Rooftop Solar Power Reaches Grid Parity With Coal Fired Power – Well, Not Really

Posted on Fri 08/19/2011 by


Coming soon to a rooftop near you. Image Braemac Corp.

Yesterday, a fascinating article was posted in one of the major Australian media outlets.

The article said that in some places of the State of NSW, (New South Wales) Rooftop Solar panels were providing power fed back to the grids that was the same price as for coal fired power.

This is the link to that article in the Sydney Morning Herald.

The claim is so far off the mark that it’s almost incomprehensible why such a claim would be made.

The average person with panels on their roof would read this article and be happy that they have made the right decision, but the claim is not correct.

Again, something like this is complex, so that average person would not have the understanding as to the truth of the matter, so it requires some explaining as to why it is in fact not true that those panels on the roof are supplying power to the residence that is in fact the same cost as coal fired power.

Rooftop solar panels generate electrical power that is then consumed in a residential application to offset the power supplied to the residence from the grid. The generated power is DC, so part of the system is an Inverter which then converts that DC into the AC power that is the same as that supplied by the grid for all areas of consumption, whatever power is in use for that Country, and in Australia that is 240 Volts at 50 Hertz. (Cycles per second) Any excess power not being used by the residence is then fed back to the grid to add to the total power available at the grid for all other consumers. It sounds like a win win for everyone really, but just how much of that power is being generated, how much is being consumed by the residence, and how much is then being fed back to the grid.

The average residence consumes about 20KWH of electricity each 24 hour period. Most of that consumption is in the evening from around 4PM until 11PM, the major consumption time when families arrive home, and do the household work, prepare the evening meal, do the clothes washing, light their homes, and watch TV, with the cooler on in Summer, and the heater on in the Winter. There is also a 2 hour period during the early morning when residents wake and prepare for the day when residential consumption also peaks.

These two large consumption periods account for two thirds of all residential power consumption, and in the main, are before the Sun reaches its peak intensity, and then after the Sun has set, so taking two thirds of that power from the overall total, the power consumed by the residence during the period when the Sun is at its peak, that residence consumes around 6KWH of power during that daylight period.

There are varying sizes of rooftop solar installations, and, quite obviously, the one most in use is the cheapest one to install, which is around the 1.5KW mark. What needs to be kept in mind here is that the panel does not generate its maximum as soon as the Sun hits it. It takes time to build up to its maximum rated power, and then as the afternoon sees the Sun sinking, that power level falls away again. This is provided it is a bright Sunny day, as any cloud cover sees those panels ability to generate power fall away, and to fall away quite dramatically. Just one cloud flitting across the face of the Sun sees that power fall away to less than one third, and then take time to build back up to power again, so constant cloud cover could see the panel generating lass than 10% of its maximum rating. The same applies also if the panel is not kept clean, and here I mean pristinely clean as any dust covering also sees the panel’s ability to generate power fall away as well. This applies for the Summer months as in the Winter, there are even less daylight hours, hence less generating power capacity.

That being the case, and taken over a whole year, the panels have an average generating capacity of around 15 to 20% of their maximum rating, and that’s a conservative percentage if anything a little on the high side. The theoretical maximum is 38%, but very few panel systems ever achieve this.

That 15 to 20% of the total generating capacity, now in place for the most popular system, that 1.5KW system, sees that panel generating around 3 to 4 KWH of power each day.

Compare that to the average power being consumed by a residence of around that 6KWH during those daylight hours when the panel is actually generating power, and you see that even with that 1.5KW rooftop panel system, that residence is still a net consumer of power from the grid during the day, and is also a net consumer from the grid for the rest of the day before and after the Sun sets.

The rationale here is that there is a saving on that residence’s power bill for the power generated by the system, hence that amount of power not being consumed from the grid. That saving amounts to an average of around 15% a year. That being the case, then the system would effectively ‘pay for itself’ over a period of time. Keep in mind here that the installation of that system is subsidised by the Government, as they have to have some means of making them attractive, otherwise that pay back period would be substantially longer, hence they would not ‘seem’ attractive at all.

As I mentioned, these small systems are only providing power that the residence itself consumes during the day, and because of that, no power whatsoever is fed back to the grid.

That can only be achieved with a much larger system necessitating many panels on the roof.

To actually have power to feed back to the grid, a residence would need to have a larger system in place, and with that comes a much larger price tag, again subsidised (sometimes as high as 50/50) at the installation time by Governments to make them attractive.

Then, to make them even more attractive, Governments then subsidise the power that is fed back to the grid. This subsidy is between two and three times what the residence actually pays for the power it consumes from the grid.

Importantly here, what needs to be remembered is that this is based upon the retail cost of the electricity, which is around 20 cents per KWH, so those feed in tariffs range from 40 to 60 cents per KWH. The site at this link details just some State’s feed in tariff amounts.

What this in effect does is to make the pay back period for the cost of those panels shorter, otherwise, if there were no installation subsidy, and no feed in tariff subsidy, then these systems would be so expensive that they would just not sell, because the pay back time would be longer than the life of the panels themselves.

Keep in mind also that any system is just producing power during daylight hours, so every residence with these systems is still a net consumer of power from the grid.

In fact, these systems are designed not to be electrical power consumption neutral, but only revenue neutral.

If a residence does have a system that can effectively generate the average household consumption of that 20KWH per day, even that residence is still a net consumer of power from the grid, as two thirds of their power consumption is from the grid at times when their system is not generating power. They may think that it is power consumption neutral, because they are generating what they use during the day, but the grid is not a personal battery where you take back the power your system generated during the day, and in any case, that residence is being paid for the excess power they generate and that is (supposedly) being used by other consumers.

So now we see that any rooftop solar system is only revenue neutral, let’s then go back to the article at the top of the Post where it was claimed that rooftop solar has reached cost parity with coal fired power in some places.

This comment is completely deceptive on many fronts.

The claim is that, at 28 cents per KWH, it has in fact reached grid cost parity with coal fired power.

Where this claim deceives is that the 28 cents per KWH quoted is in fact the retail cost of electricity in that area, and for all you other Australians reading this, take out your most recent power bill and look at that retail cost for the electricity you are consuming. It is around an average of 20 cents per KWH. What this shows is in those Country areas paying that 28 cents per KWH, then all of us are in fact being subsidised by those people paying that 28 cents per KWH, another example of how people in the rural and regional areas have to pay more for everything. I suppose that’s understandable in a way, because after all, that electricity has to be trucked out there from where it’s being generated so the cost of all those trucks delivering power to the consumers out there adds to the cost, eh! (Tut tut, sarc off now Tony.)

However, the main thing to look at here is that where the price of 28 cents per KWH was quoted, that is the retail cost of electricity, the overall cost for the power provided by the provider.

That provider buys his power from the operator of the power plants connected to the grid in that area, who sells that electricity to the grid, hence to the provider at the wholesale rate.

That wholesale cost of the electricity provided by most coal fired plant operators is around 3 cents per KWH.

So now it becomes plainly obvious that the quoted parity price of 28 cents per KWH is nowhere near what the provider buys his power from the coal fired plant operator of 3 cents per KWH.

In fact it’s nowhere near parity, actually 9 times more expensive.

Also worthy of note here is that the provider, who is selling that electricity to you the consumer at retail would try at every time to purchase that power at the cheapest available rate, and at that 3 cents per KWH, you tell me where that provider will be buying the bulk of his power from, when the rooftop power is in nearly every case more expensive at wholesale than what he can sell it for at retail, even without those subsidies for feed in tariff in place.

Also noteworthy is that the price you pay as a residential consumer is at ‘top whack’, that 20 cents per KWH, because power in the other two sectors of consumption, the Commerce and Industrial sectors are charged considerably less than that 20 cents per KWH, usually in the form of locked in cost contracts.

Again where this price parity claim falls over is that this is the recent price where, in some places those feed in tariffs have been removed. Why they have been removed is because it has become too expensive for Government’s to keep paying those high feed in tariffs.

Go again to the link provided for those feed in tariffs, and look at the next column, the one that states how long the original tariff will be in place for.

See how some of those contracts are in place until 2028, a further 17 years away, and others range from 10 tears to 15 years.

Note now how much those feed in tariffs are, one as high as 60 cents. So not only is rooftop solar not at parity, but in some cases is 15 to 20 times the price of coal fired power.

So, then just how much power is being fed back to the grid in the State of NSW?

The same article quoting the parity story says that soon, there will be 371MW of rooftop solar power in that State.

This places it in the vicinity of a small/medium power plant, but again, the power returned to the grid is smaller than that provided by that equivalent power plant, so let’s then do the Math for how much power is in fact returned to the grid.

As I mentioned above with any system less than 5KW, then almost no power is returned to the grids across the whole State.

A vast percentage of those rooftop solar installations are of the 1.5KW size, and barely 5% of them are larger than that 5KW size.

That total theoretical power generated from that 371MW at the 20% (median percentage, and even at that well on the high side as the real average would be closer to 15% year round) amounts to around 650GWH (GigaWattHours).

As barely 5% of systems are large enough to actually feed power back to the grid, 5% of that 650GWH now comes in at 32GWH.

As I also mentioned above the residence itself consumes part of that power, so now the power fed back could (conservatively) be only 20% when extrapolated out over the differing sized installations greater than that 5KW.

So, now we see that the power actually fed back to the grid comes in at only 6.5GWH.

This is spread across the whole of the State.

For a direct comparison, let’s then look at a large scale coal fired power plant, and I often use the Bayswater plant as a reference in cases similar to this.

Bayswater produces that same 6.5GWH of power in, and wait for this ….. three and a half hours.

Sort of gives some perspective on it eh!

However, let’s be fair here.

That total power being generated is in fact power that is not being consumed from the grid.

So, that amount of total power that is generated comes in at that 650GWH, which now may actually seem quite substantial. That amount of power is however, spread across the whole State of NSW, so in effect a number of grids.

That amount of power available as power at the grids is so tiny as to not even be recognised, and in any way, pity help the grid power provider who relies on that rooftop solar as part of the mix of all power at the grid.

Incidentally, that amount of power is generated for consumption by Bayswater in 12 days.

As it is, with that tiny amount of power being returned to the grid from rooftop solar power, all those other plants supplying the grids would not even roll back by the tiniest amount to take that power into account, so any savings, so any estimated savings in the emissions of CO2 would be a paper calculation only, and not in fact ever be realised.

Note also, at that same ‘parity’ article where the person making the statement said that placing a Tax on those CO2 emissions would bring it even closer to parity.

That CO2 Tax will increase the wholesale price of electricity by around 2 cents per KWH, passed directly down to you as consumers.

Even then that parity claim is nowhere near realisation, as the feed in tariff will still be eight to twelve times higher than for coal fired power.

So, the person making these claims is being entirely disingenuous. He bases his claim on rooftop solar power wholly subsidised at the front end installation, and then for the feed in periods, and then uses the retail cost as a comparison.

I’m just wondering now how many of have taken out your most recent power bill and looked at that retail cost of 20 cents per KWH, and are wondering at that coal fired power wholesale cost of 3 cents per KWH.

And lastly, here’s one for all you smug owners of rooftop solar panels, thinking you are doing something for the sake of the environment. How’s that smile on your face going now, when you realise that every one of the rest of us who don’t have those rooftop panels are the ones who are paying you to actually be able to afford those rooftop panels.

What I want to see now is how many rooftop installations of the larger size are actually being installed, now that the feed in tariff is lowered to retail price without those huge feed in tariffs in place.

Incidentally, for those of you with those large systems (and keep in mind, you are still net consumers of power from the grid) who were lucky enough to be locked into a long term feed in tariff, I hope you are happy in the house you live in, because you can’t take it with you if you do decide to move, and that tariff is structured so that it pays for itself over the period of time when those panels generate power at their optimum amount, because the panels only have a life span of 20 to 25 years, provided they are kept pristine that is, washed and polished once a week.

As all of you can now plainly see, rooftop solar power is really not all the hype makes it out to be.

Also, see how it’s more complex than him saying, ‘ Yes we have cost parity’, and then me saying, ‘Well, no. You don’t.’