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Monday, 22 October 2012

Consumer-oriented Electricity Market?

A draft report by the Productivity Commission, Electricity Network Regulation Frameworks, has found that regulation and ownership arrangements for electricity networks require overhaul.
The costs of electricity networks — the wires and poles criss-crossing Eastern Australia — now represent as much as one-half of people's average power bills. Network cost rises are responsible for much of the surge in electricity prices over the last five years.
Philip Weickhardt, the Presiding Commissioner for the inquiry, said: 'The current regulatory regime is undermining the capacity of network business managers to run their businesses efficiently, and puts up barriers to consumer involvement. There is no quick fix, but our proposed reforms can deliver a more efficient system and potentially save billions of dollars.'
The report says that a few periods of peak demand — mostly during hot spells in summer — require huge amounts of infrastructure. The Commission recommends the phased introduction of more cost-based pricing, combined with smart technologies. It says this would cut network costs and end the large hidden subsidies, often from lower income households, to people who use a lot of power at peak times.
The Commission also recommends the creation of a new industry-funded consumer body, with enough expertise to contribute to regulatory determinations and merit reviews. It also proposes a national, consumer-focused, approach to reliability standards. These can vary without reason across states, and sometimes require costly investments to achieve a much higher level of reliability thanconsumers would otherwise choose.
The report also recommends that all state-owned network businesses be privatised (but remain strongly regulated). It finds that this would improve efficiency and avoid the conflicting mix of state government influences on their corporations.
The Commission finds that over the shorter run, there is limited scope to use regulatory benchmarking, which rewards businesses based on their relative efficiency. It notes that fixing the flaws of the regulatory framework would in any case be a prerequisite to its meaningful use.
The Commission is seeking public feedback on its draft proposals. Its final report will be delivered to Government in April 2013.

Background information

Ralph Lattimore, Assistant Commissioner 02 6240 3242

Requests for comment/other

Clair Angel, Media & Publications 02 6240 3239 / 0417 665 443
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Thursday, 18 October 2012

Solar in Governments Hands

The Australian government in July started charging polluters for the carbon they emit to reduce the nation’s reliance on fossil fuels and encourage wind and solar power. The country also plans to invest $10 billion in Clean Energy Finance Corp. to help the industry.

“First Solar has labeled Australia as one of the more prospective markets globally, and we would agree with that,” said Tim Buckley, managing director at Sydney-based Arkx Investment Management, which owns shares in the US panel manufacturer. “But progress to date has been limited,” partly because of uncertainty about government energy policy.

While Australia has the highest average solar radiation per square meter of any continent, according to the government, some projects picked to receive solar grants, including a venture led by Areva SA in the state of Queensland, have failed to meet financing deadlines and sign power-supply agreements.

“If you can’t create a sustainable solar market in Australia, it’s difficult to see how you can create one in other markets without strong government intervention,” Curtis said.

Solar News from Green Energy WA 

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Wednesday, 17 October 2012

Did you know?

Our mother Earth receives more energy from the sun in an hour than is used in the entire world in one year. 

Did you know Leonardo da Vinci predicted a solar industrialisation back in 1447 Makes you wonder knowing  it is only in recent years that the world has turned to solar power systems. 

Did you know that Shell Oil now predicts that 50% of the world's energy will come from renewable sources by 2040.

Solar Energy from Green Energy WA - Truly the way forward 

Visit us today - WA's No1 Solar Company 

Monday, 15 October 2012

Chinese Solar In Disarray

BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.
But now China’s strategy is in disarray. Though worldwide demand for solar panels andwind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.
The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.
China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.
The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.
In the solar panel sector, “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens,” said Li Junfeng, a longtime director general for energy and climate policy at the National Development and Reform Commission, the country’s top economic planning agency.
Mr. Li said in an interview that he wanted banks to cut off loans to all but the strongest solar panel companies and let the rest go bankrupt. But banks — which were encouraged by Beijing to make the loans — are not eager to acknowledge that the loans are bad and take large write-offs, preferring to lend more money to allow the repayment of previous loans. Many local and provincial governments also are determined to keep their hometown favorites afloat to avoid job losses and to avoid making payments on loan guarantees, he said.
Mr. Li’s worries appear to be broadly shared in Beijing. “For the leading companies in the sector, if they’re not careful, the whole sector will disappear,” said Chen Huiqing, the deputy director for solar products at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
The Chinese government also wants to see the country’s more than 20 wind turbine manufacturers, many of which are losing money, consolidate to five or six. “Wind does not need so many manufacturers,” said Mr. Li, who in addition to drafting renewable energy policies is the president of the Chinese Renewable Energy Industries Association.
Chinese solar company executives blame their difficulties partly on the United States’s decisions last spring to impose antidumping and anti-subsidy tariffs on solar panel imports, and on the European Union’s recent decision to start its own antidumping investigation of imports from China.
“It is not a Chinese industry problem, it is a global solar industry problem,” said Rory Macpherson, a spokesman for Suntech Power, one of the largest Chinese solar panel manufacturers. “It is primarily the result of an imbalance between supply and demand, and the U.S. and E.U. trade investigations.”
Mr. Li said the solar industry’s problems were the result of overcapacity in China, and not the fault of trade restrictions.
Yet he insisted that if the Chinese government could turn back the clock and revisit past renewable energy decisions, it would not do anything differently.
The problem lies in the eagerness of Chinese businesses to rush into any new industry that looks attractive and swamp it with investments, he said. Chinese companies and their bankers are then far more reluctant than Western companies to admit defeat for investments that prove unprofitable.
Mr. Li added that banking regulators had not yet decided what to do about banks’ exposure to the solar sector. The central government tried without success to learn from local and provincial government agencies how much of the solar industry’s bank debt they have guaranteed, Mr. Li said.
Chinese solar power companies are making some cutbacks. Suntech, based in Wuxi, is temporarily closing a quarter of its solar cell capacity. It will transfer a majority of the 1,500 affected workers to other operations and provide severance payments to the rest.
Jiangsu province, where Suntech has its headquarters and most of its factories, issued an unusual appeal to state-owned banks several weeks ago to continue lending money to the company, a step that Mr. Li criticized as inappropriate. Mr. Macpherson of Suntech wrote in an e-mail that the Jiangsu government had not guaranteed any of the company’s debt, which totaled $2.26 billion at the end of the first quarter, including some convertible bonds in addition to bank loans. Trina Solar, one of its biggest rivals, also has said it will “streamline its operations” and shrink its work force, but did not provide details.
Trina shares have dropped 85 percent in the last three years and Suntech shares have fallen more than 98 percent in the last five years. Both trade on the New York Stock Exchange.
The modest cutbacks in production barely put a dent in China’s overcapacity problem. GTM Research, a renewable energy consulting firm in Boston, estimates that Chinese companies have the ability to manufacture 50 gigawatts of solar panels this year, while the Chinese domestic market is on track to absorb only 4 to 5 gigawatts. Exports will take another 18 or 19 gigawatts.
The enormously expensive equipment in solar panel factories needs to be run around the clock, seven days a week, to cover costs.
“You want to be up at 80 percent, so they’re half of what they need,” said Shayle Kann, the head of GTM Research, which is a unit of Greentech Media.
Chinese companies have struggled even though a dozen solar companies in the United States and another dozen in Europe have gone bankrupt or closed factories since the start of last year. The bankruptcies and closures have done little to ease the global glut and price war because China by itself represents more than two-thirds of the world’s capacity.
To reduce capacity, foreign rivals have clamored for China to subsidize the purchase of more solar panels at home, instead of having Chinese companies rely so heavily on exports. But the government here is worried about the cost of doing so, because the price of solar power remains far higher than for coal-generated power.
The average cost of electricity from solar panels in China works out to 19 cents per kilowatt-hour, said Mr. Li. That is three times the cost of coal-fired power. But it is a marked improvement from 63 cents per kilowatt-hour for solar power four years ago.
China’s official goal is to install 10 gigawatts of solar panels a year by 2015, using 20-year contracts to guarantee payment for electricity purchased from them. If costs stay where they are now, the subsidies would be $50 billion over 20 years for every 10 gigawatts of solar power installed, based on figures supplied by Mr. Li.
Even if solar power costs fall by a third, as the government hopes, he said, “it’s big money.”

Global view by Green Energy WA
Fully Story NYTIMES