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Rooftop solar power is making coal obsolete in Australia

Published Jul 9th, 2014 4:38PM EDT
Solar Vs. Coal Power

Rooftop solar panels are becoming such a powerful factor in the energy market that they now can push the price of electricity to negative territory in the sunniest regions of the world. This is possible because powering down fossil fuel energy generators during peak solar power periods would be more expensive than paying customers to use the electricity.

The negative energy price barrier was breached in Queensland, Australia, where low demand and high rooftop solar power generation pushed the wholesale electricity price to AUD -$100 per megawatt-hour on Wednesday afternoon, July 2. This is mid-winter in Australia, so daily temperatures are mild. Household appliance usage dips in the early afternoon and peaks in mornings and afternoons, so an early afternoon during a sunny Australian winter is the period when solar power is at its zenith.

Queensland is a special case due to local overbuilding of coal power plants and bad policy decisions. This is an example of how the rapid growth of solar energy is catching governments off guard. More than a million Australians have already installed rooftop panels, causing demand for electricity supplied by traditional utilities to plunge. According to analysis from UBS, demand for electricity in Australia has dropped by 13% over the past four years. 75% of Australia’s residential buildings and up to 90% of commercial buildings may be equipped by rooftop solar panels within 1o years.

Apple recently announced plans to expand its massive North Carolina solar power farm substantially. China’s solar power panel production is expected to double by 2017 as the country focuses on creating massive economies of scale to help drive down panel pricing. Various American tech companies are trying to compete against China’s raw government subsidy policies by introducing advances in materials, such as thin-film photovoltaic technology.

This dramatic rivalry between American and Chinese solar panel industries is likely to yield substantial reduction in solar power costs over the next five years. By the end of the decade, the idea of homes and companies getting close to self-sustaining regarding energy production and consumption may become the norm in the sunnier American states.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.