Thanks!

It depends. If the government has access to lower borrowing costs because its probability of default is low, and if it can, pass on that low rate to consumers without there being additional transactions costs from acting as an intermediary, and if can avoid charging consumers the risk premium that they would normally have been charged because, as the tax collector, it can write the rules to be the first creditor to be paid if the borrower goes bankrupt, and if it would actually be prepared to be a hard-line debt collector should the need arise, and if (the biggest if), the advantage it gets from being able to guarantee repayment has its effect purely from eliminating moral hazard by buyers and not by imposing costs on other creditors who are moved further down the pecking order in the case of bankruptcy, then Norman would be right. To the extent that some of the if are not true, then there would be some element of a subsidy, but probably not as much as the full difference between the government cost of capital and retail borrowing rates would suggest.

I agree – tbf, they were separate bullet points when I did the initial post 🙂

Storage is a big issue for me, in general, as it seems like it would change the perceived efficacy of different options – so I find it really exciting.

The feed-in-tariff issue is interesting in a number of quite different ways. However, without storage the variability of the prices will be greater which is interesting – who bears the risk in those ways etc etc!

Bridges says: “I have news for the Greens – if it’s a lower interest rate than normal, it must involve a government subsidy,” he said. “And if it makes the cost of solar power cheaper for families than existing power options it also must involve a subsidy.”

Norman says: “there was no subsidy, because the loans would be repaid with interest determined by the Crown’s cost of borrowing.”

Isn’t Bridges right? Surely the local councils are taking on extra credit risk here (and admin costs)? Central government might be guaranteed a balanced budget, but they’ve just shifted the cost to local govt?

In other words, they could find themselves paying far more in fixed costs to the networks because their solar PV does nothing to reduce their winter night-time peak demand.

Thanks!

I’m now quite confident in saying I think (like John) you’ve tied two unrelated issues together there: feed-in-tariffs and thermal storage. The former deals with the value of electricity to the market, the latter deals with technology that can indirectly reduce electrical demand.

I think the feed-in-tariff issue is quite simple. The value to the market is reflected in spot price. So, solar generated electricity will be worth in the region of 7-8c/kWh. Some retailers choose to pay more than that. Some countries choose to artificially increase the buyback rate through a subsidy.

If electricity storage (ie batteries) drops in price significantly, then this would improve the attractiveness of any home-based generation system. Or it might be that the battery justifies its presence on other grounds (ie electric vehicle) and could be used to help manage the peak demand of the household.

If thermal storage methods improve, this should reduce electrical load by providing alternative means of heating a house or business. But there’s probably no need to put thermal storage on some pedestal here, as any energy efficiency activity has the same impact (eg LED lights, insulation, thermal mass in house construction).

Along the line of the first indeed – it looks like the second link is a more general form.

The key point is that periods of high demand on an energy system also tends to be points in time when supply from a solar system will be low. If solar is a large part of generation, this implies the need for significant back up capacity – or the acceptance of rationing through very high prices during winter, night time, etc.

However, if the cost of storing (and the efficacy of transferring energy from different sources) through time was low then this wouldn’t matter as much.

I just remember reading (it would have been over a year back) that current storage technology made solar not cost effective on a large scale (due to the requirements of needing backup storage).

The water heating bit is a good example – water heating acts as a defacto form of storage, therefore it is an incredibly natural example of where solar seems like a choice idea.

Sorry, still puzzled. I suspect this is just a jargon thing.

By ‘thermal energy storage plants’, are you talking about http://en.wikipedia.org/wiki/Seasonal_thermal_energy_storage or maybe http://en.wikipedia.org/wiki/Solar_thermal_energy or maybe city-wide heating systems (as is being looked at for CHCH)? Or something else?

Thermal energy storage plants – it isn’t that Germany was unusual in using them, it is just that as part of their focus on increasing the proportion of energy associated with solar power the importance of having thermal energy storage was important.

Given the large fixed costs of these plants, this can make the average unit cost of solar pretty high.

It was in this context that significant uptake of solar becomes interesting – it is the point I elaborate on a little bit below.

Key thing as well is that I’m interested and asking about it, if storage costs are not so prohibitive that is a piece of information I’m definitely interested in 🙂

“Storage is a big thing for me though when looking at this whole issue. If we can get good storage, solar becomes a complete game changer. That is what the thermal plants in Germany are all about right?”

What is it that you think is going on in Germany with storage? I’m not aware of them doing anything unusual in that regard.

My reaction is that storage is -as Adam suggested- a red herring.