supplying copious amounts of hot water for many years with no problems at all: we did not proceed with manufacturing the unit as , in those far-off days, local suppliers of electrons, to discourage competition, charged an excess fee if any form of ‘free’ energy was used.
    We knew that if our device was fitted, it would take about ten years to achieve a profit.
    As a result of our experiment we learnt heaps about using solar energy and heaps more about the irrational behaviour of civil servants defending an irrational official position in that if one needed to heat water, solar, even in a not-very-tropical area in the lower North Island, even in Winter, is practical. I doubt that the same applies concerning the generation of electricity.

  2. Mike Jowsey on 26/05/2015 at 11:10 am said:

    We have 2 solar hot-water units using evacuated tube technology. They heat nearly 600 litres of water to, on average 70 degrees. Our power bill has been reduced by a third and the ROI is less than 2 years.

    Photovoltaic doesn’t hold the same good economies and it will be a while before it does, but I imagine it eventually might as electricity prices continue to spiral upwards, helped along by stupid policies such as carbon taxes and wind farm installations.

  3. Andy on 26/05/2015 at 11:19 am said:

    Interesting discussion as I have been looking at Solar hot water for our new house build in the Mackenzie

    PV does seem very expensive in comparison, and also very complicated (having seen the switchboards in peoples houses).

    There are also issues with adding in an emergency generator into the house wiring and isolating that from the PV, not to mention the fire risk (if your house catches fire, the roof is a live electrical circuit that cannot easily be isolated)

  4. Richard C (NZ) on 26/05/2015 at 3:01 pm said:

    >”We have 2 solar hot-water units using evacuated tube technology. They heat nearly 600 litres of water to, on average 70 degrees”

    What? No CO2 heating Mike?

    That’s a good payback. I’m always amazed the roofs are not covered by solar hot water units in all the new subdivisions but in many there’s none. Same for new inner city townhouses where, around here anyway, they sell for a $million (or two). Even a boost to overcome thermal inertia will reduce heating costs, let alone heating to 70 degrees.

    There must be some part of a new house that can be deferred in order to allocate funds to solar water heating I would have thought but it’s been years since I did quantities and costs of materials so I haven’t a handle on costs (Andy, what could you defer?).

    If the solar units could be equated to other building costs then maybe solar could be made to “fit” e.g. carpeting vs mats, seal/concrete driveway vs unsealed, carport vs garage, brick vs fibreboard etc. But if the type of building is already low cost materials and structure i.e. the bare necessities, then perhaps it’s no wonder solar cannot be made to fit in the initial build. I get the impression that most solar units are retrofit. And a lot of mortgage has to be paid off before funds become available for a retrofit.

    Knowing what you know now Mike, would you integrate solar units in your first home build as a matter of course, or would you leave it to be retrofit later?

  5. Andy on 26/05/2015 at 3:52 pm said:

    RC, in order to fit solar hot water, your water tank needs to be of the right type, and this is a fairly expensive part of the equation. The solar collector isn’t that much really.

    There seem to be two types, the tubes and the flat panel. I’m not sure of the pros and cons, but living in an area of high snow might be a consideration for me.

    Once you have got the water cylinder, whether you put the collector in on a new build or later is academic, though I would have thought you might as well put it in a new build

    Hot water also has its own “battery” in the form of a lagged cylinder. I’m impressed with Mike’s payback time.

    With PV, there is some technology that is built into the roof coating which looks a lot more aesthetically pleasing than external PV panels. Obviously, this kind of solution lends itself to a new build.

  6. Simon on 27/05/2015 at 4:59 pm said:

    The propect of being paid to consume power is actually quite appealing.
    Though I do agree that the Australian subsidy programme was poorly thought out. Selling back to the grid should be at the spot rate rather than at a guaranteed minimum. Solar panels in Australia still make economic sense even without subisides, they are so inexpensive now.

  7. Andy on 27/05/2015 at 5:13 pm said:

    Unfortunately these moments of “success” when Germany is producing so much power that the spot price drops to zero means that conventional power stations become uneconomic.

    This is good news if you like “sticking it to the man” but bad news if you want to continue running an industrial economy. Hence Germany has to subsidise coal and gas power stations to stop them going out of business.

    The net effect is that Germans are paying some of the highest electricity prices in Europe and hundreds of thousands of people have been disconnected for non-payment of bills

  8. Mike Jowsey on 28/05/2015 at 6:14 pm said:

    RC, would I install solar water heating in my first build. Absolutely, and every one thereafter. It’s a no-brainer really. We also have a wetback in out logburner, so winter months are catered for.

    But Andy, when you say ” in order to fit solar hot water, your water tank needs to be of the right type, and this is a fairly expensive part of the equation.” you are not entirely correct. We had to replace our cylinder a couple of years ago and made sure we got a “solar ready” one. When we recently purchased the panels we ended up not using the solar coil in the cylinder as it was more efficient to pipe the heated water straight into the cylinder rather than have a closed loop. The extra we paid for solar ready was a complete waste of money. From memory it added about $400 to the cylinder cost.

  9. Andy on 28/05/2015 at 6:48 pm said:

    Mike – thanks for the tips. I might actually have to discuss this with you offline as we get further into our build project

  10. Richard Treadgold on 28/05/2015 at 8:34 pm said:

    If neither of you has the other’s email address, I’m happy to send one of you the other’s email address. Or both. Rather than advertise, with all these rascals around.

  11. Richard C (NZ) on 28/05/2015 at 8:45 pm said:

    Mike, Andy. Interesting responses, thanks.

    Having worked for a while decades ago as a structural drafty and technician for Arch/Struc consultants, I had an interest some time ago re pre-fabricated modules that integrate every conceivable innovation into the simplist and least costly design solution (usually termed “green” now unfortunately). Lapsed lately though and lost touch of progress. There is an on-going world-wide university Solar Decathlon competition along the same lines where the designs can be viewed and actual builds of them presented at whatever campus hosts it, see:

    Solar Decathlon

    As you say Mike, no-brainer for solar water heating but it’s not happening en masse as the normal convention, modular or not. I don’t see this type of approach percolating into NZ building practices but I’m not an insider now.

    Must say this diversion makes a nice change from the overwhelming leaky building problem round MtM here that’s costing owners tens of $thousands (even $100+k). The whole place, including huge sometimes neighbouring apartment complexes, seems to be have been enclosed in white shrink wrap for some time.

  12. Richard C (NZ) on 28/05/2015 at 9:25 pm said:

    Solar water heating – Consumer NZ

    Government funding for solar water heating is no longer available. This isn’t necessarily a bad thing. For many people the predicted savings wouldn’t happen in their solar water-heating system’s lifetime. What’s more, some of the claimed “benefits to the nation” may have been overstated.

    2 reports on the economics and benefits of solar water heating were published in 2012: one by the Parliamentary Commissioner for the Environment (PCE); the other by the Ministry of Economic Development (MED), now known as the Ministry of Business, Innovation and Employment.

    PCE report (2.16 MB)
    MED report (6.76 MB)

    For many people – especially those who’ve already bought a solar water-heating system – the findings of these reports may be a surprise.

    Key findings were:

    # On average, a system installed under the government funding scheme would leave its owner just $395 better off over its lifetime.
    # The overall (average) cost to the country is $4766 per system.
    # There are other ways of heating water that are cheaper to install, more cost effective and more environmentally beneficial.

    So what’s the problem?

    For the homeowner, the main problems with solar water-heating systems seem to be:

    # the high initial cost compared with other water-heating options
    # difficulty in ensuring the system’s designed and installed correctly
    # difficulty in telling whether the system is working properly.


    Cost versus benefit

    With costs generally in the range of $4000 to $10,000 per system, any solar water heater will have to pay itself off by saving a lot of money each year or by lasting for a very long time without the need for repairs.

    However, evidence from studies – and from the owners of systems – suggests that in many cases the systems’ cost savings and longevity aren’t enough for solar water heating to be economically viable.

    Improving the value of your house is another benefit often mentioned in discussions of solar water heating – and one result of the government funding has been that many people regard solar water heating as up there with good house insulation. But given the doubts about the longevity of these systems (and the expense of repairing them), there’s a good chance an ageing solar water heater will be seen as a liability when people are house hunting.


  13. Richard C (NZ) on 28/05/2015 at 9:33 pm said:

    Solar Power in NZ – What is the payback?

    Article by Mike Bassett-Smith, November 14, 2011


    Direct Savings in Electricity Bills

    Solar electricity systems produce predictable direct savings in electricity bills. The annual output of any size of solar system for any region can be accurately calculated before the purchase is made and remains reliable throughout the system’s working life. These qualities allow solar investors to make reliable system sizing and budget decisions when considering the purchase of a solar power system.

    For example, a Powersmart Solar 3.04 kW system currently costs $15,245 and will produce approximately 4,256 kWh of electricity each year in Auckland under relatively ideal mounting conditions. At current electricity prices of $0.27 per kWh (Auckland) this translates into direct electricity savings of $1,150. As years pass the system’s electricity output remains reasonably constant so rising electricity prices translate directly into increased savings.

    If electricity prices rise at a simple inflationary rate of 3.5% per annum, those savings will be over $1,300 per annum by year 5 and over $1,600 per annum by year 10. The accumulated direct savings would repay the initial capital cost of the solar system by year 11, long before the end of the system’s useful life which is well in excess of 25 years.

    It is highly likely that electricity prices will inflate much more rapidly with some commentators calling for prices to double within 5 years. It is the protection from these rising prices and the reliable energy savings that produces a solar power systems second quality as an investment; an increase in the appraisable value of the home or building.

    The graph [shown] shows the cumulative savings generated by the solar power system over a 25 year period. Even at very low rates of electricity price inflation the system returns the original investment in less than half its warranted


    # # #

    Mike’s payback must be exceptional. What did you do right Mike?

  14. Richard C (NZ) on 29/05/2015 at 12:03 am said:

    >”Mike’s payback must be exceptional. What did you do right Mike?”

    Referring here to Mike Jowsey, not Mike Bassett-Smith.

    Sheesh, what are the odds……

  15. Richard C (NZ) on 29/05/2015 at 11:00 am said:

    I’m growing increasingly sceptical of your payback period Mike.

    Are you sure you’ve crunched the right numbers and crunched them right?

    Can you provide the calcs (privacy understood if not)?

  16. Richard C (NZ) on 29/05/2015 at 11:31 am said:

    Have you subtracted the contribution of your wetback wood burner Mike?

    By far the most calories of heat would be from that source.

  17. Richard C (NZ) on 29/05/2015 at 12:17 pm said:

    A wetback burning coal will boil water in the cylinder (100 degrees) and vent steam.

    I know this because the farm house I was bought up in had wetback water heating burning wood and coal. When the water was boiling the noise was fearsome and the house shook.

    There was a coal bunker under the house and the Whatawhata coal mine was nearby (also plenty of wood on the farm). Solar heating would have been superfluous.

    In my neighbouhood now at MtM I can only identify one residence with a coal burning wetback (smoke and smell is the giveaway). But if everyone had same the air would be like Beijing (or ChCh was).

    And only one with solar water heating – and this a neighbourhood of millionaires (of which I am not one).

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