Advance for Solar Cells, But Carbon Price Needed To Boost Investment
The message is out that what investors need most of all is a carbon price, to give a clear market signal of the viability of renewable energy, and without it, investment in low-CO2-emissions power sources does not make sense. Meanwhile, China’s solar billionaire Zhengrong Shi agreed to head a new Victoria-Suntech Advanced Solar Facility in Melbourne to revolutionise solar cell technology.
Jennifer Foreshew in The Australian (1 June 2010):
A $12 MILLION project aimed at delivering next-generation solar cell technology was officially launched in Melbourne.
The Victoria-Suntech Advanced Solar Facility (VSASF) is a collaborative venture between Melbourne’s Swinburne University of Technology and Suntech Power Holdings in China, one of the world’s leading producers of solar panels.
The facility, expected to be staffed by about 10 researchers, has been partially funded by a $3m grant under the Victorian Science Agenda Investment Fund.
Current solar cell efficiency is far below what is expected of it in the future, VSASF director Min Gu said. The aim of industry is to try to double the solar cell efficiency and reduce costs.
The VSASF would also be headed by Zhengrong Shi, Suntech’s chairman and chief executive, as well as a fellow of the Australian Academy of Technological Sciences and Engineering.
The collaboration would provide a platform for the partners to commercialise Nanoplas, a revolutionary nanoplasmonic solar cell technology being developed at Swinburne.
The Nanoplas technology would allow for the efficient collection of solar energy from a wider colour spectrum than cells currently being developed.
This could make them twice as efficient as the current generation of cells, making them significantly less costly to produce and use.
“As soon as we prove the concept, Suntech will work with the Victorian government to invest money to produce a plant in Victoria,” said Professor Gu, who is also director of the Swinburne Centre for Micro-Photonics.
He said the technology was expected to be commercialised in about three to five years.
It would also complement Suntech’s industry-leading Pluto solar cell technology.
“We are pretty confident that we should be able to apply this Nanoplas technology into their current product,” Professor Gu said. “On the other hand, our concept can also produce a totally independent solar cell, but that will probably take longer.”
Professor Gu said the project would compete with a similar project that had recently been announced in Europe.
“So there is competition now on which one is going first,” he said.
Professor Gu said the team was in a unique position to research, develop and commercialise the innovative solar cell technology.
“So we can reduce the time of development, the cost of development and then transfer the knowledge to the production.”
Carbon price is missing impetus
James Dunn in The Australian (27 May 2010):
BATTERED by the global financial crisis, the shelving of Australia’s emissions trading scheme, the Carbon Pollution Reduction Scheme (CPRS) and, for some, the government’s new Resources Super Profits Tax (RSPT), it is a shaping as a bleak winter for Australia’s renewable energy companies.
What they want most of all is a carbon price, to give a clear market signal of the viability of renewable energy. Without it, investment in low-CO2-emissions power sources does not make sense. As Ross Paul, chief investment officer at specialist renewable energy and cleantech investment firm Bakers Investment Group, puts it, renewable energy investors have to “stump up both faith and cash”.
“Without a carbon price, renewable energy is still considered a bit on the speculative side”, says Paul.
“Not having a carbon price makes them a little less attractive.”
Regulatory support is a big driver of renewable energy and cleantech investment, says Paul. “The RSPT has scared off investors, particularly if resources are part of the supply chain. With all that’s happening in Europe, post-GFC it is another piece of bad news that investors didn’t need.
“The question will be the degree to which government will continue — either at state or federal level — to try to meet on a voluntary basis or even a legislative basis, any renewable targets,” he says.
In the Budget delivered in May, the federal Government recommitted to its mandatory renewable energy target (MRET), which seeks to ensure that 20 per cent of Australia’s energy consumption by 2020 is derived from renewable sources. Combined with the 15,000 gigawatt hours (GWh) of renewable energy already available, the MRET aims for Australia to produce 60,000 GWh of energy from renewable sources by 2020.
The Government also used money saved by the shift of the CPRS to the backburner to announce a new fund, the $652 million Renewable Energy Future Fund, to develop renewable energy. The fund will be used to support renewable energy projects such as wind and solar power, as well as to encourage households to reduce their energy use.
Local renewable energy companies have to use the Renewable Energy Certificates (RECs) market as the closest proxy for a carbon price. The REC market requiresenergy retailers such as AGL Energy and Origin Energy to buy enough RECs to ensure they meet the federal government’s 20 per cent target. Each REC represents one megawatt-hour of electricity: a wind farm, for example, will generate RECs over the life of the project.
But complicating the REC market is the fact that to encourage the installation of rooftop solar power, the federal Government gave households five RECs upfront for every MWh of electricity they generate. In 2009, the REC market was over-supplied — mainly from this source — with 15 million RECs generated compared with 8.1 MWh of RECs required.
From $50 in May 2009, the spot REC price fell under $30 by October 2009, but after a review of the REC market by the Government in November 2009, the price has recovered to $45.
A low REC price works against the large-scale renewable energy producers — for example, wind projects — which rely on the REC price to be high enough to compensate for the higher cost of generating renewable energy. If the price of the RECs doesn’t rise, investment in large-scale renewable energy projects could be jeopardised.
Andy Gracey, portfolio manager at Australian Ethical Investments, says the comeback in the REC price has been welcome, but there is a long way to go. “If you’re a renewable energy producer, say a wind power producer, for one megawatt hour of wind production, you get the ‘black’ price — the price that the grid in a particular state will pay for buying your electricity — plus an additional $45 credit for that megawatt hour, that is, the REC. The ‘black plus green’ return — the total return per hour that the wind producers are getting — is up at about $100 per MWh.
“The problem is that on a global scale, Australia has a relatively low wholesale power price, at about $40 per MWh. I think wind really needs a price of $120 a megawatt hour to make some kind of sense from an investment point of view — to make economic returns on wind,” says Gracey.
He says the REC price has actually recovered from that flooding of the markets. “That side of the market is good: we’d like it to improve more, but overall, we need it to be higher. The feeling was that as we progressed down this regime, the value of the RECs would go up.
“On the one hand, the cost of buying a wind turbine is falling: so from that perspective, the economics of renewables is getting better. But at the moment, the ‘black plus green’ return is not enough, and I don’t think you’re going to see a lot of new wind projects at these levels.
“The Government definitely wants to encourage this, but in terms of what happened at Copenhagen, and the subsequent decision to delay the ETS, they are definitely setbacks,” says Gracey.
In another Budget announcement, the Government announced the eight projects that will be invited to participate in the second stage of assessment for the first round one of the $1.5 billion Solar Flagships Program. The two winners will be announced in the first half of 2011.
Gracey says Infigen Energy, Australia’s largest wind-energy developer, surprised the stock market by being named on the Solar Flagships Program shortlist. Infigen is teaming with US company Suntech Power, the world’s leading producer of crystalline silicon solar PV (photo-voltaic) modules, to generate up to 195MW of solar PV power generation capacity at three Australian sites.
In April, Infigen scrapped an attempt to sell its US wind farms, after a much-anticipated auction of the assets failed to entice attractive bids.
The market had hoped the wind farms would fetch about $1.5 billion, as it is the biggest independent wind portfolio in the US, but a weak market for renewable energy forced the abandonment of the sale.
“A couple of months ago I would have described Infigen as the Australian market’s stand-out renewables stock, but then it failed to sell the US windfarms,” says Gracey.
“It’s Australia’s biggest ‘pure’ renewables play, but it’s fair to say that the market is scratching its head about a wind play going into solar.’
“Infigen has bounced 11 per cent since the Budget . . .
“At least Infigen is saying ‘we know wind, we understand the intermittency of renewable energy, the volatility of not supplying electricity constantly to the grid.’
“They obviously see solar PV as an opportunity, they’ve got the experience, and if the government is footing a fair chunk of the capital bill, why not?” Gracey says.