Power Alliance submission to the medium-scale solar discussion paper
Section 4: Definition of Medium-Scale Solar
QU1: It is appropriate to define medium-scale solar as falling between 100kW and 5MW?
Entirely appropriate – this is the level that sits between the large and small parameters of most incentives and is the ‘solar donut’. Small scale CDM also has these levels with a 5 MW cut off for some tech types.
QU2: Do you agree with such a definition and if not, why not?
Yes – it fits with current policies without stretching.
Section 5: Identification of Potential Barriers to Uptake of Medium-Scale Solar
QU3: What are the immediate financial short-term barriers to investing in the medium-scale solar sector and how do these differ from investment in small or large-sale solar?
There are not the levels of incentive for medium scale solar such as RECs which have a solar multiplier that favours 1.5 kW or large scale FiTs.
Medium scale has very strong application opportunities in business – especially food processing and in areas not on the natural gas grid. Businesses need incentives to take on solar which doesn’t exist at this scale.
QU4: What are longer-term financial barriers to investing in the medium-scale solar sector and how do these differ from investment in small or large-scale solar?
There is a strong policy bias for PV over thermal energy. This imbalance needs correcting over the longer term. 1 MW of electricity placed into the grid is equivalent to 1 MW of electricity not demanded through the use of solar thermal energy – this is not recognised.
Solar thermal energy has a greater range of applications taking into account time of use and would be a significant measure at the business and domestic level of taking load off the grid at peak demand. Such applications include hot water, air conditioning, space heating and cooling. PV has complete electricity production decay at high temperatures when most electricity is demanded for air conditioning. Solar thermal is effective at high temps when there is high demand.
QU5: Have all the relevant barriers to uptake of medium-scale solar been identified in this Discussion Paper, and if not, what are they?
No: solar thermal energy is not highlighted as a measure to take demand off the grid and to more broadly apply the energy to commercial medium scale demand such as food processing: brewing, dairy, pork, eggs, meat processing, wash-outs etc.
QU6: Can these barriers be differentiated by market segment (for example, are business entities likely to encounter different barriers to government organisations or community groups?)
Businesses don’t have seven-year business plans – generally they are 3-5 and with changing policies they are not prepared to make significant investments. Government organisations are happier with changing policies and community groups often have non-financial incentives that can determine investment.
Incentives should be placed for the rural and food processing business sectors to attain returns within business planning cycles – 3-5 year pay back periods.
QU7: What is the most significant barrier affecting your particular market segment?
The relative strength of the AUD against the yuan that makes importing PV cheaper, and combined with incentives at the 1.5 kW level for a 5 times REC multiplier and FiT for PV the small to medium business with high thermal demand cannot attain their energy at comparative prices.
Section 6.1: Broader Policy Aims for Medium-Scale Solar
QU8: What level of uptake would be required for medium-scale solar to make a significant contribution to meeting renewable energy and greenhouse gas reduction targets and how feasible is such a level of uptake?
The definition of medium scale must include “aggregated” or “programmatic” approaches to be effective – that is to say entire housing developments or new industrial parks are deemed to be one medium scale project. This would open up the technology types available to this type of demand thus maximising the uptake and greenhouse gas reductions.
QU9: What contribution is medium-scale solar likely to make to the security and reliability of supply?
By taking demand off the grid supply is increased – especially time of use. Solar thermal has the capacity to take 20% of the household and, in some cases such as the dairy industry 50% plus, demand. Only by reducing demand can we significantly improve supply because PV is not available during peak times. Peak PV output is 10am. Peak thermal is closer aligned to time of use demand peaks.
QU10: How does this contribution differ from the contribution that is likely to be made by small or large-scale solar?
Large scale solar is too expensive to compete with wind. Small scale has the opportunity to provide distributed load but only at the domestic level. This medium scale approach with appropriate solar thermal weighting will bring in more business users.
QU11: What are the opportunities for establishing local manufacture and production of solar technologies? To what extent are these regionalised?
Technique Solar could have the capacity to manufacture over 200,000 units in Melbourne that could readily be deployed as medium scale projects across the state. Surplus demand could be met from South Australia. This would require govt or corporate investment to more rapidly commercialise the technology and compete in the short term with low Chinese overheads.
QU12: What are the benefits of increased community engagement in this space over and above financial benefits? To what extent can these be quantified or do they remain largely intangible?
Jobs in regional areas, more improved business conditions that support community well-being.
QU13: What support models for medium-scale solar are likely to provide the greatest opportunities for community engagement?
Manufacturing in Victoria.
Large scale roll-outs so that entire business parks or industry groups such as the dairy industry could provide leadership.
QU14: Are there any further broad policy aims which should be considered?
Solar thermal energy needs to be considered as more valuable than PV electrical energy as it is the only way we can reduce the strain on the grid. We need to incentivise reduced grid demand through medium scale solar policy, not putting more into a strained grid in an inefficient way though PV.
Section 6.2: Specific Drivers for Investing in Medium-Scale Solar
QU15: What are the immediate short-term financial drivers for investing in the medium-scale solar sector?
QU16: What are longer-term financial drivers for investing in the medium-scale solar sector?
Project IRRs above 15%
Reduced energy bills
QU17: What other drivers exist for investment in medium-scale solar and to what extent are these differentiated by different market segments (for example business, government and community groups)?
High process heat users are medium businesses that have no drivers to invest in solar technology. Gas connected business may consider co-gen but this is not an option to non-gas connected businesses.
QU18: What is the primary driver in your particular instance and why?
NA – we are a developer not an end user.
Section 6.3: Potential for Medium-Scale Solar in Victoria
QU19: To what extent is increased uptake of medium-scale solar a regionalised opportunity?
Very much regional – a great many process heat users, hot water users are regional. Especially the dairy industry that needs over 2 litres of water per cow at 75 degrees twice a day for wash outs.
QU20: If a support mechanism is deemed appropriate, to what extent should this be differentiated in relation to the type of grid connection?
All incentives must be based on non-grid connection to increase supply of available electricity at peak times by displacing demand with thermal energy.
QU21: To what extent is the need to import system components likely to impact on a project’s capital costs (for example through foreign exchange rates and increased distribution costs)?
Massive – if the AUD goes down 20% and the yuan is revalued up 20% all projects using PV fail cost hurdles.
QU22: Is labour density likely to increase or decrease when investing in larger installations? In other words, is the relationship between kilowatts installed and number of jobs created a constant, or are medium-scale installations likely to require more or less employees than smaller-scale installations?
Tech type dependant. More engineering type jobs at the larger scale and more trades related at the smaller scale.
More jobs are created with local production than in any scale of installation.
QU23: How are safety and OH&S concerns best addressed when implementing medium-scale solar?
Use only licensed trades people that are union members having undertaken accreditation.
QU24: Is there a need to modify or extend current accreditation procedures in relation to medium-scale solar?
Possibly with higher temperature thermal applications and higher pressures.
QU25: What opportunities are available for increased training in the solar sector?
Section 7.1: Potential Solutions to Addressing Current Barriers to Medium-Scale Solar
QU26: Given the barriers you have already identified as being the most significant in your particular instance, what would be the most appropriate solution and why?
To place a solar thermal REC with a multiplier greater than PV to increase the uptake of energy use at the load. This would allow more supply from the grid.
Appendix C: Case Studies
QU27: Are you aware of or have you installed any examples of medium-scale solar projects in Australia not referred to in this Discussion Paper?