Stop Subsiding Fossil Fuels & Encourage Solar Power

The Australian-educated founder of Suntech Power Zhengrong Shi says governments were subsidising the price of conventional energy by selling off natural resources — particularly coal, oil and natural gas — too cheaply. He says a tax on carbon is necessary. His company, which has an annual turnover of $US3 billion ($3.2bn), says the higher price of fossil fuel energy would encourage more to make greater use of solar power.

Glenda Korporaal in The Australian (29 September 2010):

CHINA’S solar power billionaire, Zhengrong Shi, has supported the BHP Billiton chief’s call for Australia to introduce a tax on carbon.

In an interview with The Australian yesterday at the Forbes CEO Conference, the Australian-educated founder of Suntech Power said Australian governments were subsidising the price of conventional energy by selling off natural resources — particularly coal, oil and natural gas — too cheaply.

“It (a tax on carbon) is necessary. The government is subsidising conventional energy — fossil fuel energy — enormously,” Mr Shi said. “But people don’t know that. We don’t see it. So an additional tax on top of that is trying to monetise its real cost.”

Mr Shi, whose company has an annual turnover of $US3 billion ($3.2bn), said the higher price of fossil fuel energy would encourage more Australians to make greater use of solar power.

“People will say why do I need to pay additional tax to use conventional energy when I can make a similar investment to put a solar panel on my roof which is sustainable and doing something good.”

Mr Shi predicted the cost of solar energy would eventually reach “grid parity” in Australia as the cost of solar power came down with cheaper manufacturing solar panels and improved technology and as costs for electricity generated by fossil fuels rose. He said solar power in Italy already had already reached grid parity, a trend that would happen increasingly around the developed world. He estimated that this could happen within five years in Australia.

“Why do we need to sell oil to the power companies at $5 a barrel and they sell to other countries at $80 per barrel?

“It is an asset. Why don’t you use the sun?

“If people could see the subsidy for coal or oil or gas that the government provides — if you take that into account it is already very expensive.

“Solar is cheaper.”

Mr Shi said Australia should dramatically increase the market price of its resource assets such as coal, oil and natural gas.

He said people who installed solar-powered systems on their rooftops could sign a power purchase agreement at a fixed 15c per kilowatt hour cost which would be stable for next 20 or 30 years.

But he said the cost of fossil fuel power would continue to rise.

“Do you think a conventional power electricity company would be willing to sign a long-term agreement with you? They don’t know the cost themselves? Today their price may be cheaper than solar power but it will eventually become more expensive.

“There will be a turning point where grid parity is reached, and going forward from that point, solar will be cheaper than fossil fuel based energy.”

Mr Shi said Australia’s policy of having 20 per cent of its electricity supplied by renewable energy by 2020 was a “good goal”.

But Mr Shi said Australia needed to accelerate its shift to solar power if it was to reach this goal.

He said Suntech currently had about 30 per cent of the market for solar panels in Australia which generated revenues of about $50 million a year.

He said Suntech had benefitted from policies by Australian governments to encourage the use of solar power.

“They have made the economics work and really pushed the market growth.”

He said China’s government was serious about energy and environmental issues and encouraging greater use of solar power.

He said the country planned to introduce a target to have 20 per cent of its energy use supplied by renewable energy by 2020. Mr Shi said China planned to make a substantial new investment in solar power technology.

He said solar energy was already beginning to leapfrog conventional electricity in poorer countries such as Indonesia and India where there was little established electricity infrastructure

Mr Shi predicted China’s solar power market would boom as the cost of manufacturing the panels continued to come down.

Suntech has research operations in Australia with links to the University of NSW in Sydney and Swinburne University in Melbourne.

It bought a research company called CSG Solar 18 months ago which had operations in Sydney.

He said Australia was a major research and development focus for the company, which spent $3 million a year on R&D here.

Source: www.theaustralian.com.au