Good for one is not good for the many

Many jurisdictions are encouraging the installation of residential small scale solar power systems. The economics for this appear simple - invest in the installation now and, for the next 25 years, reduce the electricity demand of the household on the electricity grid. Ignoring any government assistance that may be available, the savings in electricity suggest a payback in as little as 4 or 5 years for some electricity buyers. In fact, even when excluding the effect of the expected rise in electricity prices over the coming decade, a typical installation would save more than $10,000 over its lifetime. This is clearly good for the electricity user, but is it sustainable?

There is no relationship between monetary savings and a reduction of carbon emissions. Unfortunately, any currently proposed pricing of Carbon will not fix this.

In terms of responding to climate change, the scenario still appears to make sense. Every kWh of electricity bought is usually considered to be at least ½kg of Carbon. A single domestic solar panel can produce over 5,000 kWhs over the expected minimum 25 year life - thus providing a 2.5t saving of Carbon. Every little bit helps, right? Not quite.

Life-cycle Carbon Cost

The weakness in the approach taken above is that it is only a snapshot of the life-cycle of the solar panel. A solar panel does not appear on the roof of a house without a carbon cost. No agreed standard for the assessment of this cost exists and there is substantial variation in the data available for considering it. Nevertheless, considering the entire industrial process, the panel will have cost at least 1t of Carbon to manufacture, supply and install. In addition, in disposal, albeit hopefully more than 25 years away, it will cost a further 200+kg of Carbon.

Therefore, the panel has a debt of 1.2+t of Carbon to repay, effectively halving any potential benefit. However, before considering the benefit, let's look back at two assumptions in this scenario. Firstly, a solar panel will provide peak power throughout operation and secondly, the Carbon intensity of the offset electricity will remain constant.

Solar performance is very installation dependent

The output of a solar panel is dependent upon many factors - the amount of hours of sun the installation location receives, how closely the panel is pointed to the mid-arc point of the sun passage on the solar equinox and even the ambient temperature. There are also losses in converting the DC power output to a regulated AC domestic supply, losses due to the inability to use the generated power when it is generated and, for most panel designs, losses due to a shadow across just 10% of the surface shutting off the power generation. The result is that the actual electricity offset can be less than 2,000kWh.

Is all mains electricity supply Carbon intensive?

The Carbon intensity of electricity is dependent on the method of its generation. Generally, the worst is brown coal and the best is hydroelectric or nuclear (wind and solar usually have a higher intensity than either of the latter sources when considered in life cycle terms). The on going COP or post-Kyoto discussions provide indication for encouraging energy policy responses to climate change. These policies will guide and accelerate a lower carbon intensity for electricity supply worldwide. This means that the average carbon intensity over the next 25 years is not the ½kg per kWh generally assumed but more likely less than half this level (many supply environments today can already be less than 150g per kWh).

In terms of considering many real world installations over a 25+ year life neither of the former assumptions hold. Certainly, the benefit can still be a net saving but one sensitive to site specific factors. Our analysis suggests the benefit is rarely more than 1t of Carbon per solar panel even in relatively sunny carbon intense energy markets as Australia. Significantly, even before any further 'greening' of the electricity supply in this coal rich country, there is a negative Carbon balance for installations in its most southern state due to the combination of that state's use of hydroelectric supply and its distance from the equator. Negative Carbon balances can also be found in certain parts of the United States, Japan and even China, as well as all grid connected residences of France, Iceland, and Brazil.

Every saving counts and the value of this approach to climate change should not be lost. However, caution is required as there is a significant risk for misplaced investment due to the perceived efficiency improvements and financial return available.