Ross's essay is a useful summary of the "average punter's" view of renewable energy policy. I offer some alternative perceptions. (I'm not a solar nay-sayer)

Photovoltaics (PVs) are still expensive relative to carbon-based, wind-based or nuclear-based electricity- at any scale. Even large-scale systems still cost at least 25-50 cents/kwh, before subsidies. Prices are declining, due to economies of scale of production.

To get to competitive prices, demand has to be at the tens of gigawatt (GW) level- Australia has a total electricity generating capacity of about 50 GW. It would take one million systems of the size that Ross has analysed to make one GW, t a cost about $13 billion. As the Government has allocated about $100 million to this program, it is obvious that the domestic demand for PVs in Australia is not going to change the price or make a significant dent in the coal-based electricity demand.

Should the Government increase the subsidy and allocate more funds to the program? I would argue not. There are four basic reasons for subsidies, based on market failure grounds: R&D (which industry invariably under-funds), scaling-up new products to assist local production, special needs (like remote communities),and security. The early uses of PVs were for the latter two, which served to demonstrate that the technology was viable.

Which leaves the second reason for subsidy. As we have no PV industry to speak of, the subsidies are providing a minor stimulus to overseas manufacturers, and provide a few local jobs for system installers. Germany has been into PVs for two reasons- security (against capricious Russian gas suppliers) and to build up its export manufacturing base. China is aiming at both exports and local consumption on a huge scale.

So where does this leave Australia? We have missed the boat on manufacturing. Remote communities are important, but not economically significant.

We would be better off putting our money into energy conservation measures, and waiting for the Chinese and German PVs to reach genuinely competitive prices- and hope that we have something to export to pay for them.

Installing solar PV panels - the figures don’t add up, BUT…
By Ross Buncle –
I’m not surprised by the figures quoted but more important, in our quest for CO2 reduction, is the energy content of making the panels to how long the solar energy takes for the panels to become energy neutral. Money unfortunately has little connection with the physical world it therefore lead us astray.

Thanks for this article. I've been thinking seriously about installing PV panels at my home but hadn't got to crunching the numbers. Now I know where I stand. With WA electricity costs set to rise I had been thinking that installing solar would be a good investment, but this is clearly not the case.

I spent $20k on a circa 2kw system in 2005 in cloudy Tasmania. I got $4k back and the export tariff is 16.5c per kwh. My electricity bill is currently in credit. The secret is minimal hot water use, microwave and woodfired cooking and in my case woodfired winter heating due to free local firewood. Passive cooling and generally mild summers make air conditioning unnecessary.

I disagree with feed-in-tariffs as I think they are a tax on the poor which drives up electricity prices across the board while favouring the already well off. We may have to face the fact that solar photovoltaics may always be too expensive for general use while being great for outback water pumps. Note winter insolation is 25-30% that of summer. If prices of panels, inverters and compact longlife batteries came down at least 50% I propose an alternative financing model. Power companies should progressively install 2.5 kw of panels and a 10-20 kwh online uninterruptible power supply in every home with responsible occupants. The power bill is reduced by a kind of rent for roof space and energy microstorage. A box the size of a suitcase combines battery, UPS, inverter and smart meter. The money comes from carbon taxes or the emission trading scheme and counts towards a mandatory renewable energy target (MRET). Meanwhile other cheap lower carbon options are pursued such as conservation, wind and nuclear power. Think of solar as a form of energy superannuation that takes a long time to show lasting benefits.

Terrific article.

I have signed the petition and urge other OLOers to do the same.

We won't achieve a sustainable economy in the current tokenistic employed by government.

Otherwise we are just sitting watching opportunities fade away along with fossil fuels.

I have no doubt that the calculations in the article are correct, and that's with a subsidy. However, I would urge everyone to avoid Taswegian's solution of burning firewood to reduce electricity consumption. That approach adds substantially to any individual's carbon footprint (one could argue that its part of the carbon cycle but its still seems an odd, short-term approach to solving an alleged carbon overload in the atmosphere).
In any case, the article underlines the whole problem of shifting to alternatives. Alternatives remain both horribly expensive and unreliable (PVs only give power during the day). Until some cheap, reliable means of storing power becomes available, about all the Aus power industry can do to reduce its footprint is to switch to gas (nuclear also seems to be out).