Does solar power bring down electricity prices?

Solar panels bring down electricity prices 171 81067 0 14090601 300

Businesses and households across Australia are being encouraged to do their bit and invest in renewable energy, and research suggests this could be having more of an impact than many people realise.

The Australia Institute released its Will we let the sun shine in? report, which takes a closer look at the nation's solar power industry and whether it's having the desired impact on the energy mix.

The findings of the study are varied, but one of the key outcomes is that investment in solar power is bringing down electricity prices - something many people will no doubt be glad to hear.

How is solar affecting energy prices?

Research from the Australia Institute indicates that the Renewable Energy Target (RET) is leading to a decline in wholesale electricity prices, which in turn will result in lower retail electricity costs. In fact, some experts believe that increasing the target from its current level would bring down costs even further.

At present, the RET is designed to ensure 20 per cent of Australia's energy needs are sourced from renewables by 2020, although this could soon be changed pending the outcome of an official review.

Citing findings from Intelligent Energy System, the Australia Institute explained how energy customers across the country will be $500 million better off as a result of the RET and the use of renewable electricity.

This is an effect that has already been experienced in some other countries, such as Germany, where large-scale solar installations have had a dramatic impact on power prices during peak periods.

What are the other benefits of solar power?

Besides the positive impact on energy prices, increased investment in solar power also has the potential to benefit other areas of the economy.

One of the most prominent impacts it has is on employment, as the Australia Institute revealed how at the start of this year, there were 4,300 solar photovoltaic businesses providing jobs to 13,300 people. This marks a considerable rise from the 1,800 people employed in the sector just six years ago.

The employment opportunities aren't expected to stop there either, as the report suggests an extra 8,000 positions will be created between 2014 and 2018. This has the potential to increase further, especially as the cost of solar panels and battery storage continues to decline.

Solar power also led to the growth in innovative financing, spurred by government subsidies and other incentives to install renewable energy systems. This has led to a decline in the cost of the technology, which the Australia Institute believes will only continue in years to come.

However, one of the difficulties faced at the moment is that many people are reluctant to make a significant upfront payment for these systems, even if the cost will be recouped in the long term. Instead, the group suggests that financial products need to be made available that lead to lower electricity bills over the panels' lifetime, without the need to pay for the panels and their installation.

Are Australians embracing solar?

There is plenty of evidence to suggest that solar power systems are capturing the attention of the public. Just 8,000 systems had been installed in 2007, with the figure rising to over 1 million five years later.

It's estimated that around 11 per cent of the Australian population now receives at least some of their electricity from solar power, but the challenge will be to maintain this now government assistance is gradually being withdrawn.

Solar power is becoming increasingly important in Australia. As the Australia Institute points out, there is some way to go before the prediction of it accounting for a third of the country's electricity needs by 2050 is realised.

Posted by Jeremy Elliott