Getting More Solar into the Mix - Disruptive Technology or Just Plain Disruptive?

Date Added: 1 Apr 2014 from BusinessNZ

By Rob Whitney

The recent visit by the Secretary-General of the World Energy Council, Dr. Christoph Frei has shone new light on recent announcements about the greater use of solar power in New Zealand.

A number of lessons can be drawn from the work of the World Energy Council (WEC) most notably the ‘Energy Trilemma’– the challenge of creating policies that simultaneously deliver secure, affordable and clean energy.

The WEC provides an independent ranking of countries’ energy and climate policies. This includes a scoring metric which enables policymakers to identify trade-offs that exist with the energy trilemma in their country. New Zealand scores an extremely creditable 8th out of 129 countries. We are seen by the WEC as one of the global ‘leaders of the pack’.

Our high ranking is largely thanks to developing markets that have delivered a high exposure to renewable electricity, good access to reliable energy supplies, and reasonable environmental outcomes. But constant improvement is required.

In the context of the trilemma, new technologies need to be facilitated. However, emphasising one technology-type above others can prevent the development of balanced, sustainable energy systems.

WEC also tells us that in the absence of a balanced, sustainable energy system, there is no foundation for a robust and durable climate change policy.

As far as considering alternative future scenarios goes, WEC anticipates large increases in solar energy by 2050. However, this will mean making some hard choices.

WEC’s energy scenarios build on the extended network of its 93 member committees and 3000 member organisations. Out of this, the WEC built two scenarios - the consumer-driven, market‑led Jazz scenario and the voter-driven, state-led Symphony scenario.

The Jazz energy scenario has a focus on achieving energy affordability and accessibility through economic growth. In the Symphony scenario, the driving forces for technology choices will be national energy and environmental strategies.

In these scenarios electricity generation from renewable sources will increase around four to five times by 2050 in comparison to 2010. This is strongest in the Symphony scenario, where solar technologies will take off, promoted by feed-in-tariffs for electricity, production subsidies and net pricing in Europe, and tumbling solar technology prices.

Solar has the highest increase of the renewable electricity sources, and its growth to 16% of electricity generation is rapid and on course to exceed both hydro and coal not long after 2050.

While neither scenario achieves the UN goals for energy access and climate change, Jazz performs better on energy affordability and accessibility, while Symphony is better on environmental sustainability.

These scenarios are not intended as policy blueprints. Neither offers a clear policy prescription for New Zealand and whether more solar is desirable. But what the scenarios do is help us better understand the consequences of policy choices and to test them against progress toward a balanced, sustainable energy system.

Subsidised solar in New Zealand will displace two unsubsidised sources of power generation &nash; geothermal and wind. These are currently the most economic investment options for electricity. Solar requires the use of more expensive thermal peaking plant to back it up when there is no sun. My Italian WEC colleagues tell me that their experience of the subsidised uptake of solar has resulted in their night time electricity becoming more expensive than during the day. Annual subsidies for photovoltaic energy in Italy surpassed 6 billion euros last year.

It is unlikely to address energy equity. Solar incentives are typically taken up by middle class home owners, who end up being subsidised by other power consumers. In Germany renewable electricity subsidies are costing every man woman and child around $400 per year raising concerns about the international competitiveness of German industry.

As a technology taker, our market is too small for our subsidies to help bring down the world price of solar. Instead they will encourage the premature uptake of solar power technology at a time when its performance is still improving and its cost is falling rapidly.

The WEC energy trilemma and scenarios highlight the need for a clear objective and the need to understand the complex trade-offs involved. Decisions to disrupt a functioning market should not be made in their absence.

Dr Frei, during his recent New Zealand visit, agrees. New Zealand, he said, should be careful about making hasty changes to what appears to be a “well-oiled machine.” In other words, if it ain’t seriously broken, don’t use a sledge hammer to fix it.

Dr Rob Whitney is Chair of the BusinessNZ Energy Council and Chaired the World Energy Council Energy Scenarios to 2050 programme. The Report from this programme was launched at the World Energy Congress in Korea last October. Full details on the study can be found here

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