Renewable Energy Technology: BREE Picks a Number

A few weeks ago the Australian Government’s economics research group (the Bureau of Resources and Energy Economics) released a hefty technical report called the Australian Energy Technology Assessment.  Within a ten minute skim-read, I found a glaring deficiency.

I haven’t bothered to read it properly to learn anything from it, or pick up more inaccuracies.  If I can find something patently wrong with a report within minutes, I’m not going to waste more time on it (even though I’m writing this article – but I’ll keep it short!).

The report is a 122-page behemoth, largely undertaken by Australia-listed engineering giant Worley Parons.  It provides actual and forecast technology costs and cost of electricity production with all sorts of variables.  No doubt, the contract involved $100,000, and all sorts of program managers and committee meetings over several months before issuance as evidenced by the acknowledgements.

Here’s my beef:

In summary, it is estimated that the total installed cost of fixed PV systems is now $3.38/W AC (i.e. $3380/kWnet) in 2012.

Fact: six months ago, installed costs including margin for 100 kW – 5 MW range projects was $2.5/W all-in.  Now, prices are around $2/W.  This is known from workign with several project developers.

Four observations follow:

1. Commissioning large clunky engineering firms to do this sort of study will likely get inaccurate outcomes as they neglect real-time market innovations, and their own experience in projects in which they are involved means that those project costs are higher than best-practice due to the company’s own cost-base.
2. Commissioning managers at BREE do not exist in the real world.  They live in Canberra.  There is very little industry or innovation based in Canberra, even if they were to have any interface with them.
3. These reports, and BREE, are referenced by Government innovation policy managers.  Inaccurate reports will negatively influence and distort innovation and renewable energy policy.
4. These reports are referenced by non-specialists, and repeated to a broader audience, leading to an inaccurate understanding of the market context.  This has important ramifactions for acceptance, uptake, and financing of particularly technologies.

With the range of stakeholders consulted for the generation of the report, I am actually baffled as to how a price above $3/W can be arrived at for mid-2012.