GILES PARKINSON. Super cheap solar – and why that’s good for Australia’s mining sector

Aug 24, 2017

Australia’s most pre-eminent solar researcher, Dr Martin Green, says the cost of solar PV technology will fall substantially in coming years, and while bad for the country’s thermal coal industry it will spell good news for other Australian mineral and materials exports.’ Any loss in thermal coal sales due to strong solar PV uptake will be offset 5 times over by increased demand for more valuable resources- coking coal,iron ore,alumina and copper’

Green, the director of the Australian Centre for Advanced Photovoltaics at UNSW, spoke at an Australian Renewable Energy Agency function in Canberra last week, and we caught up with him on Monday.

“Solar PV is the cheapest form of new power, and soon it will be even cheaper,” he says.

Solar PV, Green expects, will fall in price in some areas in the world to around $US20/MWh this year, but by the mid-2020s costs of just $US10/MWh will be obtained, and prices in the $US20/MWh range will be routine across the world.

But the underlying message of Green’s presentation in Canberra, and his later remarks to RenewEconomy, was that this would be good for the mining industry, rather than bad, as it is often portrayed by the mining lobby.

“It’s great for Australian resources,” he says. A global surge in solar capacity would lift demand for key Australian exports such as coking coal, iron ore, bauxite, alumina and copper, while the battery storage industry will be good news for miners of lithium, nickel and cobalt and other materials.

It’s ironic, because the biggest opponent of renewable energy in Australia has been the mining lobby, and its proxies in the Murdoch media. But Green says the export boost from other materials will offset the reduction in revenues from thermal coal exports by a factor of more than five.

One terawatt of solar PV – that is 1,000GW, or one million megawatts – would, by his estimates, be installed by the early 2020s, and possibly become the annual installation rate.

“Over the last 18 months, solar fields … have become the cheapest way of generating electricity – and they are quickly becoming cheaper,” Green says. “And Australians have played a major role in this and in future cost reductions.

“The really important development is not that solar is now two-and-a-half times cheaper than coal, but that solar is now becoming cheaper than coal fuel costs – with solar costs still decreasing. This is important because in future, solar systems can be financed solely from fuel savings.”

Green says the solar industry has already moved from its “pre-production phase” and its “industry development” phase, and is now in its “mass production” phase, but its “learning rate” is still rising – to 40 per cent. Forecast price drops are being met earlier than expected.

“Australia has played, and continues to play, a major role in this transformation, beginning in the lab,” he says.

UNSW held records for silicon cell efficiency for 30 of the last 33 years, and is now leading with the PERC technology, which currently has a 20-25 per cent market share in the world. It is now aiming for a further 50 per cent boost in efficiency by stacking a second cell onto silicon, sustaining ongoing cost reductions.

“We are approaching 1 TW installed solar PV and, at present growth rates, installing 1 TW/year by the mid-2020s is feasible,” Green says. If this is achieved by the mid-2020s, then CO2 emissions can reduce close to the 2°C trajectory rate.

By Green’s estimates, installing 1 TW/year PV will reduce thermal coal demand by about 600 Mt/year, or 10 per cent of the present market. While great for the rest of the world, Australia is a major thermal coal exporter and its coal exports, worth $15 billion in 2015-2016, will suffer.

“Economics is an inexact science, so I aim for consistency not exactitude by estimating this loss by what I call a ‘Share the Gain/Share the Pain’ approach. If the world market drops by 10 per cent, I assume Australian exports drop the same 10 per cent, or $1.5 billion. Bad news!

“But maybe not! According to IRENA, 1TW of PV requires 56 million tonnes (56 Mt) of steel for mounting structures and the like, or about 60Mt of coking coal, 6 per cent of the present market.

“Australia is the largest exporter of coking coal, with increased demand increasing earnings by $1.2 billion, estimated as before. This nearly offsets thermal coal losses.

“But we also need iron ore to make the steel, about 110 Mt more, 3.3 per cent of the world market – another $1.6 billion for our exports – we are now well ahead.

“But that’s not all! IRENA estimate another 19 Mt aluminium is needed for module frames and supports, or about 38 Mt of alumina. Australia is again the biggest exporter – another $3.3 billion gain.

“Also another 5 Mt of copper where Australia is 4th biggest ore exporter – another $2.1 billion.

“Any loss in thermal coal sales due to strong solar PV uptake will be offset likely 5 times over by increased demand for more valuable resources – coking coal, iron ore, alumina and copper.” This does not include demand for other resources where demand will increase – silver, lithium, cobalt, nickel, for example.

“This also neglects Australia’s No. 1 position in solar resources. With future very low-cost solar electricity, lower than almost anywhere in the world, Australia could add value to its resources by increasing the amount of local processing,” he says.

“To recap on my 3 points, electricity from large solar PV is already cheaper than from any other source and it’s going to get a lot cheaper – maybe 2-3 times cheaper than at present.

“Australia has played a major role in getting to this stage through its research leadership – this role should be encouraged and even accelerated … because it benefits the Australian resources industry enormously and may give Australia the world’s cheapest electricity further down the track.”

You can see a video edit of Green’s presentation here.

This article first appeared in New Economy on 22 August 2017

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