Solar Shop Australia - submission to medium-scale solar discussion paper

November 2010
Prepared by Andrew Wilson

The following is a response to the list of questions extracted from the Medium-Scale Solar Discussion Paper and cross-referenced to the relevant section for ease of reference.

Section 4: Definition of Medium-Scale Solar

QU1: It is appropriate to define medium-scale solar as falling between 100kW and 5MW?

100kW to 5 MW covers the gap from where deeming stops at 100kW to 5MW where there is Utility Scale support.

QU2: Do you agree with such a definition and if not, why not?

Yes

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?

Currently a typical commercial scale installation of 100-500kW has a payback period of 22-25years and most customers would proceed if it could be 10 years or less.

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?

Solar Shop Australia believes a medium scale feed-in tariff is essential for a sustainable local PV industry, since it enables small-to-medium sized PV enterprises to build capacity and experience in larger project development.

While not prescribing the specific details of a medium scale feed-in tariff; features may include:

• Less than 10 year payback period required
• Could be in the range 30-40¢/kWh Gross feed-in (Net would also be possible), fixed for 20 years
• Regression of tariffs (ie. new installations receive lower tariffs) each year

Ideally the tariff should be set at the levelised cost of energy from a marginal system of commercial scale (not the average cost). It is important the tariff be adjusted from time-to-time to reflected falling PV technology costs and innovations, with the benchmark system being the cheapest commercial system currently available at the time.

The tariff could be designed to be phased out altogether after 5-10 years.

But more important than any of the above is that the methodology be transparent, and that the law cannot be rescinded or retrospectively changed – investor certainly is by far the most important factor for commercial sized PV projects.

The tariff would be funded from a general levy on electricity consumption, with exclusions for households on low incomes etc. The increase in electricity expenditure for average households would not be significant (Solar Shop Australia would be happy to provide data on this if required).

QU5: Have all the relevant barriers to uptake of medium-scale solar been identified in this Discussion Paper, and if not, what are they?

• Building roof design regulation should stipulate a minimum of 25kg/m2 for any new roof to allow for Solar Power retrofit.
• Building regulations for new buildings should target a minimum roof area allocation for provision of Solar power generating

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?)

QU7: What is the most significant barrier affecting your particular market segment?

• The grid connection process for medium scale solar within the various distributors is unclear and varies with each distributor and can significantly hold up project execution, impacting costs.
• Scale economies result in lower installed costs for commercial systems, typically $2.00/Watt less than residential systems. In these terms, larger systems are better value for money
• Cost effective Generator licensing and establishment of PPA’s for Medium Scale Solar installations.

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 available commercial and industrial roof space which can be practically utilised for retro-fit PV is significant. It has been estimated that a feed-in tariff targeting this sector could see 1GW installed within a decade.
• The commercial sector accounts for 22% of Australia’s electricity consumption, increasing to 32% by 2029-30 (ABARE) and 10% of Australia’s GHG emissions.
• Commercial load profiles are typically better matched with PV production than residential. This improves the network benefits for distributors.

QU9: What contribution is medium-scale solar likely to make to the security and reliability of supply?

QU10: How does this contribution differ from the contribution that is likely to be made by small or large-scale solar?

QU11: What are the opportunities for establishing local manufacture and production of solar technologies? To what extent are these regionalised?

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?

Support should be encouraged for regional community Medium Scale Solar installations; i.e. Community halls, sports stadiums, even community solar farms.

QU13: What support models for medium-scale solar are likely to provide the greatest opportunities for community engagement?

QU14: Are there any further broad policy aims which should be considered?

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?

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)?

• PV systems on existing commercial & industrial buildings abrogate the need for the complex land acquisition, site & environmental approval processes required for larger free-field installations.
• The ability to utilise PV for "green branding" in the commercial and industrial sector is significant. This alone often justifies the expense for corporate clients.
• Commercial and industrial PV systems positively contribute to commercial building energy rating schemes, and can utilise accelerated depreciation. Introducing Building Integrated PV (BIPV) elements into new commercial developments is an increasingly viable option for architects.

QU18: What is the primary driver in your particular instance and why?

The primary driver currently for most Solarshop clients is attaining ESD/green star rating mandates and reduction of greenhouse gas emissions.

Section 6.3: Potential for Medium-Scale Solar in Victoria

QU19: To what extent is increased uptake of medium-scale solar a regionalised opportunity?

Solarshop support the inclusion of the "aggregate model" in any regionalised incentive scheme because we see this as a potentially viable means of generating uptake in the medium scale sector.

Grid support through medium scale embedded generation should be eligible for some incentive.

QU20: If a support mechanism is deemed appropriate, to what extent should this be differentiated in relation to the type of grid connection.

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)?

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?

QU23: How are safety and OH&S concerns best addressed when implementing medium-scale solar?

Solarshop currently undertake standard Building Industry OH&S procedures

QU24: Is there a need to modify or extend current accreditation procedures in relation to medium-scale solar?

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?

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?