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Good for One is not Always Good for Many

September 11, 2018

 

 

Many jurisdictions are encouraging the installation of residential small-scale solar power systems. The economics for this appear simple - invest in the installation now and, for the next 20+ years, reduce the electricity demand of the household on the electricity grid. Ignoring any government assistance that may be available, the savings in electricity suggest a payback in as little as 4 or 5 years for some electricity buyers. In this manner, a typical installation can save more than $10,000 over its lifetime. This is clearly good for the electricity user, but is it sustainable?

 

In terms of responding to climate change, the scenario still appears to make sense. Every kWh of electricity bought is usually considered to be at least ½kg of Carbon and in much of Australia it is closer double this. A single domestic solar panel can produce over 5,000 kWhs over the expected 25-year life - thus providing a 2.5-5.0t saving of Carbon. Every little bit helps, right? Not quite.

 

Life-cycle Carbon Cost

 

The weakness in the approach taken above is that it is only a snapshot of the life-cycle of the solar panel. A solar panel does not appear on the roof of a house without a carbon cost. No agreed standard for the assessment of this cost exists and there is substantial variation in the data available for considering it. Nevertheless, considering the entire industrial process, the panel will have cost at least 1t of Carbon to manufacture, supply and install. In addition, in disposal, albeit hopefully more than 25 years away, it will cost a further 200+kg of Carbon.

 

Therefore, the panel has a debt of 1.2+t of Carbon to repay, possibly halving any potential benefit. However, before considering the benefit, let's look back at two assumptions in this scenario. Firstly, a solar panel will provide peak power throughout operation and secondly, the Carbon intensity of the offset electricity will remain constant.

 

Solar performance is very installation dependent

 

The output of a solar panel is dependent upon many factors - the amount of hours of sun the installation location receives, how closely the panel is pointed to the mid-arc point of the sun passage on the solar equinox and even the ambient temperature. There are also losses in converting the DC power output to a regulated AC domestic supply, losses due to the inability to use the generated power when it is generated and, for most panel designs, losses due to a shadow across just 10% of the surface shutting off the power generation. The result is that the actual electricity offset by the panel referenced above can be the substantially less 2,000kWh over its lifetime.

 

Is all mains electricity supply Carbon-intensive?

 

The Carbon intensity of electricity is dependent on the method of its generation. Generally, the worst is brown coal and the best is hydroelectric or nuclear (wind and solar usually have a higher intensity than either of the latter sources when considered in life cycle terms). Despite policy stagnation in Australia, there is encouraging change occurring in energy supply here and across the globe. The main effect is to lower the carbon intensity of mains supply electricity over the coming decades. Instead of ½-1kg per kWh many jurisdictions will see carbon intensity drop below 250g per kWh.

 

In terms of considering many real world installations over a 20+ year life neither of the former assumptions hold. Certainly, the benefit can still be a net saving but one sensitive to site specific factors. Our analysis suggests the benefit is rarely more than 1t of Carbon per solar panel even in relatively sunny carbon intense energy markets as Australia. Significantly, even before any further 'greening' of the electricity supply in this coal rich country, there is a negative Carbon balance for installations in Tasmania due to the combination of that state's use of hydroelectric supply and its distance from the equator. Negative Carbon balances can also be found in certain parts of the United States, Japan and even China, as well as all grid connected residences of France, Iceland, and Brazil.

 

Every saving counts and the value of this approach to climate change should not be lost. However, caution is required as there is a significant risk for misplaced investment due to the perceived efficiency improvements and financial return available.

 

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