Friday, June 24, 2011

Subsidising solar power is just plain crazy

A 100-megawatt solar power station is planned for Mildura.  And last weekend Energy Minister Martin Ferguson announced funding for two new projects, a 150-megawatt solar plant for NSW and a 250-megawatt facility for Queensland.

All these plants are relatively small compared with conventional plants such as TRUenergy's 1500-megawatt brown coal power station in the Latrobe Valley.

Solar generators concentrate sunlight through the use of lenses and reflectors.  This produces electricity in the same way as conventional coal or gas power stations.

Solar power has the superficial attraction of being free.  And Australia is well endowed with sunshine.  So the line touted by some politicians and their advisers is that we should gradually replace all our fossil fuel power stations with solar power.

To support their case, advocates of solar draw on impressive-looking documents, including the latest report by the Intergovernmental Panel on Climate Change (IPCC).  This argues solar power could easily produce 80 per cent of the world's electricity.

Government propagandists say IPCC reports are produced and vetted by 4000 of the world's top scientists.  However, it turns out that the part of the report on solar power was written by a Greenpeace activist who used made-up data.

In fact, solar plants are exorbitantly expensive electricity producers.

Victoria's Auditor-General estimated the costs of large-scale solar facilities at almost six times those of the brown coal power stations that provide almost all of Victoria's electricity.  Coal power stations also have the advantage of being able to operate whenever they are needed.  Solar plant is available on average only 22 per cent of the time.

There is little prospect of solar power's costs and availability markedly improving.

THE only way solar generators can be built is if governments use taxpayers' and consumers' money to subsidise them.

The Mildura plant will receive a subsidy from Canberra of $75 million and a state grant of $50 million.  Those grants comprise 30 per cent of the costs.  Subsidies to the Queensland and NSW plants are even more lavish.

In addition, electricity retailers are forced to use solar and wind power within their total supplies, at a cost of four times that of conventional electricity.  That share will grow to 20 per cent by 2020.

Compelling retailers to include high-cost electricity in the total supply means the subsidy is hidden.

And it is not some faceless ''big polluter'' businesses that get slugged with these costs.  As a result of hidden subsidies to solar and wind power, electricity prices are rising and will increase further even without a carbon tax.  The effect is already evident in electricity bills.  But even greater costs are embedded in the goods and services that consumers and businesses buy.

The craziness of subsidising solar power is illustrated by considering the costs of using it to replace all existing generators.  For the power plants alone the outlays would exceed a year's national income.

And all this for a form of electricity that is intrinsically unreliable.

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