Subsidies in Frame as Silex Ends Local Solar Cell Manufacture

By Rich Bowden

Solar industry news in NSW this week has been dominated by the announcement by Silex Solar, the last company to manufacture solar cells in this country, that it will discontinue the production of locally made cells. (Note the solar cells are the black, round, saucer sized, plates of silicon, which make up solar panels).

In an announcement earlier this week, the company said while it would continue to manufacture solar panels at its Homebush, Sydney plant, it would do so with solar cells from an as yet unnamed overseas country (read China).

The decision is expected to cost around 30 jobs and has been taken as a sign of a marked downturn in the state’s solar industry.

Interestingly, the Silex head pointed to a growing lack of government support as one of the reasons for the decision. Mr Michael Goldsworthy explained that his company could not compete with cheap overseas imports of solar panels (again read China ) claiming that the cost of a solar panel had halved in two years.

While this has been excellent news for anyone considering purchasing solar panels, (pause for muted cheers from SQ readers) the Silex head hinted that the prevailing lack of Australian government backing for renewable energy had meant his company is now unable to compete effectively in its own backyard.

“Right at the time when the federal government is claiming they have got all sorts of benefits for renewables we don’t see a cent,” he said. “We don’t want government handouts; we want a level playing field,” he was quoted as saying by The Australian.

But the question should be asked; do our solar manufacturers need to rely to our fickle governments to supply ever-dwindling handouts? Surely automation and innovation could stand our nascent solar industry in good stead? (Why isn’t anyone producing a solar panel with integrated mounting, microinverter and WIFI yet?)

One argument in favour of a solar industry standing on its own two feet (from a U.S. perspective) is provided by the National Renewable Energy Laboratory’s Michael Woodhouse. He explains in this recent Yale article that if solar energy is considered on a US regional rather than a national level, it may already have achieved close to grid parity — defined as the tipping point where the means of generating solar power becomes as cheap as fossil fuel-generated energy.

Woodhouse, refreshingly, points to a solar future without the need for reliance on government subsidies.

“When people say PV will never compete without subsidies, that is like fingernails on a chalkboard to me,” he said. “That’s a really incomplete picture.”

According to the article:

“The key, he said, is to look at the cost of electricity on a regional and state level rather than overall. Woodhouse has conducted analyses of several specific locales. For example, in Santa Barbara, California, he said that right now, when the 30 percent federal tax credit for solar is included, residential solar power costs about 13.8 cents per kilowatt-hour. The average price of electricity across the state, meanwhile – meaning, from all sources – is 15.1 cents per kilowatt-hour. In other words, solar power might already have achieved “grid parity” in Santa Barbara.”

So the US has cheaper grid electricity than us by a long way (I pay 25c per kWh) yet some states’ residents can still buy solar safe in the knowledge that it is the cheapest electricity available due to the long term incentive in terms of Federal tax credits.

Andrew Blakers, director of the Australian National University’s Centre For Sustainable Energy Systems, believes costs are being constantly driven down through the mass production of solar technology and with a very modest ,long term subsidy, solar power can be transitioned to becoming the cheapest form of energy available in Australia:

“Sustained expansion is rapidly driving down costs – they have halved since 2007. Further large cost reductions are in train, through both technical innovation and mass-production learning curves,” he said in this article written for The Conversation.

“It’s possible to estimate the cost of subsidising and accelerating solar technology to provide most of the world’s electricity. We add up the declining price difference year by year between solar and wholesale fossil energy, until it reaches zero. It would cost about a trillion dollars, spread over the next 20 years. That works out at $1 per week for each of the billion citizens of rich countries like Australia,” Blakers added.

Note that the wholesale price of coal power is about 8c per kWh – the 25c you and I pay is the retail price and includes distribution costs and profit margins. If you believe that because solar is generated at source at peak times and shouldn’t have all the network costs tacked on then the unsubsidised price parity of solar and coal is probably less than 4-5 years away.

But can subsidy-free wholesale solar power be cheaper than coal? Perhaps it’s possible. Have your say below or join in the discussion at our Facebook Page.