Grid Parity – Sustainability Planning to reduce the Carbon Tax
Grid parity is the point where energy generated by renewable sources can be generated at the same cost or less than fossil fuel sources. There has been much speculation about which particular energy source will reach grid parity first, however in Australia many reports have stated that solar energy has reached this point in certain areas.
A related article by climate spectator highlighted that the unsubsidised cost of a Solar PV module bought for $1.80 translates into a cost of energy of 29c/kWh – which is roughly the price that many households pay for energy during peak demand. Although most businesses pay much less for electricity than this, the price of electricity is set to increase by between 3-9% over the next 25 years.
This translates to an interesting case for savy business owners – whilst the price of electricity is set to keep increasing, the cost of energy from solar (c/kWh) will remain the same over the systems lifetime. Essentially what this boils down to is simple: by installing commercial scale solar system a business can choose to buy electricity at a fixed cost for the next 25 years. This could be particularly critical once the carbon tax is implemented and businesses will have to not only pay for their carbon emissions but also pay increased electricity prices
At the same time, the price of solar has been reducing rapidly over the last decade. First Solar has indicated that its manufacturing cost has fallen in 2009 to 93 cents per watt, down 5% in three months and down 28% in a year. By 2014, it expects to drive down cost per watt to make solar modules to fall to between 52 and 63 cents. The biggest driver of the lower costs is better efficiency.
So when is the best time for a business to practice sustainability planning and act? Although the price of solar will decrease over the coming years, in Australia there is still subsidies available for small-scale solar. These government subsidies were sustainability funding created with the sole purpose of stimulating the Australian market as the price of solar components reduce. In my opinion, by securing your energy costs now you can dramatically insulate your business against the event of major energy price rises – something that will become increasingly important in this age of carbon.
- Green Blog: Solar Installations Rise, but Manufacturing Declines (green.blogs.nytimes.com)