PV or NPV: getting homes and small business to invest in renewable energy

1. PV or NPV: getting homes and small business to invest in renewable energy Energy in Western Australia 2008 14 August 2008 Dr Ray Wills Chief Executive Officer Western Australian Sustainable Energy Association Inc.

2. Responding to climate change • The threat of dangerous climate change is not just an environmental issue - underscores the need to build a sustainable economy. • An effective response will change the way we use energy and in so doing, future proof our economy. • Action by government, business and the community must put in place measures that • reduce unnecessary use; • promote energy efficiency across life cycles; • reduce reliance on increasingly expensive traditional fuels and improve energy security; • produce energy through renewable generation; and • offset remaining emissions.

3. Sustainability in a changing climate for the community - and business. • All corporates have worked for years or even decades on pro-environment strategies and corporate social responsibility, and growing awareness of global warming among consumers is accelerating change. • Businesses in green buildings report improved productivity, better staff retention - particular Y Gen, fewer sick days, millions of dollars in energy savings and a reduced environmental footprint. • Property landlords Higher relative investment returns (minimum 14% ROI); marketing advantage (free promotion); higher market value for asset (10% increase); higher rents (5-10% increase); and according to a recent evidence, the cost to build green is less than a 3% premium above the costs of standard construction.

4. Sustainability

5. Sustainability • Key attributes include: • Dealing transparently and systemically with risk, uncertainty and irreversibility. • The principle of continuous improvement. • The need for good governance. • A commitment to best practice. • No net loss of human capital or natural capital. • Ensuring inter-generational equity. • Integration of environmental, social, human and economic goals in policies and activities.

6. Responding to climate change ABS STATISTICAL INDICATORS - WA • 1367.5 • JUN 2007

7. Responding to climate change ABS STATISTICAL INDICATORS - WA • 1367.5 • JUN 2007

9. Renewable energy generation • Opportunities in resource distribution - wind, wave, solar, geothermal • Biomass productivity

10. Wind • Spatial relationships

11. Renewable energy in Western Australia • Solar Energy - Photovoltaics (PV) • Grid-connected and stand alone power systems for remote telecommunications infrastructure and water pumping systems. PV modules also in many niche applications, including emergency telephones, street and other outdoor lighting, and marine navigation buoys.

12. Solar thermal • Low-Temperature Collectors • Used for space/water heating • Heat swimming pools • Industrial - salt production in salt farms! • Medium-Temperature Collectors • Hot water needed for residential and commercial use • High-Temperature Collectors: Concentrated solar power • Heat storage • Heat storage - transfer the heat to a substance (molten salt, silicon phase change products, pressurized steam) which can hold the heat with a high energy density.

13. Responding to climate change • Fossil fuel prices will continue to push up inflation, but renewable energy will continue to shine on us, to wash up on our shores, and to blow past us without additional cost. • Australia is the Middle East of renewable energy and we are failing to harvest the energy bonanza for the benefit of the Australian economy and especially for and in support of Australia’s export industries.

14. Responding to climate change • Responding to climate change will create opportunities, establish new businesses, and create new jobs. • Renewable energy generation is generally more labour intensive, and more broadly distributed across regions. • With a better employment factor, a diversity of renewable energy projects can lead to growth of local communities in rural WA. • Any economic analysis must fully assess the benefits to the community – that’s a part of sustainability.

15. PV or not PV PV Market Development • Production of photovoltaic cells (PV) reached 3,800 megawatts worldwide in 2007, up an estimated 50 percent over 2006. • Cumulative global production stood at 12,400 megawatts, • PV production has been doubling every two years since 2002, making it the world’s fastest-growing energy source. • China tripled PV production in 2006, and more than doubled output in 2007. With more than 400 PV companies, China’s market share has moved from 1 percent in 2003 to over 18 percent by end of 2007. (Jonathan G. Dorn, Earth Policy Institute 2008)

16. PV or not PV PV Market Development (Earth Policy Institute 2008)

17. PV or not PV PV Market Development (Earth Policy Institute 2008)

18. PV or not PV PV Market Development (Earth Policy Institute 2008)

19. PV or not PV Australian PV Market Development • All (APVA, 2008)

20. PV or not PVSome barriers to uptake • A state and national energy policy • Incentives for distributed generation and home generation from a diversity of sources • Promoting early movers • Removing impediments to market entry • PV rebate commenced in 2000 and currently funding likely to be used by 2009 • Householder only rebate • Market uncertainty - 2000 $5.50/Wp then $4, - 2007 $8/Wp, then $8 means tested

21. PV - or not PV. Australian PV Market Development

22. PV - or not PV. Australian PV Market Development

23. Feed in Tariff principles • Electricity buy-back rate which provides payback within the life of the system / scheme • Enhanced tariff is mandated and paid for via a levy on electricity sales (sometimes from Government budgets) • Can be paid on total generation, generation net of customer usage, up to a set limit, time of generation etc • Tariff for the year of installation is guaranteed for a set period • Can attract huge investment in renewables if appropriately structured • Provides advantage to the most efficient technology (adapted from Muriel Watt, UNSW, 2008)

24. WA SEA Feed in Tariff model • Nationally consistent FiT above electricity tariff • Payment on total generation – a gross feed in tariff • Small/medium enterprise should be eligible for systems under 1 MW. • No cap on eligible customers • Any renewable energy • Initial starting tariff should aim to repay capital cost over a FiT time period in less than 15 years, preferably half this time. • FiT cost should be covered by customer levy, rather than government budget • Levy should be spread across all customer types

25. Responding to climate change • 2 Million every 5 minutes

26. WA SEA – WA’s peak business body for the sustainable energy industries • WA SEA Members - the business part of the solution to climate change - developing and adopting technologies and services that minimise energy use through sustainable energy practices and maximising energy use from sustainable sources.

27. The inconvenient truth - time has run out for solutions that are simply convenient. Dr Ray Wills WA Sustainable Energy Association ceo@wasea.com.au Future Smart Strategies rwills@futuresmart.com.au School of Earth and Geographical Sciences, The University of Western Australia rwills@segs.uwa.edu.au