John Gardner, US Secretary of Health, Education and Welfare joined Lyndon Johnson’s cabinet in 1965 to help create a ‘Great Society’ to end poverty, promote equality, improve education, rejuvenate cities and protect the environment. Of these goals he said: “What we have before us are some breathtaking opportunities disguised as insoluble problems”. In a few short years the insoluble problems transformed into: the Civil Rights Act and Medicare to promote equality; the Elementary and Secondary Education Act to improve education; and the formation of the Corporation for Public Broadcasting to inform the people.
Breathtaking opportunities are driven by vision and inspiration rather than efficient allocation of resources. Any cost-benefit analysis would have failed to quantify the benefits of the Civil Rights Act, taking on Nazi Germany, space exploration, the formation of the United Nations, and the development of the motor vehicle. Analysing cost is an important component in decision making but it should not preclude the opportunity for transformation.
The breathtaking opportunity that we face today is the transformation of global energy use from fossil fuels to renewables; a journey to environmental sustainability. The insoluble problem that we think we face is cost.
So what is the state of the technological transformation required to source our energy from the sun? Photovoltaic (PV) technology (which converts sunlight to electricity using semi-conductors) currently being rolled out in Germany and China originated in Australia but due to a lack of support for development and deployment, those countries were able to acquire the Intellectual Property (IP) and build industry to deploy the technology.
The German PV industry is now well-established and has been instrumental in the installation of 25 gigawatts of power, the creation of 130,000 jobs, the despatch of 18.5 terawatt hours of energy in 2011, and earning Euro 10 billion of income in 2010. Suntech, the Chinese PV manufacturer, started by Dr Zhengrong Shi who studied at UNSW, earned $3.13 billion and employed more than 20,000 people in 2011.
By comparison, Australia’s entire booming mining industry employs 205,000 and earned $98 billion in 2011($44 billion for coal, oil and gas). It would seem that Australian quarry mentality is determined to ignore the potential of its IP in favour of flogging off its mineral wealth.
Large-scale PV deployment has reduced the cost of electricity from PV from $0.37 in 2007 to $0.15/kilowatt hour (kWh) today, attributable to generous Feed-in-Tariffs around the world and competition induced by China’s investment in PV production. Efficiency of energy conversion is around 15% with research indicating that 40% is achievable using multiple layers of silicon (Compare that to the 24% efficiency in converting the energy in brown coal to electricity in Australia).
The current cost of Concentrated Solar Power (CSP), with storage, from BrightSource and SolarReserve (which use mirrors to concentrate sunlight to heat a fluid which generates steam to drive a turbine) is estimated at between 12 and 14c/kWh according to Green Tech Media Research. The US Department of Energy (DoE) has a target for cost of electricity from CSP of 6c/kWh. To facilitate this trip down the cost curve, the US DoE has forged the Sunshot Initiative which is researching how to: reduce the cost of heliostats (mirrors) from $200/m2 to $74/m2 (this is important since heliostats contribute around 50% of the total cost of CSP); increase the temperature of the receiver to 1000 degrees and still contain heat; and improve conversion efficiency of the power block to 50% or more with dry cooling. These should not be paralysing, insoluble problems.
Whilst large-scale deployment of PV is reducing its cost, it is still more expensive than CSP. CSP (with storage) has another substantial advantage over PV, in that it can dispatch energy as required, avoiding the intermittency and scheduling problems associated with PV (and wind). The current level of PV deployment is more a factor of modularity than cost effectiveness; individuals can afford an expensive and compact rooftop PV unit but not a large-scale thermal power plant with acres of heliostats, despite its cost benefits over PV. What this shows is that there is a genuine desire for solar power by the proletariat, but a lack of vision from the central planners (be they politicians in control of regulation or investors in control of finance); a shortcoming exacerbated by indecision blamed on prohibitive cost.
And yes, both solar power options currently generate electricity more expensively than that from coal or gas whilst we fail to count the costs of their environmental footprint. However, a study last year found that “For any [coal] plant design, once efficiency improvements have been exhausted, the price of coal will set a floor on total costs.” We may have seen substantial efficiency gains in the last 100 years, but we are still prepared to accept considerable waste in the transformation of energy. Australian energy consumption in 2009 shows energy consumed as: 23% by industry, 2% by agriculture, 8% by households, 5% by commerce, 30% of all energy consumed is wasted in generating electricity; 10% is used to extract and process fuels; and 22% is used in transport (although it is estimated that of that 20% is used to combat the inertia of vehicles). Every year, more energy is wasted than used.
The breathtaking opportunity that we stand to gain from being able to convert energy from the sun into electricity is that solar power has no fuel price setting a floor on cost. Irrespective of geopolitical tensions and reserve depletion, the cost of solar power can only get cheaper. This view is lost when investment decisions are justified solely on current levelised costs and carbon prices.
Investing in CSP to meet increased demand is not going to decimate the economy as alarmists would have us believe, it is simply going to pave the way to a future where our energy needs could be sourced from renewable sources. The largest barrier to solar power is not its level of technological advancement, or efficiency, or the existence or size of a carbon price, but the lack of vision from the central planners that dictate an energy policy stuck in a previous century.
Comments welcome below.