I've got the POWER!

Last Friday one of my longest-held dreams finally came true. We got solar power installed on our new house. So far, the check-list of life is going pretty well: Wife, check; kids, check; own a business, check; become an author, check; buy a house, check; run off solar panels, BLOODY CHECK!

Only things left now, really, are add "kinda successful" to that author one from before, and get back on radio again. Hope my aspirations aren't too extravagant. Never really expected too much from life, and am thankful for whatever it offers up.

I don't know about you, but I have always been fascinated by the astounding technology of the photo-voltaic silicon solar cell. And when I say always, I mean it. There is evidence of me marvelling at it while in the womb. Just ask Mum. 

And why wouldn't I? I mean, just look at this!

Pinched from Wikipedia. Thanks fellas. :)

That thin sheet of inanimate shimmery-blue stuff can make electricity just by sticking it in the sun. Pure unadulterated brilliance, that is. And considering that at any one time the sun is apparently supplying us with 174,000,000,000,000,000,000 watts of energy (I think I got the right amount of zeros in there) it just plain makes sense to borrow a measly 12,000 or so a day. The sun won't miss it, and it was only getting wasted growing that pesky grass anyway. Power free from an unfathomably big ball of super-heated gas in the sky that won't go out till long after we're gone? Or instead we could just keep burning coal and producing gaseous carbon so that eventually we will blacken the skies so much we won't be able to see the sun? And be choked and cooked to death as our planet becomes another Venus.... Solar power just makes sense from all angles, really.

Though, for some strange reason, not everyone sees it that way.

Coincidently, at practically the same time the blokes were thumping around on my roof laying down my solar power station, there was hot debate getting fired up around our local electricity providers deliberately causing friction when it comes to solar being installed on domestic houses. The claims seem to be that while people are rushing out and getting their own little solar plants, Ergon's expensive suite of state-wide infrastructure is slowly becoming obsolete as less people are needing to buy power. Ergon still have overheads to pay, and slackening revenue to pay them. $50 billion in total "stranded assets", apparently, is included in those overhead expenses. We're told they are beginning to panic that soon we'll all have solar and they won't be needed to generate power for us, thus will have no money to clear their debts and go bust.

In fact, there are even claims that while a person like me is getting solar to avoid rising power prices (and because I love it), my poor solar-less next-door neighbour is stuck paying even higher prices for his coal-fired power because Ergon is struggling with a market demand that's steadily dropping while their costs of maintenance and generation remain the same or rise.

Fair point, in theory. I mean, if Apple only sell 104 units of their latest version iThing, then those 104 people will have to take a share in the $32,203,483 in research and development costs. So that new iThing will cost each of those 104 purchasers approximately $300,950 plus retail mark-up rounded to the nearest obscene amount. That roughly equates to the cost of the Sony Playstation 4 when they first came out, for those crazy people willing to sleep on the pavement outside their local technology store to be the "first" to buy one.

On the other hand, if 12,365,210 people bought that innocuous little iThing, each would only pay $2.60 for the R&D component, plus retail mark-up of 2000%. See how that works? That's the "beauty" of a free market. So coming back to the power scenario, I could almost see where this "shrinking market" would cause issues for them. However, when I sit down and nut out the numbers in a rough sort of way, no matter how I arrange things, at least in the short to medium term and while they still have customers using their power, Ergon come out in front. Mostly because, while they may be paying me a small government-mandated amount for any power I make and feed into the grid, they are then turning round and charging my neighbour the full retail price for that power, as well as having to make less power at the generating plant. Please refer to these cute little graphics I made up for a much clearer confusing muddle:

The Standard Situation with both my neighbour and I drawing power from the grid. To protect his privacy, I've omitted his name and referred to him in the cockney-English vernacular of " 'im ".

 And now to the Solar Situation, where I have solar, using a bit less power, feeding my left-overs to the grid for my neighbour to use, and only drawing a little at night.

So you see where, in the new scenario, Ergon have reduced their output by 50%, down from 8Kw a day to 4; 1 for me and 3 for 'im. This should have halved their income, right? However, they are happily retailing at full price any solar power that I have sold them, which would normally cost them approximately $0.21c/Kw to produce. For this, they're getting away with only paying me $0.06c/Kw wholesale. At a current retail price of $0.28c, that's a mark-up on my power of 466% and, in our model anyway, a saving for them on generating costs of around $55 a year!!!

So all up, for the amount of power they are actually generating, Ergon are proportionately still making more than before - around 25% more in fact. They are saving $55 a year, and making a bonus $80 to boot! Somehow they have actually managed to increase their profit margin by 130%! It's like a Girl Guide failing to sell 100 cookies at $1, instead selling 40 cookies for $5 each. That crafty little entrepreneur is ahead by a hundred bucks and gets to eat her left-over cookies!!! 

Now I know that the actual system that they work to is most likely infinitely more complicated than my simple little scenario. And with a LOT bigger dollar amounts, energy wattage and customer numbers. I've probably got the wrong end of the stick in more than one sense of the phrase, but surely even my monkey-minded scuttle is barking up a tree pretty close to the true one. Wouldn't it all even out in the end, mostly in favour to Ergon?

Either way, if you put aside all the media spin and crossed-information to actually sit and think about it for a moment, it seems like a pretty damn good deal for the power generators. Surely their extra infrastructure costs could come out of that nice little profit margin, while they sit back and relax, only having to produce half the output as before because my solar panels are doing the work for them!

And in the long run, yes, maybe everyone will end up getting solar on their roof and battery banks in their carport. Ergon, and other power companies like them, may well become obsolete in the future. But guess what, that's called the ever-changing turbulent world of business. Technologies and trends change; it's a fact of life. If a business is not savvy enough to catch that train, they fail. Just look at Kodak and their camera-making department. Power companies will have to evolve or fail. Maybe Governments will end up buying back and running the network infrastructure, just taking those running costs in taxes, while we all make our own power and borrow their grid to share it round. Who knows what the future will hold?

But two things are for certain: 1. Our world is precious, and will collapse if we don't start really taking care of her. Finally the trend is moving toward renewables with a solid, sustainable momentum. Very soon we will have affordable electric cars, charged by your solar house, and every large company will power themselves with green energy. Apple gets a bit of credit there... Even if it causes short term economic strain now, the long-term benefits from stowing away on the renewable energy train will have massive repercussions for our race and this planet. And secondly, PV Solar is awesome!

Does any of this make sense to you? Is this unique to Australia, or have you had similar issues where you live? And exactly how right or wrong have I got it? It's ok to tell me; I'll only cry a little. Please leave a comment and let me know what you think.

Till next time,

-Damien.