Solar Electricity Installations look like a gravy train.
by tonytran2015 (Melbourne, Australia).
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(Blog No.90).
#solar electricity, #solar panel, #home installation, #return on investment, #gravy train, #subsidize, #economically inefficient,
Solar Electricity Installations look like a gravy train.
With electricity price running out of control, anticipated to hit 40c/kWh in the near future, I have to consider investing in a home system of Solar Panels to reduces my expenditure. The good news is there are some Solar Panels on sale at $150 per square meter and my friend can install them for me at a cost of $150 per square meter. So I drew up the following financial analysis for the prospective installation of 1m2 of panel. The results are quite surprising: Solar electricity is not matured enough to be economically competitive. The Green actions by Australian Governments are mostly a gravy train with well connected, greedy people already having First Class seats on it.
1. Assumptions leading to prospective installation
All currency are in Australian dollars
1. Electricity is to cost $0.40/kWh (This is on the high side, the current wholesale price for gas generated electricity is still below $0.15/kWh),
2. Solar Panels can be bought at $150/m2,
3. Total installation cost is only $150/m2,
4. There is no heavy disposal costs for discarded Solar Electricity components which contains lead and other pollutants.
2. The physical figures for Solar Panels.
a/- Solar energy flux is about 1000W/m2 before sunlight reaches the atmosphere.
b/- Average over 12 hours of the flux of daylight on equinoctial day reaching a panel pointing directly at the Sun at its midday is
1000W/m2*(2/3.14).
c/- However, not every house can mount a panel pointing at the Sun at midday on the equinoctial days. The panel is either mounted pointing too high or too low and oriented too much away from the noon position along the North-South direction.
Average of flux through roof slope panel is therefore reduced by a factor of 0.5. The solar energy flux through panel is therefore
1000W/m2*(2/3.14)*0.5
d/- Not everyday is a sunny day. So the average flux on the Panel needs to be reduced for this weather effect.
Average over cloudy and sunny days is
1000W/m2*(2/3.14)*0.5*0.3
e/- Average Solar radiation energy that can be collected daily is
(1000W/m2) *(2/3.14)*0.5*0.3*12
f/-Average daily energy that can be converted to electricity is (assuming 17% of radiation energy can be converted into electricity)
(1000W/m2)*(2/3.14)*0.5*0.3*12*0.17 = 194Wh
g/- Electric Energy produced per year= 194*365 = 70,800Wh = 70.8kWh
h/- Retail Market Value of that daytime electricity generated in a year:
70.8kWh*$0.40/kWh = $28.3
3. Financial return for Solar Panels.
Maintenance and Depreciation cost (assuming 10% of installed value. The Panel is assumed to have a useful life of 20 years and the increases in roof maintenance cost has been included in this estimate)
10%*$300 = $30.
Insurance cost (between 1% and 3% of replacement value) as the Panel may get vandalized, stolen or damaged by rare 5cm hail storms in Melbourne.
(1% to 3%)*$300 = $3 to $9
Possible State levy on electricity from the system (A high possibility, as State Institutions still love building their empires.)
(0 to 50%)×$28.3 = 0 0to $14.1
Cost of the installed panel is at a rock bottom value of $300.
Yearly return on my Investment on Solar Panel on my own roof is:
Electricity – (Maintenance and Depreciation) – Insurance – possible State levy
$28.3 – $30 – $3 -(possibly $6) – (possibly $14.1) = -$4.7 -(possibly $20.1)
That is there is a minimum annual loss of $4.70 with a possible additional loss of $20.1 when or if the Insurers and the State Government decided to gouge my Solar Istallation.
Return on Investment = -4.7/300 – (20.1/300) = -1.6% -(6.7%)
So the return is -1.6% but it can worsen to a heavy loss of -8.3% even when there is no borrowing.
4. Terrible loss on Solar Panels with borrowed money.
In the above financial analysis, the ROI (Return On Investment) has been based on own money.
If financing has been obtained from a bank, the ROI would have to be subtracted by interest paid on borrowed money (currently between 5% and 10%) and would be terrible. However the ROI may become positive if you can obtain Loan with NEGATIVE INTEREST (It is harder to find such loans than to extract kinetic energy from renewable earthquakes!).
5. Governments cannot do any better.
I believe that US$120/m2 is the best value for Solar Panel in 2017. If any reader can find a cheaper price please write a comment so that I can update the ROI calculation.
The installation fee of AUD$150 is believed to be the best as my friend only gave such a low price to help with my prospective experimental installation.
Economy of scale does not work with non-transparent governments. Economy of scale do reduce the cost on packaging, transportation and marketing but CORRUPTION INCREASES EXPONENTIALLY WITH SCALE there.
So if individual cannot make profit, no government can unless:
a/- It can obtain Solar Panels for free (such as asking for war reparations from a rich vanquished nation like Iraq).
b/- It can have cheap Prisoners Labor for installation.
c/- It can collude with either domestic Power Generator Companies to jack up Electricity price or with Foreign Governments or Organizations (such as Green Movements) to create artificial increases in Electricity price. (The figure of 40c/kWh is already a high price, the current (2017) price excluding connection fee for domestic consumption is about 20c/kWh.).
6. Follow the money on Green Projects spent by Governments .
Australian Governments since 2004 have spent national wealth (left by the John Howard Government) on MAD, UNJUSTIFIABLE WASTEFUL plans:
Subsidized (100% subsidization at $2000, under Kevin Rudd’s government) costly conversion of car to dual fuel (petrol plus LPG), installing $2000 system on old, $500 cars which become not economically viable after only few years of usage (the old car was sold for only the value of the dual fuel system).
Subsidized (100% subsidization at $2000, under Kevin Rudd’s government) costly but sloppy glass wool insulation of old houses leading to many house fires caused by in glass wool impeding the ventilation flows of flush mounted, sunken lighting.
Government policy (under PM Kevin Rudd) to encourage costly, but ECONOMICALLY INEFFICIENT, installations of (mostly Chinese) Solar Panels.
“If you buy a solar system today (October 2017), it is subsidized by a federal government scheme worth about $600 per kW installed. That’s around $3,000 off a typical 5kW system, which is usually applied at the point of sale (i.e. any advertised prices you see almost certainly have the rebate already applied).”[4], [5].
The excess energy generated by the installation can be sold to the Grid at (crazily priced) 23c/kWh, More than Generator’s Electricity price of around 9c/kWh (Locked in contracts of 2 years duration were signed under Kevin Rudd’s government). The price paid to those households for their uneconomically produced excess energy must come from the pockets of other electricity users.
(It has now been known that Former PM Kevin Rudd liked to speak Chinese and has some family connections with some people with Chinese descent)
In Queensland, Australia, the State government paid, then supervised the payment of 44c/kWh for exvess energy generated from home solar systems. Essentially all electricity customers are charged high “distribution costs” part of which is then used to pay some Solar Panel owners the rate of 44c/kWh for their solar electricity fed into the grid[13] ! This causes electricity costs for normal households to jump up.
Having built no Fluorescent Lamp Disposal Facilities even after making the whole nation using almost only Fluorescent light sources, Local governments now move on to promote Solar Electricity. Mercury from discarded fluorescent lamp have not been mentioned by any Environmental Protection Agencies or Green Movements. Mercury is now an unmentioned threat lurking in Australian Wastes.
Local governments (Councils, Shires, Counties, …) now don’t concentrate on Waste Collection, Local Road Repairs, Schools, Local Libraries as required but get into the Conservation movements: Maribyrnong Council send out their “chosen” Green advocates to every home (in Maribyrnong Council) to replace 2 globes for the house holders with 2 new energy saving globe. The globes do save energy but the house hold will eventually pay for the replacement of those 2 globes at about $100 (in increases of Council annual rates on each household) while the two globes are worth only $15 and the householders can easily do the jobs themselves.
6. Conclusions.
Solar electricity is currently not matured enough to be economically competitive. The Green actions by Australian Governments are mostly a gravy train with well connected, greedy people already having First Class seats on it. Just follow the money to find out the reasons for their actions.
References.
[1]. Are solar panels worth it, https://www.solarquotes.com.au/issolarworthit.html?utm_source=plista&utm_medium=cpc&utm_campaign=aresolarpanelsworthitpl2
[2]. Gouging-insurance-premiums-and-possible-state-levies-await-solar-panels, survivaltricks.wordpress.com,2017Sept28
[3]. Solar Panel FAQs, https://www.redarc.com.au/solar-faqs#7
[4]. The “Solar Panel Rebate” (that we are not allowed to call a rebate!), Peacock Media Group Pty Ltd, https://www.solarquotes.com.au/panels/rebate/?gclid=EAIaIQobChMI6f6K0sHb1wIVXAQqCh3XTAlfEAAYAiAAEgI6pvD_BwE, accessed 2017 November 20.
[5]. http://yourenergysavings.gov.au/rebates/renewable-power-incentives
[6]. http://www.heraldsun.com.au/news/energy-bills-households-paying-inflated-electricity-and-gas-prices/news-story/4f4c4ea257fddd0c1357546fa11dc470
[7]. https://superforest.blog/2017/10/18/way-to-go-greenies/
Added after 2017 October 20th:[8]. https://us-issues.com/2017/10/19/reported-plunge-in-renewable-costs-prompts-aussie-government-to-pull-subsidies/
[9]. https://wattsupwiththat.com/2017/10/08/reported-plunge-in-renewable-costs-prompts-aussie-government-to-pull-subsidies/
[10]. https://www.energymatters.com.au/renewable-news/wa-solar-tax-em5225/
[11]. https://onestepoffthegrid.com.au/synergy-proposes-sun-tax-on-wa-solar-households/
[12]. https://superforest.blog/2017/11/26/the-big-slide-in-renewable-energy-tells-the-real-story/
[13]. https://www.ozbargain.com.au/node/266933
[14]. http://superforest.blog/2017/12/24/weekly-climate-and-energy-news-roundup-297/
[15]. http://us-issues.com/2017/12/25/trump-to-support-us-solar-manufacturing/
[16]. http://us-issues.com/2017/12/25/on-shutting-the-epa-gravy-train/
Added after 2018 May 13:
[17]. https://superforest.blog/2018/05/14/the-ethanol-gravy-train-rolls-on/
[18]. https://superforest.blog/2018/05/16/a-question-that-gives-pause-if-solar-and-wind-are-so-cheap-why-are-they-making-electricity-so-expensive/
[19]. https://superforest.blog/2018/06/07/china-slashes-solar-subsidies-green-stocks-tumble/
[20]. http://mobile.abc.net.au/news/2017-03-10/energy-retailers-making-millions-off-solar-feed-in-rates/8342254
[21]. https://us-issues.com/2018/07/14/straining-at-gnats-in-antaractica/
POWER WHEN NOT WANTED.
[22]. https://www.smh.com.au/business/the-economy/too-much-of-a-good-thing-solar-power-surge-is-flooding-the-grid-20180606-p4zjs7.html
[23]. https://www.smh.com.au/entertainment/books/stranger-than-fiction-rudds-daughter-picks-it-with-campaign-ruby-20100816-125oh.html
(K. Rudd won the 2007 election to become Australian PM. His daughter Jessica Rudd is married to Hong Kong born Albert Tse, the couple moved to London after election and relocated to Beijing in June 2009, where Tse works for Macquarie Capital.)
High electricity costs and reversal of renewable energy agenda.
[24]. http://mobile.abc.net.au/news/2016-06-09/electricity-disconnection-hotspots-mapped-in-new-modelling/7493876?pfmredir=sm
[25]. https://www.documentcloud.org/documents/2856621-Households-in-the-Dark-report.html
[26]. https://business.financialpost.com/opinion/lawrence-solomon-trudeau-stands-alone-as-canada-and-the-world-abandons-green-energy
[27]. https://news.harvard.edu/gazette/story/2018/10/large-scale-wind-power-has-its-down-side/
[28]. https://superforest.blog/2018/10/05/harvard-wind-power-will-create-significant-warming-of-0-24c-plus-eat-up-5-to-20x-more-land-than-thought/
[28b]. https://papundits.wordpress.com/2017/07/03/monumental-unsustainable-environmental-impacts/
[28c]. https://papundits.wordpress.com/2018/10/31/a-looming-technology-security-minerals-crisis/
[28d]. https://superforest.blog/2019/01/29/epic-fail-of-renewables-causes-texas-town-to-have-1200-per-month-higher-power-bills/
[28e]. https://superforest.blog/2019/01/30/uh-oh-california-solar-and-wind-projects-at-risk-due-to-pge-bankruptcy/
INSURANCE ON GREEN SYSTEM
[29]. https://wattsupwiththat.com/2018/10/21/electri-fried-fusion/
CLIMATE CHANGE SCIENCE
[30]. https://papundits.wordpress.com/2018/10/30/climate-change-australia-abc-preaches-warming-ignores-science/
[31]. https://superforest.blog/2018/10/29/nitrogen-dioxide-sense-and-nonsense/
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