1
BARRIERS TO THE USE OF
RENEWABLE ENERGY
IN WESTERN AUSTRALIA
F. J. Harman
L. J. Stocker
I. Walker
M. Stirling
Murdoch University
Murdoch
Western Australia 6150
JUNE 1991
2
TABLE OF CONTENTS
PAGE NO.
TABLE OF CONTENTS
1
TABLES
4
FIGURES
6
ACKNOWLEDGEMENTS
8
ABSTRACT
9
SUMMARY
10
RECOMMENDATIONS
16
CHAPTERS
18
1.
18
PROJECT OBJECTIVES AND WORK PROGRAMME
1.1
2.
3.
BARRIERS TO THE DIFFUSION OF RENEWABLE
ENERGY TECHNOLOGIES
18
1.2
BARRIERS IN WESTERN AUSTRALIA
19
1.3
PROJECT OBJECTIVES
19
1.4
WORK PROGRAMME
20
LITERATURE REVIEW
22
2.1
INTERNATIONAL PERSPECTIVES
22
2.2
AUSTRALIAN STUDIES
24
RENEWABLE ENERGY IN WESTERN AUSTRALIA
27
3.1
SOLAR WATER HEATING SYSTEMS
27
3.2
WIND AND SOLAR ELECTRICITY GENERATION
27
3
4.
5.
6.
7.
ENERGY SURVEYS: OBJECTIVES, HYPOTHESES
AND METHODS
30
4.1
INTRODUCTION
30
4.2
OBJECTIVES AND HYPOTHESES
30
4.3
METHODS
32
WATER HEATING SYSTEM SURVEYS:
RESULTS AND DISCUSSION
35
5.1
SURVEY OF MANUFACTURERS AND SUPPLIERS
35
5.2
SURVEY OF HOUSEHOLDERS
39
5.3
DISCUSSION
62
PASTORAL LEASE SURVEY: RESULTS AND DISCUSSION
66
6.1
RESPONDENTS
66
6.2
ELECTRICITY GENERATION
68
6.3
ELECTRICITY CONSUMPTION
76
6.4
SEPARATE RENEWABLE EQUIPMENT
76
6.5
FUTURE RENEWABLE ELECTRICITY GENERATION 77
6.6
WATER HEATING
6.7
DISCUSSION
80
85
RENEWABLE ENERGY IN REMOTE ABORIGINAL
COMMUNITIES
89
7.1
REMOTE ABORIGINAL COMMUNITIES
89
7.2
USE OF RENEWABLE ENERGY
89
7.3
PROVISION OF ENERGY SERVICES
90
7.4
BARRIERS TO THE USE OF RENEWABLE ENERGY
91
4
8.
9.
10.
PRIVATE COST COMPARISONS OF WATER HEATING
SYSTEMS
93
8.1
METHODOLOGY
93
8.2
RESULTS
98
POLICY ANALYSIS
104
9.1
SOCIAL COSTS
104
9.2
SUBSIDIES
106
9.3
OTHER SECWA POLICIES
9.4
STATE GOVERNMENT HOUSING POLICIES
112
9.5
STATE GOVERNMENT INDUSTRY DEVELOPMENT
POLICIES
113
111
CONCLUSIONS
115
10.1
WHAT THE SURVEYS SHOW
115
10.2
THE ANALYSIS OF PRIVATE COSTS
118
10.3
WHAT THE POLICY ANALYSIS SHOWS
118
10.4
BARRIERS AND THEIR REMOVAL
119
BIBLIOGRAPHY
121
APPENDICES
127
APPENDIX 1:
SOLAR WATER HEATING SYSTEMS:
SURVEY OF MANUFACTURERS
AND SUPPLIERS
APPENDIX 2:
SURVEY OF ENERGY USAGE FOR WATER
HEATING: SURVEY OF METROPOLITAN
HOUSEHOLDS
APPENDIX 3:
ELECTRICITY SUPPLY AND USE:
SURVEY OF PASTORAL LEASES
APPENDIX 4:
SECWA ELECTRICITY AND GAS TARIFFS
5
TABLES
PAGE NO.
3.1
TELECOM APPLICATIONS OF PHOTOVOLTAICS IN
WESTERN AUSTRALIA
5.1
PERCEIVED REASONS FOR PURCHASING SOLAR
WATER HEATING SYSTEMS
36
MAIN PERCEIVED BARRIERS TO PURCHASING SOLAR
WATER HEATING SYSTEM
37
5.3
CORRELATES OF CURRENT WATER HEATING SYSTEM
45
5.4
MULTIPLE REGRESSIONS PREDICTING CURRENT WATER
HEATING SYSTEM FOR THE TOTAL SAMPLE AND FOR
INSTALLERS ONLY
47
FACTORS INVOLVED IN DECISION TO PURCHASE SOLAR
WATER HEATING SYSTEMS (SOLAR INSTALLERS ONLY)
48
MULTIPLE REGRESSION PREDICTING SATISFACTION
WITH CURRENT WATER HEATING SYSTEM (TOTAL SAMPLE)
50
MULTIPLE REGRESSION PREDICTING SATISFACTION
WITH CURRENT WATER HEATING SYSTEM
(SOLAR OWNERS)
51
MULTIPLE REGRESSION PREDICTING SATISFACTION
WITH CURRENT WATER HEATING SYSTEM
(NON SOLAR OWNERS)
52
5.9
CORRELATES OF INTENDED WATER HEATING SYSTEM
53
5.10
CORRELATES OF INTENDED WATER HEATING SYSTEM
(COLLAPSED ANALYSIS)
54
CROSS-TABULATION OF CURRENT WATER HEATING
SYSTEM AND INTENDED WATER HEATING SYSTEM
57
REASONS FOR NOT PURCHASING A SOLAR WATER
HEATING SYSTEM (INSTALLERS ON NON-SOLAR SYSTEMS
ONLY)
58
REASONS FOR CONSIDERING, BUT NOT BUYING, A
SOLAR WATER HEATING SYSTEM (NON-SOLAR OWNERS,
NON-INSTALLERS).
58
5.2
5.5
5.6
5.7
5.8
5.11
5.12
5.13
29
6
5.14
6.1
6.2
PERCEIVED REASONS WHY MORE PEOPLE DO NOT
INSTALL SOLAR WATER HEATING SYSTEMS
60
FACTORS INVOLVED IN CONSIDERING RENEWABLE
ENERGY EQUIPMENT IN AN ELECTRICITY
GENERATING SYSTEM
81
THE THREE MOST IMPORTANT REASONS FOR NOT
INCLUDING RENEWABLE ENERGY EQUIPMENT IN AN
ELECTRICITY GENERATING SYSTEM
81
6.3
THE MOST IMPORTANT ECONOMIC PRESSURES FACED
IN MANAGING THE PROPERTY
82
6.4
PROBLEMS EXPERIENCED WITH SOLAR WATER
HEATING SYSTEMS
84
MULTIPLE REGRESSION PREDICTING SATISFACTION WITH
CURRENT SOLAR WATER HEATING SYSTEM
86
MULTIPLE REGRESSION PREDICTING INTENDED WATER
HEATING SYSTEM (SOLAR OWNERS ONLY)
87
8.1
SECWA TEST DATA
94
8.2
SIMULATION DATA
95
8.3
COST COMPARISONS: BASE CASE
96
8.4
GAS TARIFF CHANGES REQUIRED TO ACHIEVE
SOLAR EQUIVALENCE
101
SOLAR STANDARD CAPITAL COST CHANGES
REQUIRED TO ACHIEVE GAS COST EQUIVALENCE
101
SOLAR STANDARD EFFECTIVE LIFETIME CHANGES
TO ACHIEVE GAS EQUIVALENCE
102
OFF-PEAK ELECTRICITY TARIFF REQUIRED TO
ACHIEVE EQUIVALENCE WITH ELECTRICALLY BOOSTED
SOLAR ON THE DOMESTIC TARIFF
102
DOMESTIC ELECTRICITY TARIFF REQUIRED FOR
ELECTRICALLY BOOSTED SOLAR TO ACHIEVE GAS
EQUIVALENCE
103
APPLICATION OF DAMAGE/AVOIDED DAMAGE
COSTS TO WESTERN AUSTRALIA
105
6.5
6.6
8.5
8.6
8.7
8.8
9.1
7
FIGURES
PAGE NO.
3.1
SOLAR WATER HEATING SYSTEM INSTALLATIONS IN
THE METROPOLITAN AREA
28
5.1
AGE DISTRIBUTION OF RESPONDENTS
40
5.2
DISTRIBUTION OF RESPONDENTS' GROSS HOUSEHOLD
ANNUAL INCOME
41
5.3
DISTRIBUTION OF TYPES OF DWELLINGS
41
5.4
DISTRIBUTION OF OCCUPANCY TYPE
42
5.5
AVAILABILITY OF STREET GAS TO RESPONDENTS
42
5.6
AVAILABILITY OF GAS TO RESPONDENTS' HOMES
43
5.7
TYPES OF WATER HEATING SYSTEMS
5.8
PERCENTAGE OF RESPONDENTS IN EACH INCOME
BRACKET WHO REPORT HAVING A SOLAR WATER
HEATING SYSTEM
46
IMPORTANCE OF FACTORS IN THE DECISION TO
PURCHASE SOLAR
49
5.9
5.10
44
INTENDED NEXT PURCHASE RELATIVE TO
EXISTING SYSTEMS
56
REASONS FOR NOT PURCHASING A SOLAR WATER
HEATING SYSTEM (INSTALLERS OF NON SOLAR SYSTEMS
ONLY)
56
5.12
FREQUENCY DISTRIBUTION OF ENERGY BILLS
61
5.13
FREQUENCY DISTRIBUTION OF % OF ENERGY BILL
BELIEVED TO BE SPENT ON WATER HEATING
61
5.11
6.1
DISTRIBUTION OF RESPONDENTS' STATUS
66
6.2
NUMBER OF ADULTS ON PROPERTIES
67
6.3
NUMBER OF CHILDREN ON PROPERTIES
67
8
6.4
TYPES OF ELECTRICITY GENERATING SYSTEMS
68
6.5
HOMESTEAD GENERATOR SYSTEM VOLTAGE
69
6.6
TOTAL RATED CAPACITY OF HOMESTEAD GENERATORS
70
6.7
TOTAL RATED CAPACITY OF PORTABLE GENERATORS
70
6.8
AVERAGE LOADS OF NON-PORTABLE HOMESTEAD
GENERATORS
71
PEAK LOADS OF NON-PORTABLE HOMESTEAD
GENERATORS
71
6.10
ANNUAL FUEL COST OF ELECTRICITY GENERATION
72
6.11
ANNUAL OPERATIONAL AND MAINTENANCE COST
73
6.12
DIESEL POWER GENERATION: SUMMER
74
6.13
DIESEL POWER GENERATION: AUTUMN
75
6.14
DIESEL POWER GENERATION: WINTER
75
6.15
DIESEL POWER GENERATION: SPRING
76
6.16
FUEL SOURCES AND USES OTHER THAN THE MAIN
POWER GENERATION SYSTEM
77
APPLIANCES AND TOOLS POWERED BY THE HOMESTEAD
ELECTRICITY GENERATING SYSTEM
78
6.18
USE OF SEPARATE SOLAR AND WIND EQUIPMENT
79
6.19
RISE IN FUEL PRICES NECESSARY BEFORE RENEWABLE
EQUIPMENT MIGHT BE INSTALLED
80
6.20
DISTRIBUTION OF CURRENT WATER HEATING SYSTEM
83
6.21
DISTRIBUTION OF PREDICTED WATER HEATING SYSTEM
83
8.1
COST OF HOT WATER BY APPLIANCE TYPE: BASE CASE -
97
8.2
COST OF HOT WATER BY APPLIANCE TYPE:
12% INTEREST RATE
99
COST OF HOT WATER BY APPLIANCE TYPE:
7% INTEREST RATE
100
6.9
6.17
8.3
9
ACKNOWLEDGEMENTS
This project was funded by the Energy Research and Development Corporation and given
infrastructure support by the Institute for Science and Technology Policy at Murdoch
University. A concurrent project undertaken for the Renewable Energy Advisory Council
of Western Australia shared some aspects of the analysis contained in this Report.
The research team was assisted by an oversight committee consisting of Mr Matt Duxbury
from SECWA, Mr Ken Hodgkin, Director of the Energy Policy and Planning Bureau, Mr
Fred Barnes and Mr Tom Crawford, both formally of SECWA and now independent
consultants. Assistance with additional information was also supplied by SECWA through
the good offices of Mr Matt Duxbury. Research assistance for ten months of the project
was provided by Dr Judy-Mary Seward. Professor Ian Lowe and Dr Elizabeth Harman
provided constructive comments and assistance on aspects of the project.
Members of the State Government's Renewable Energy Advisory Council made a
substantial contribution to the questionnaire design and in the provision of information for
the research team. The Australian Bureau of Statistics also provided technical assistance
with questionnaire design.
Mr Wal James at the Murdoch University Energy Research Institute (MUERI) and Dr John
Barker at the Solar Energy Information Centre (SEIC) generously provided information for
the project. A number of members of the solar energy appliance industry in Western
Australia also gave assistance to the project. Particular thanks should be given to the
Pastoralists and Graziers Association (PGA) for their support for the survey on electricity
generation on pastoral leases. Homeswest provided detailed information on policies
relating to government housing.
Finally our sincere thanks go to Mrs Kaye Butherway, Mrs Jenny Longley and Mrs Jean
Hassall for their generous support with secretarial and administrative assistance for this
project.
10
ABSTRACT
We investigated the role of non-technical barriers to the use of renewable energy
technologies. Our study assessed the nature of public attitudes towards renewable energy
in two areas: water heating in the metropolitan area, and energy supply and use on pastoral
leases in Western Australia. We analysed the private costs of water heating systems in a
way which may give guidance to manufacturers on improving the economics of solar water
heating systems, and to policy makers for facilitating the use of solar water heating
systems.We also outlined the policies currently in place in Western Australia which act as
barriers to the greater use of renewable energy. The Report provides a number of
recommendations which would overcome barriers to the wider use of renewable energy.
11
SUMMARY
PROJECT OBJECTIVES
This Report seeks to uncover the non-technical barriers to the widespread use of renewable
energy technologies in Western Australia.
To achieve this overall objective, the project first sought to discover whether there existed
a range of attitudinal factors and perspectives on renewable energy held by consumers
which might act to inhibit the use of solar energy technologies. Surveys of energy
consumers were to be used in the project as the means of uncovering the existence of such
attitudes. The surveys would, in particular, reveal information about the perceived costs
and benefits of renewable energy appliances over other alternatives, the state of knowledge
of consumers about renewable energy, and the characteristics of the people who use solar
energy.
The surveys also had the objective of providing descriptive material on how consumers
actually use energy for water heating and electricity generation, and in particular how they
use renewable energy equipment for these tasks.
The second objective of the project was to examine the costs of competing water heating
systems to assess the relative cost of solar water heating as perceived by consumers in the
Perth metropolitan area. With information on the components of costs (capital and
operation) it would then be possible to assess the conditions under which solar systems
could be the lowest cost choice. This analysis would have implications for manufacturers
with respect to the cost of solar equipment, and governments with respect to energy prices.
The third objective was a detailed examination of government policies with respect to the
pricing, use and delivery of energy in Western Australia which impact upon renewable
energy. In this way an assessment could be made of the extent to which government
policies act as barriers to renewable energy.
MAIN FINDINGS AND CONCLUSIONS
Survey of Manufacturers and Suppliers
Manufacturers and suppliers of solar water heating systems identified the two main barriers
to their greater use as their cost compared to conventional systems and the absence of an
incentive to use solar water heaters in rental accommodation. Additional barriers were
perceived to include a lack of knowledge of solar water heating systems, unattractiveness
of the systems, short term residence in homes, lack of access to finance, and restrictions on
hot water availability.
Survey of Householders
The survey of householders provided a considerable volume of information on the
12
characteristics of people who have solar water heaters. In addition the strongest predictors
that a solar system had been purchased emphasised home owners with larger families and
who expect to remain in their house for another five years. Other characteristics such as
income and age did not appear as significant predictors.
High satisfaction was recorded by owners of solar and gas systems, less satisfaction with
electric systems. The determinants of satisfaction related to the perceived percentage of
the energy bill devoted to water heating, and the number of times the hot water supply had
been exhausted. Breakdowns and service requirements did not feature as measures of
satisfaction or dissatisfaction.
With regard to any future system, a clear majority indicated a preference for a solar system,
with the bulk of them preferring a gas booster. Only just over a quarter of the respondents
opted for a gas system and 7% indicated they would purchase an electric system. Those
opting for a future solar system were in general younger in age and living in a relatively
young house with a relatively larger number of occupants than was the case for
respondents expressing preferences for future gas and electric systems.
Importantly, only a small proportion of current solar owners (5.6%) indicated that they
would buy a non solar system. Half of the current gas system owners would switch to a
solar system, and only 30% of those who currently have an electric system would buy
another, with 48% of them indicating a switch to solar.
When respondents who had actually installed their current water heating system were
asked why they did not install a solar system, their responses reflected the perceptions of
the solar water suppliers. In particular the initial cost, and other aspects of cost (working
life, expected savings and expected maintenance) were the dominant reasons. Other
survey questions reinforced this perception of cost rather than ignorance or lack of
confidence in the technology.
The results of the two surveys relating to solar water heaters clearly indicate that the solar
technology does have a wide degree of public acceptance. The technology as such does
not appear as a barrier. The dominant barrier is the perception of cost. As shown in
Chapter 8 this perception is realistic in the current market for water heating equipment, and
consumers appear to be behaving with individual economic rationality in their choice of
water heating equipment.
Answers to an additional question about power generation suggest that the majority of
people are not willing pay more for electricity generated from renewable sources.
Nevertheless 44% indicated they would be willing to pay, on average 6%, more.
The clear commercial and policy implications which flow from this are that:
• manufacturers and suppliers must find ways to reduce the initial capital outlay on solar
water heaters if they wish to expand sales;
• appeals to concerns such as the environment and greenhouse effects are unlikely to be
effective in influencing water heater choice without a significant educational campaign;
13
• relatively young owner occupiers of houses in which they expect to stay for some time
with a large family are the group most likely to purchase a solar water heater when their
existing water heating system comes to the end of its useful life;
• government policy with respect to electricity and gas tariffs could significantly influence
the choice of water heating equipment by influencing the cost of the alternatives to solar
water heaters.
Pastoral Lease Survey
The survey of pastoral leases provided a large amount of descriptive information on how
electricity is generated and used on pastoral leases. It also provided information on water
heating, in particular the use of solar water heating, on pastoral leases.
Only 24 properties reported the use of wind power or photovoltaic systems as part of their
main generation plant. A high degree of satisfaction was reported from properties using
wind or solar equipment.
The capital cost of wind or solar equipment was the dominant reason for not using it in
electricity generation, but other important reasons were a lack of confidence in the
performance of renewable energy components, a perception that there would be inadequate
maintenance and service facilities, and a lack of familiarity with the equipment.
Thus the survey reveals that, unlike the situation with solar water heaters in the
metropolitan area, electricity generation with the use of wind power or photovoltaics is not
an accepted technology for pastoral properties in Western Australia.
In addition, the perceived costs of renewable systems are such that respondents indicated
that fuel prices would have to rise considerably (almost 60%) before leaseholders would
consider switching to renewable components.
Only some 20% of respondents were aware that the Isolated Systems Subsidy offered by
SECWA would cover generation equipment that incorporated renewable energy
equipment, though having been informed by the survey, two-thirds of the respondents
indicated that this would make it more likely that they would consider incorporating
renewable equipment.
Photovoltaic cells are also used for other purposes on pastoral leases, with 24% of
respondents using them for electric fencing and 18% for water pumping. Thus small scale
application of renewables is more widely accepted than for electricity generation in the
homestead.
The commercial and policy implications flowing from the information relating to
electricity generation are:
• the use of wind and solar equipment is seen as costly, unfamiliar, and lacking in aftersales support;
14
• perceptions about the initial capital outlay factor may be offset by greater familiarity with
the technology and with the savings which may be made through the use of renewable
generation equipment ;
• information especially relating to performance and reliability is required to enable
pastoral leaseholders the opportunity to assess the possibilities of using renewable energy
components;
• demonstrations of renewable equipment in remote areas could be an effective means of
disseminating information;
• some system of providing service and maintenance on a reliable basis would be required
to overcome the perception that these are unavailable;
• the Isolated Systems Subsidy should be made more visible and more specific to
renewable systems; it should more accurately reflect the costs SECWA (and hence all
other consumers) would incur if a grid connection were made instead of a stand alone
system.
Nearly one quarter of pastoral lease respondents used a solar water heating system with an
electric booster. When asked what they would buy in future, more than half indicated they
would purchase a solar system.
Calcium deposition, a reflection of the water quality on pastoral leases, was seen as the
major problem associated with solar water heaters, followed by lack of access to
maintenance services, then leaks, then corrosion. Nevertheless satisfaction with solar
water heaters was high with 52% of owners indicating that they were "very satisfied" with
their system. The advent of cheaper, all plastic SWHS may further enhance their
acceptability.
Remote Aboriginal Communities
Remote aboriginal communities are growin rapidly in number and in many cases their
power needs can be well served by renewable energy systems. Barriers to the extensive
use of these systems for aboriginal communities include lack of access to information
about renewable systems, difficulties with maintenance and after-sales service, as well as
an absence of a clear administrative structure with responsibility for the provision of
energy services to remote communities. Thorough consultations are required with the
communities to ensure that their particular needs are understood and met.
Private Cost Comparisons of Water Heating Systems
Detailed analysis of the costs of hot water from a range of water heating appliances
supports the perceptions of consumers that in the context of the prevailing appliance costs
and current electricity and gas tariffs, solar water heating is an expensive option relative to
gas. Data were only available for electrically boosted solar systems, and the relatively new
gas boosted systems were not included in the analysis.
15
Solar is less expensive than storage electric and instant electric systems for larger hot water
requirements, where the consumer has the appliance for the full equipment life.
Simulations carried out with the data show that solar could be made competitive with
external instantaneous gas with gas tariff changes in the order of 30%, equivalent
reductions in the capital cost of an installed solar unit or by at least doubling the effective
lifetime of a solar unit.
The provision and widespread use of an off-peak electricity tariff would pose a severe
competitive pressure on solar heaters boosted with electricity at the normal domestic tariff.
This pressure could be removed by either regulation to exclude water heating from the
benefits of an off-peak tariff, or by increases in the current off-peak tariff in the order of
30%.
One option not feasible is the reduction in electricity tariff for electricity used to boost a
solar water heater, as the tariff would have to fall to less than zero.
The commercial and policy implications of the analysis are that:
• changes to capital costs of solar water systems are required to achieve greater market
penetration;
• change is also required to the effective lifetime of solar units, though this would be less
effective than a reduction in initial capital outlays because of the fact that people
perceive that they change their residences without taking their solar heater with them
either physically, or in the form of a higher sale price for the residence;
• changes to electricity and gas tariffs would also have an impact on the perceived costs
and benefits of a solar water heater.
Policy Analysis
The generation of electricity and the use of natural gas involve the creation of significant
external costs. Failure to internalise these external costs means that the prices faced by
consumers for water heating and electricity generation equipment and electricity and gas
do not fully reflect the real costs imposed on society by those choices. Furthermore
because renewable energy use involves less external costs, the failure to internalise
external costs constitutes a considerable bias against renewable technologies.
A similar bias occurs through the provision of subsidies for electricity and gas
consumption. These subsidies may be provided either directly to consumers or through the
institutional framework in which electricity and gas are provided.
The analysis of both forms of subsidy has shown them to be widespread, though it is
difficult to be quantitative about the size of the subsidies.
Once again the subsidy framework creates a bias against renewable energy systems
16
because the institutional framework within which renewable energy equipment is supplied
does not significantly benefit from current subsidies, especially those delivered through
state owned, centralised energy utilities such as SECWA.
State government housing policies for welfare housing reflect the same position as that
taken by private landlords. Solar water heaters add to capital costs while the benefits are
taken by rental occupants. Homeswest instead sees itself as providing housing and would
prefer to use its limited capital for the provision of housing rather than energy.
By contrast the agency responsible for housing government employees, GEHA, has
adopted a policy of solar water heaters on GEHA homes. A major reason for the
difference in policy is that GEHA operates almost completely in areas outside the natural
gas reticulation system.
Industrial development policies in Western Australia give no comfort to renewable energy
because the State government sees its industrial future in the energy intensive value adding
minerals processing arena. Faced with already high costs for electricity and natural gas,
the competitive position of Western Australia in the resource processing field is not seen to
be strong. There is thus a perception that the use of renewable sources of energy does not
assist with the overall thrust of industrial policy because of the even higher costs which
would be involved.
One exception would be the use of renewable energy for electricity generation in the
remote areas of the State where generation costs with conventional diesel generators are
already high, and where renewable energy is competitive.
WORK PROGRAMME DESCRIPTION
The work program consisted of a number of components.
First, a literature review was undertaken to establish the context for subsequent steps.
Second, an outline of the known use of renewable energy in Western Australia was
prepared as a means of illustrating the low level of penetration of renewable energy, and
indeed the actual decline in the use of solar water heating systems in new installations in
the Perth metropolitan area.
The third step involved contact with manufacturers and suppliers of solar equipment in
Western Australia, particularly the solar water heating manufacturers and suppliers. This
culminated in a formal survey to assess their views on consumer attitudes to solar water
heaters.
The fourth stage involved a survey of households in the metropolitan area. This survey
provided descriptive material on the characteristics of households with solar water heaters
as well as information on barriers to the greater use of solar water heaters.
The fifth stage involved a focus on a completely different, and relatively newer technology
17
- the use of renewable energy equipment to generate electricity. A survey was carried out
on pastoral leases in Western Australia to discover how pastoral leases generate electricity
and for what purposes, and to what extent they use renewable energy equipment. At the
same time the survey also examined water heating on pastoral leases.
Based on energy use data from SECWA and cost data from industry, it was possible to
carry out simulations directed towards removing the advantage of gas over solar systems.
In this way it was possible to isolate the commercial and policy requirements necessary to
reduce cost as a barrier to the use of solar water heating systems.
An examination of government policies which may present barriers to renewable energy
was undertaken. Particular emphasis was given to the policies of SECWA and the
institutional framework within which SECWA operates. In addition government policies
on the role of renewable energy in public housing and industrial development were
assessed.
POTENTIAL FOR SHORT TERM INDUSTRIAL APPLICATIONS
The cost data, together with the attitudes of consumers as revealed in the surveys, indicate
that manufacturers and suppliers of renewable energy equipment need to reduce costs and
improve the actual and perceived capability, performance and reliability of their
equipment.
Reductions in costs may come from larger markets, new materials, or new production
processes. Improving performance means dealing with the actual problems highlighted in
the surveys. In addition there are a number of perceived problems to be overcome, largely
in the area of electricity generation. Solution to these problems most likely involves a
commitment to greater use of local demonstration projects, and an improvement in the
provision of after sales service, including training in self-maintenance.
18
RECOMMENDATIONS
1. Place SECWA on a fully commercial basis which would involve SECWA covering
the full costs of electricity generation and gas supply and passing on those full costs to
consumers. In this way consumers will face the real costs of energy supply and be in a
position to better assess the alternatives including renewable sources.
2. External costs associated with the generation of electricity and the use of natural gas
should be internalised so as to make the prices paid by consumers accurately reflect
the costs imposed on society by the use of electricity and gas.
3. The above two recommendations may cause hardship to low income consumers,
therefore policies which assist them should be maintained and financed from
consolidated revenue.
4. Phase out the uniform tariff policy in the non-interconnected system, in the first
instance by removing it for industrial and commercial consumers and subsequently for
domestic consumers. To ease the burden on domestic consumers, the ongoing value
of the uniform tariff policy could be replaced by a contribution to the purchase of
renewable energy technologies.
5. Within the interconnected system, as local distribution networks require replacement,
the first evaluation should consider whether stand alone renewable systems could
economically replace the grid delivery system.
6. Provide an equivalent risk offset for stand alone renewable equipment as is currently
provided by public provision of conventional energy. This could be in the form of
either an interest rate subsidy or a capital cost subsidy.
7. Any policy associated with cogeneration and purchase of power from small producers,
including renewable sources should reflect the capital costs as well as fuel costs
avoided by SECWA.
8. Provide a vehicle for the systematic dissemination of information for potential users of
renewable energy which would serve to offset concerns about the reliability,
performance and maintenance of renewable energy systems. This could be achieved
by the upgrading of the Renewable Energy Advisory Council to a statutory authority
with legislative responsibilities and adequate resources to overcome existing
attitudinal and institutional barriers to renewable energy.
9. In the design of off-peak electricity tariffs, ensure that the off-peak tariff is either not
conducive to a switch to electric water heating, or that the use of the off-peak tariff is
regulated to prohibit its use for water heating.
10. The declining block tariff for domestic gas consumption should be replaced by a flat
rate tariff, with a daily supply charge directed towards recovering the fixed costs of
gas transmission and distribution. The gas tariff should be designed to reflect the long
19
run costs of gas supply, and alternative uses for the gas. The gas tariff should also be
set in a context free from institutional imperatives associated with "take or pay"
supply contracts from gas producers.
11. A single agency should be made responsible for power supply for aboriginal
communities. This agency should have the responsibility for providing information
on renewable energy systems to aboriginal communities, arranging the supply of
equipment to communities, as well as the provision of maintenance, and maintenance
training. This agency should be one which has close consultative links with aboriginal
communities.
20
CHAPTER 1
PROJECT OBJECTIVES AND WORK PROGRAMME
1.1
Barriers to the Diffusion of Renewable Energy Technologies
Despite the fact that Western Australia has a high degree of solar insolation (Lowe, et al,
1984) and available sources of wind energy (SECWA, 1990), the use of renewable energy
technologies that take advantage of these opportunities has been limited. The aim of this
project is to determine the nature and extent of the non-technical barriers that stand in the
way of an increased role for renewable energy.
Technical barriers may be defined as the inability of a technology to deliver a desired
service at any reasonable cost relative to alternative technologies. It would be expected
that any new technology may have a number of technical features associated with it which
would limit its take up by consumers. For the purpose of this study, however, these
technical factors as barriers to energy supply and use choices are not considered. Nontechnical barriers are those associated with (a) attitudes resulting from a lack of
information and experience with the technology, (b) distortions in the market prices of
technologies resulting from market failure through an inability to internalise external costs
and the provision of subsidies, and (c) the operation of institutional factors and government
policies which discriminate against one technology in favour of another.
The first focus of this study is on the attitudinal factors which potential users may have
towards renewable energy technologies. In particular, consumers may have concerns
about, for example, the cost, reliability and long term operational aspects of renewable
energy equipment. Individuals do not necessarily receive complete information about new
technology and the opportunities available for that technology. A further attitudinal barrier
may be, for example, the image people have of themselves as energy consumers. On the
one hand, it is possible that certain groups in society may willingly embrace renewable
energy out of their sense of responsibility and an interest in technological innovation. On
the other hand, there may be other groups reluctant to take on new technologies for fear of
being different, of taking chances in a world in which they are not accustomed to taking
chances. In addition people have views on the risks they are prepared to assume and may
take the view that unacceptable risks are associated with renewable energy relative to
conventional sources. Also, people may feel that resale values of their houses and the
overall perception of their street image may be adversely affected by solar energy
appliances on their roofs.
The second focus relates to the perceived costs of renewable energy. Renewable energy
equipment, despite having a free source of energy in the form of solar insolation or wind,
generally has a substantial up-front capital cost and small on-going costs, whereas for
conventional technologies the reverse is true. This capital outlay required may constitute a
barrier to the use of renewable energy, so that, despite the fact that one technology may be
preferable to another on overall cost grounds, if it involves a financing decision by
21
consumers, there may be a different outcome. Another cost related barrier is the inability
of the pricing system to take account of external costs, such as environmental damage, in
determining the relative prices of competing energy sources. In the market place the
consumer faces choices largely based on the private costs of producing the differing
technologies and the costs incurred by consumers themselves. Because of the existence of
negative externalities in the production and consumption of energy using technologies,
consumers to date are not required to take into account the full range of costs associated
with the energy supply decisions. What they are not required to consider are the external
costs associated with environmental and health impacts that are consequential upon their
decision making. Hence consumers face a distorted set of prices which biases them against
renewable energy appliances. Detailed analysis of this whole question of choice in the face
of negative externalities has been carried out by Stocker et al. (1990).
The third major focus is on the range of policy institutions and regulations which may
influence behaviour and attitudes towards renewable appliances. Examples include
Government policies with respect to the pricing of competitive energy sources, public
ownership of energy utilities, and the regulation of the use of renewable energy equipment.
1.2
Barriers in Western Australia
The focus of our study is on the non-technical barriers to renewable energy in Western
Australia. In addition to the attitudinal aspects discussed above, a special characteristic of
Western Australia is the development of a social policy towards electricity delivery in
Western Australia. The history of the post World War II period has been one in which a
government authority, The State Energy Commission of Western Australia (SECWA), has
increasingly asserted its control over all sources of electricity and gas supply in Western
Australia. Whereas previously country towns supplied their own electricity from their own
generation systems, these systems were progressively taken over by SECWA as part of a
policy of statewide rural electrification. The responsibility for electricity services was
removed from individuals and communities to a single government agency. In this way,
electricity supply became a state rather than a local community concern.
Other barriers to renewable energy specific to Western Australia arise from the set of State
Government policies currently in place including those operated through SECWA and
other Government agencies. SECWA carries out policies with respect to the pricing of
energy and the sources of fuels for electricity generation and the choice of generating
technology. SECWA is also the dominant supplier of natural gas which is the major
conventional alternative to coal for electricity generation and solar for water heating. In
other areas of Government operations, policy is directed towards the use of energy in
housing supplied by Government either in the Homeswest (welfare) context or in housing
supplied for Government employees under the Government Employees Housing Authority
(GEHA) scheme. In addition policy towards renewable energy is relevant in the provision
of power to aboriginal communities and in industry development.
1.3
Project Objectives
The first objective for the project involved an assessment of industry and consumer
22
attitudes towards renewable energy using surveys. These surveys sought to test the
perceived costs and benefits of renewable energy appliances over other sources of energy,
the state of knowledge of consumers about renewable energy appliances, the characteristics
of the people who actually made use of renewable energy appliances as well as general
overall attitudes towards renewable energy within the community.
The second objective was to assess the costs of competing water heating systems to
determine the conditions under which solar water heating systems would be the lowest cost
choice.
The third objective of the project was a detailed examination of government policies with
respect to the pricing, use and delivery of energy in Western Australia which impact upon
renewable energy. The policies under review included the following:
• the treatment of external costs in electricity generation;
• the Uniform Tariff Policy;
• the Contributary Extension Scheme (CES);
• the Isolated Systems Subsidy (ISS);
• buy-back policies from private energy suppliers;
• the structure of SECWA costs;
• industrial development policy in Western Australia;
• the Government's set of housing policies;
1.4
Work Programme
The work program consisted of a number of components.
First, a literature review was undertaken to establish the context for subsequent steps.
Second, an outline of the known use of renewable energy in Western Australia was
prepared as a means of illustrating the low level of penetration of renewable energy, and
indeed the actual decline in the use of solar water heating systems in new installations in
the Perth metropolitan area.
The third step involved contact with manufacturers and suppliers of solar equipment in
Western Australia, particularly the solar water heating manufacturers and suppliers. This
culminated in a formal survey to assess their views on consumer attitudes to solar water
heaters.
23
The fourth stage involved a survey of households in the metropolitan area. This survey
provided descriptive material on the characteristics of households with solar water heaters
as well as information on barriers to the greater use of solar water heaters.
The fifth stage involved a focus on a completely different, and relatively newer technology
- the use of renewable equipment to generate electricity from wind and solar power. To
pursue this the research area shifted to pastoral leases in Western Australia. With only a
small number of exceptions, pastoral leases are outside the SECWA South West
interconnected grid and other local area grids. Pastoral leases, because of their isolation
generate their own electricity. The survey of pastoral leases was directed towards
discovering how pastoral leases did generate electricity and for what purposes, as well as
their use of renewable equipment for electricity generation. At the same time the survey
also examined water heating on pastoral leases and the barriers which may exist in that
particular environment.
The surveys showed that cost was an important barrier. To analyse this cost question in
greater detail data on the energy requirements of a range of water heating appliances were
obtained from SECWA. When these data were combined with appliance cost and
installation data and the 1990/91 electricity and gas tariffs it was possible to provide
estimates of the cost of hot water on a cents/litre basis for a number of appliances over a
range of volume drawdowns.
The cost data demonstrated the disadvantages faced by solar water heaters, particularly
relative to natural gas systems. Using the cost data it was possible to carry out simulations
directed towards removing the advantage of gas over solar systems. In this way it was
possible to isolate the commercial and policy requirements necessary to reduce cost as a
barrier to the use of solar water heating systems.
During the process of survey design implementation and analysis, an examination of
government policies which may present barriers to renewable energy was undertaken.
Particular emphasis was given to the policies of SECWA and the institutional framework
within which SECWA operates. In addition government policies on the role of renewable
energy in public housing and industrial development were assessed.
Finally some recommendations on the removal of barriers to renewable energy were
developed.
24
CHAPTER 2
LITERATURE REVIEW
2.1
International Perspectives
Australia is not unique in having an energy supply system that is dominated by fossil fuels.
Nor is it unique in having experienced a cyclical pattern of high interest in renewable
energy followed by periods of withdrawal. Both in Australia and globally, this pattern can
in part be correlated with movements in oil and other fossil fuel prices. The lower price of
oil is one of the major factors responsible for the downturn in renewable energy use in the
mid-eighties after their rapid diffusion in the seventies. For the future, Nola and Sioshansi
(1990) suggest that despite current low oil prices, a strong interest in renewable energy
does make sense. This is because in the wake of severe oil spills and growing concern
about environmental protection and air quality, especially in cities, renewable energy can
contribute strongly to the amelioration of these problems.
Social attitudes have been another barrier to use of renewable energy worldwide. In 1981
soon after the peak of the 1979/80 oil crisis, the Solar Energy Research Institute of the
United States commissioned two interview-based surveys of home owners, seeking to
discover the attitudes to solar energy. In general, there was considerable support amongst
home owners for the use of solar energy (SERI, 1981). They strongly preferred solar
energy over other energy options and yet two-thirds had not actually considered investing
in solar equipment for their own homes. With respect to the image of solar energy, it was
perceived as being used not just by fringe groups and iconoclasts but by economy-minded
people, scientific types, upper income people and environmentalists as well as do-ityourselfers.
Further use of solar water heating systems may have been inhibited by lack of knowledge
of renewable energy. There was wide-spread ignorance of solar incentive schemes and an
ignorance of solar technology in general. Public concern which amounted to barriers to the
use of solar energy included the concern over inadequate warranty coverage for solar
energy equipment, the initial cost of solar energy equipment, its operating reliability, and
the dependability and reliability of solar firms. The most important barriers were
associated with the initial system purchase.
A second set of barriers which were not quite as important was that associated with issues
arising from living with solar energy systems such as their safety. A third group of barriers
relating to the aesthetics of solar energy systems and the lifestyle issues arising from the
use were seen to be less important again. In this survey, perceived advantages included
making savings over the long term, reducing energy bills and protecting against inflation.
Social attitudes aside, government policy will also influence the diffusion of renewable
energy. The relevant policies are both industry development policy and energy policy. A
number of countries have developed policies to promote renewable energy or at least to
offset disadvantages of, for example, high capital cost of installation. These fall into the
25
categories of consumer incentives (e.g. loans), and producer incentives (e.g. rebates, tax
incentives, buy-back and industry subsidies). A number of countries have instituted a
variety of incentive schemes predominantly to promote the use of solar hot water heating
and to a much lesser extent renewable energy power generation.
Japan, Korea, Taiwan, France, Greece, Portugal, Germany, Austria and India all have
incentive schemes in the form of soft loans to promote solar hot water heating usage.
Holland offers a 40% subsidy on solar water heating systems to promote their purchase. A
typical soft loan involves a low deposit or no deposit together with eight years or more to
pay off that initial loan at a low interest rate of 5 or so percent. In two other countries,
Papua New Guinea and Cyprus, it is compulsory for new home builders to install solar
water heating systems in their homes.
With respect to power generation from renewable sources two states are outstanding in
their success due to policy and financial incentives. These are Denmark and California.
Denmark has consistently followed a policy of promoting wind energy use in the local
market through the provision of consumer incentives (Duxbury, 1990). Despite the fact
that the initial rebate of 30% of total installed costs offered by the Government to owners
of wind generators was reduced by 1990 to around 10% for private houses and completely
removed for commercial farms, the Danish wind industry is still active for two reasons.
Firstly the utility has to buy surplus generated power at a price equal to its selling price and
secondly units used by the owner avoid the substantial taxes normally applied to the use of
electrical energy (Duxbury, 1990). The Danish export market within the EEC is also
supported by several policies of the EEC. Firstly there is a development and
demonstration programme which funds RD & D to the value of 50% and through this
scheme a good deal of funds have been made available for wind energy research in
particular. There is also a European Regional Development Fund which aims to promote
the development of indiginous energy sources and usually provides funding from between
55 and 70% for feasibility or environmental impact studies. Thirdly the Integrated
Mediterranean programme aims to improve the socio economic structures in the southern
regions of Europe. This scheme has also been used to get wind generation off the ground
e.g. in Greece (Duxbury, 1990). There is a range of other markets outside the EEC most of
which contain sites in isolated areas with high avoided fuel costs.
The wind power industry in California has expanded as a result of a multiplicity of policy
and financial incentives as well as favourable environmental and social factors including:
• the Standard Offer 4 contract devised to provide pricing certainty for independent
producers and thereby assisting them to obtain project financing;
• a 15% Federal Tax Credit;
• a 25% State Tax Credit;
• the Fuel Diversity Policy of the Californian Energy Commission which proposed that
wind energy provide 10% of the State's electricity supply by the year 2000;
26
• the role of the Californian Public Utility Commission in gaining the active support of
the utilities for using conservation and alternative energy in the State's energy supply
mix;
• a good wind resource;
• cheap land;
• a wealthy State with a strong entrepreneurial spirit;
Although not all of these incentives are currently in place in their original form, they
proved to be sufficiently powerful to establish a wind energy industry in California which
is probably the best in the world (Duxbury, 1990).
By comparison to Denmark and California, however, most other countries have offered
few incentives for the uptake of renewable energy. The existence of external costs in the
form of environmental and social impacts which are not included in the price of energy has
also meant that renewable energy is not perceived as a commercially viable source. Both
Germany and the United States are now looking closely at ways in which energy utilities
can begin internalising the cost of environmental and social damage and these processes
are likely to have a strong influence on removing the financial barriers to the use of
renewable energy.
2.2
Australian Studies
In many respects Australia is in a favourable situation with regard to renewable energy.
Australia, however, is also well endowed with low cost non-renewable energy sources and
therefore the development of renewables in this country is placed in a very competitive
environment.
2.2.1 Social Attitudes to Renewable Energy
The Victorian Solar Energy Council (now the Renewable Energy Authority of Victoria)
commissioned a report which surveyed attitudes of the Victorian public to solar energy
(VSEC, 1983). The main results of their inquiry were that firstly, very little is known
about solar energy. Secondly, negative attitudes exist towards the reliability, the
aesthetics, the maintenance, the installation costs, the suitability of the climate, the low
competitive fuel prices and the lack of technical knowledge. Thirdly, conservation of
natural resources did not appear to be an important issue among the surveyed public.
Fourthly, respondents spontaneously mentioned the notion of a pay-back period as being
relevant to their considerations and a period of five years appeared to be an acceptable time
frame.
Kinsman (1984) surveyed owners of domestic solar water heating systems in Melbourne.
The results showed that owners believed that their systems had performed better than
expected prior to purchase, and that the majority of owners would purchase solar systems
27
again. A significant proportion of owners had problems with their systems, including burst
panels due to freezing conditions, leaks, and lack of quality control, but these problems
were described for the most part as minor or insignificant. About half the respondents
indicated that they purchased a solar water heating system with the objective of saving
money in the long term, while a much smaller proportion (16%) had hoped for a saving in
the short term. Around half the respondents had actually experienced a reasonable
reduction in their electricity outlays.
In Queensland the usage of renewable energy particularly in power generation systems
took off in the early 1980's as a result of the industrial disputes which led to disruptions,
sometimes severe, in the supply of electricity. A survey of over 20 stand-alone renewable
energy systems was made by Berrill and Fries (1984) in which they sought information on
the type and use of those systems as well as the attitudes of the users with respect to their
lifestyles and to the State owned electricity supply authority. Most users reported
satisfaction with their system and well over two-thirds experienced a positive change in
lifestyle as a result of it. This was associated with a sense of satisfaction at being
independent from the grid and independent of the associated unreliability with the delivery
of power during the period of industrial disputation. A number of technical problems
were reported in the survey, and there was also a feeling that insufficient information was
supplied about renewable energy by manufacturers. Most respondents indicated that
visitors to their homes had difficulty believing that the systems could provide electrical
power, a comment that indicates a lack of available information to the public on renewable
energy technologies. Also all the respondents felt that insufficient government money was
spend on renewable energy research and information dissemination.
Also associated with the period of industrial disputation in Queensland was a rise in the
interest in, and use of, solar water heating systems. Lowe et al. (1984) noted that there was
a pronounced difference in fuel prices between the Australian states and suggested that the
differences in fuel prices might account for the variation in sales of solar water heating
systems observed amongst the states. However, it was also indicated that the patterns of
sales could not be explained simply in terms of fuel price differences. Two important
reasons given were firstly, a concern for the use of non-renewable resources and secondly
a desire to be independent of the centralised electricity system. Lowe et al. also point to
regional variations in the relative importance of these factors throughout Australia.
Concern about the use of non-renewable fuels was lowest in Queensland and Western
Australia and highest in Victoria. Concern about the security of hot water supply was very
high in New South Wales where there had been supply disruptions in the early 80's and
was also very high in Queensland. Nearly two-thirds of all purchasers of solar water
heating systems gave security of supply as a principle reason for using solar water heating
systems.
In a telephone survey of 452 new householders in Queensland, some interesting factors
came to light in terms of the reasons for the adoption or rejection of solar water heating
systems (Foster, 1990a). The reasons cited for not taking the solar option were given as
being firstly, the high initial cost, the most common reason cited by respondents, secondly
that solar water heating systems are not considered effective over their lifetime and thirdly,
that solar water heating systems provided a limited hot water supply and needed boosting.
Reasons such as the aesthetics, bad reports from friends and a range of other factors were
28
of almost no importance. Reasons for adopting solar water heating systems were given as
firstly, the potential to reduce power bills, secondly, the potential to conserve energy and
fossil fuels and thirdly, that people had previously owned and used solar systems and were
happy with them. Issues relating to appliance maintenance, the reduction of pollution and
the Greenhouse effect, and the recommendation of friends were of less importance. In
obtaining information that influences a decision, the most important source was personal
contact, and far more important than the media as a source of information (Foster, 1990a).
2.2.2 Policy barriers to renewable energy
Foster (1990b) suggests that public and private sector policies, as well as economic
performance, shape consumer perceptions and are key determinants of solar water heating
system uptake around the States of Australia. In particular, he claims that private sector
policies in the Northern Territory, Western Australia and South Australia, have had an
overall positive effect on solar water heating system sales, compared with policies in the
other states largely because of the higher levels of solar promotion undertaken in these
states. In the arena of public policy he isolates a range of positive policy areas including
energy supply policies, electricity tariff structures, solar research and development, solar
demonstration projects, financial incentives for solar system purchase, public information
and education on solar technologies, consumer protection in the form of solar access laws,
and financial concessions for conventional energy sources. This study, however, does not
appear to take into account several policies associated with SECWA and the Western
Australian Government which would serve to function as barriers to the use of renewable
energy in Western Australia.
Diesendorf (1987) and Blakers and Diesendorf (1985) have argued that the main
impediments to the expansion of renewable energy industries and the development of
associated technologies into large scale commercially viable industries are no longer
technical impediments but rather they are imbedded in our existing institutions. These
institutional barriers they identify as including the following:
• subsidies for conventional sources of energy which flow to both energy
suppliers and energy consumers;
• low and inappropriate funding for
renewable energy technologies;
research, development and demonstration of
• reluctance of electricity utilities to offer fair buy-back rates for privately owned wind
generated electricity supplied to their grids;
• failure to give economic recognition to the environmental and resource conserving
advantages of renewable energy, and a failure to internalise environmental costs;
• bias in the availability of finance for renewable energy companies.
In a document published by the Appropriate Technology Development Group, Western
29
Australia, (APACE, 1985) several institutional barriers to wind energy were identified:
• import duties on the components of renewable energy equipment;
• rural electricity tariffs whereby urban electricity consumers subsidise rural
consumers;
• government subsidies for grid connections in rural areas;
• grid connected electricity consumers paying the associated capital costs over a period of
time through electricity tariffs, whereas private renewable energy equipment requires an
up front capital outlay;
• publicly owned utilities receiving government guarantees for their borrowings, paying
few taxes and not having a rate of return requirement - advantages not given to private
investors;
• the advantages associated with environmentally friendly electricity generation not being
reflected in any form of economic reward;
• legal barriers in the form of restrictions on the sale of electricity by private power
producers;
• land use planning regulations set by local governments.
Blakers, Crawford, Diesendorf, Hill and Outhred (1991) identified further institutional
barriers to the establishment of a wind industry in Australia as being:
• relatively low discount rates set by energy supply utilities compared to small private
producers;
• inattention to the concept of least cost energy planning;
• failure to recognise the benefits of modular systems;
• narrow charters of energy supply utilities;
• inadequate education and extension services.
30
CHAPTER 3
RENEWABLE ENERGY IN WESTERN AUSTRALIA
3.1
Solar Water Heating Systems
The percentage of private dwellings in Western Australia with a solar water heating system
rose from a low 4.8% in 1976 to 24.5% in 1985/86 (Foster 1990b). While these statistics
would appear to give a favourable picture of the market penetration of solar water heating
systems, a very different picture emerges from SECWA data relating to the installation of
water heating systems in new residences over the period 1980 to 1988. Figure 3.1 shows
that as a percentage of new installations, solar accounted for 19.70% in 1980, 11.36% in
1988 with peak years in 1983 and 1984 at 26.27% of new installations. No later data are
available from SECWA because the policy of SECWA inspection of the wiring of all new
residences (the source of the data) has been discontinued.
What the latter data clearly demonstrate is the impact of SECWA's gas promotion policy
following the arrival of North West Shelf natural gas in the Perth area and the associated
contractual terms under which SECWA acquired the gas. These matters are fully
discussed in Chapter 8.
Outside the metropolitan area the early enthusiasm for solar water heaters has been
dampened by poor results resulting from inappropriate roof mounting, high maintenance
costs due to poor water quality, physical damage to collectors and the low capacity of older
units. In addition long standing government policies have acted to inhibit the use of solar
water heating systems in remote areas.
Despite the downturn in the local market, some manufacturers have had considerable
success in export markets. This in part reflects the high technical standards to which
Australian manufacturers conform.
3.2
Wind and Solar Electricity Generation
3.2.1 Wind power
The most significant application of wind power for electricity generation in Australia to
date is the SECWA wind farm at Esperance with a total installed capacity of 0.36 MW.
Electricity generated at the wind farm is supplied into the local area grid, and acts basically
as a fuel-saver for the conventional diesel generators used to supply the Esperance area.
The Western Australian Water Authority water treatment plant at Woodman Point uses a
wind turbine (60 kW) to generate a small part of its electricity requirements. They also
have a wind turbine at Denham to supply energy to a water desalination plant.
31
SECWA has carried out trials with wind turbines on Rottnest Island (55 kW). Two
turbines of 60 and 30 kW have been installed at South Fremantle, owned by SECWA and
Westwind (a commercial wind turbine manufacturer) respectively. Westwind also has a
turbine at Kelmscott (11 kW). In addition, there are a number of wind turbines in the
remote areas, as revealed in the survey of pastoral leases undertaken for this project (see
Chapter 6).
3.2.2 Solar power
There are around 40 Solar Packs in Western Australia. These are shipping containers
equipped with refrigeration, lighting, television, battery charging and communications
facilities, and powered by photovoltaic cells. They are primarily used by remote aboriginal
communities. These are further discussed in Chapter 7.
FIGURE 3.1
SOLAR WATER HEATING SYSTEM INSTALLATIONS
IN THE METROPOLITAN AREA
% Market share - new residences
70
solar
gas
electricity
60
50
40
30
20
10
1978
1980
1982
1984
1986
1988
Source: SECWA
Photovoltaic cells are used in a variety of other remote applications such as on pastoral
leases where they power electric fencing, remote lighting and water pumping.
In addition, Telecom Australia uses photovoltaic cells throughout Western Australia. The
32
four main applications are:
• Analog and digital microwave repeaters;
• Optic fibre regenerators;
• Digital radio concentrator system (DRCS) repeaters and customers;
• Customer end of single channel radio telephone services.
A total of around 260 kW of photovoltaic capacity is installed by Telecom in Western
Australia. Table 3.1 sets out the installed capacities of the above applications in the State.
The most extensive use of photovoltaic cells for microwave repeaters is for the trunk route
from Karratha - South Hedland - Derby - Kununurra - Wyndham. Forty four of the forty
five repeaters involved are solar powered, the exception being the repeater closest to
Karratha which is mains powered. Terminals in the towns are also powered from the
mains. Optic fibre regenerators use photovoltaic power when they are located away from
established mains power distribution in rural or remote areas. All DRCS repeaters in the
13 DRCS systems in Western Australia and most of the associated DRCS customer radios
for rural and remote customers are solar powered. The majority (around 80%) of
radiotelephone services for rural and remote customers are solar powered.
TABLE 3.1
TELECOME APPLICATIONS OF PHOTOVOLTAICS IN
WESTERN AUSTRALIA
System Type
Number of Sites
Typical Installed
Power Use (W)
Photovoltaic
Capacity (W)
Microwave repeaters
60
80-100
800
Optic fibre regenerators
15
NA
1200
DRCS repeaters
130
55
500
DRCS customers
390
8
80
SC radiotelephone
500
4
40
Source: Telecom, pers. comm.
33
CHAPTER 4
ENERGY SURVEYS:
OBJECTIVES, HYPOTHESES, AND METHODS.
4.1 Introduction
Three different surveys were conducted to examine some of the major non-technical
barriers to the diffusion of renewable energy technologies, with a special focus on the
adoption of solar water heating systems (SWHS). The first survey was of manufacturers
and suppliers of solar systems in Perth; the second was of a random sample of
householders in the Perth metropolitan area; and the third was of pastoral lease holders in
Western Australia. As well as using different populations, the three surveys had different
objectives.
4.2 Objectives and Hypotheses
A common objective of each survey was to discover the major non-technical barriers to
greater diffusion of renewable energy technologies. We expected, though, that the three
populations being surveyed would have their own unique perspective on such barriers.
4.2.1 Survey of manufacturers and suppliers.
Since there are not many manufacturers and suppliers of SWHS in Perth, all were
included in a questionnaire survey. The objective of the survey was to obtain from
manufacturers and suppliers:
• their perceptions of the reasons why people buy SWHS;
• their perceptions of the reasons why some people consider buying a SWHS but, in the
end, do not do so;
• their perceptions of the reasons why some people do not ever consider buying a SWHS;
• information about how they attempt to overcome these barriers;
• their perceptions of the roles of architects, builders, and the state government in
encouraging or impeding the greater adoption of SWHS;
• any background information they may have about general characteristics of the people
who buy SWHS and about the performance of, and satisfaction with, the systems they
install.
Since there are no published studies of manufacturers and suppliers of solar water heating
34
systems, this survey was largely exploratory and descriptive, and we had no formal
hypotheses to test with the data from the survey. However, we did expect clear patterns of
responses to be evident. We expected respondents would provide a small number of
reasons why they thought people either did not consider buying a SWHS, or if they did,
why they did not actually buy one; for example, costs, aesthetic values, ignorance, and
apathy. We expected we would be able to determine the perceived relative importance of
these reasons. We also expected respondents would indicate lack of support for SWHS,
and the solar industry generally, from architects, builders, and the state government.
4.2.2 Survey of householders.
In this survey we drew a random sample of 500 from the residential population of
metropolitan Perth. Members of the sample received a mailed questionnaire, containing a
range of questions about various demographic, behavioural, attitudinal, and perceptual
characteristics. The objective of this survey was to:
• find variables which predict current ownership of a SWHS;
• assess satisfaction with current water heating system;
• find variables which predict intention to buy a SWHS;
• assess the reasons why those without a SWHS do not have one;
• assess respondents' perceptions of the reasons why more people do not install a SWHS;
• assess the accuracy of respondents' knowledge of their expenditure on energy for water
heating;
• conclude from the above analyses what the major barriers are to more widespread
adoption of SWHS.
Based on previous research and on responses to the survey of manufacturers and
suppliers, we hypothesized that:
• ownership of SWHS would depend on home ownership (owning or buying versus
renting), income, home type (house versus non-house), and availability of gas;
• satisfaction with current water heating system would be no lower for those with a
SWHS than for those with different systems;
• intention to buy a SWHS would depend on a) satisfaction with current system (for
those already with a SWHS), and b) the same variables we hypothesized would predict
current ownership of SWHS;
• for those who do not currently have a SWHS, the primary self-reported reasons for not
having one would involve cost (initial outlay and expected payback period), aesthetic
35
value of a SWHS, and lack of knowledge or, understanding of, or faith in, technology;
• respondents would not have an accurate knowledge of the percentage of their SECWA
bill attributable to water heating, and that those respondents who do not have a SWHS
would not have an accurate knowledge of likely savings if they were to install a
SWHS.
4.2.3 Survey of pastoral lease holders.
This survey contacted by mail each of the 546 pastoral leases in Western Australia. The
questionnaire specifically focused on energy production and consumption and on the use
of renewable technologies on properties. There were also questions designed to determine
use of, and problems with, SWHS. As with the survey of manufacturers and suppliers,
this survey was largely exploratory and descriptive. Our main objective was to ascertain:
• how power is generated for homesteads;
• operating costs of homesteads' power systems;
• patterns of energy consumption on homesteads;
• how solar and wind power are used;
• knowledge of, and attitudes to, the Isolated Systems Subsidy;
• reasons for not having renewable components in the main power supply;
• use of, and intention to buy, different water heating systems.
We expected to gain a picture of the power needs of homesteads, how those needs are
currently met, what role solar and wind power currently plays, whether the Isolated
Systems Subsidy has affected the use of renewable components in power generation
systems, and what role solar and wind power generating systems might play in the future.
We also expected to determine the patterns of use of different water heating systems.
4.3 Methods
4.3.1 Survey of manufacturers and suppliers
A total of 19 manufacturers and suppliers of SWHS were listed in the most recent Perth
Yellow Pages telephone directory. These were each mailed a questionnaire and a replypaid envelope. The response rate was almost 74% (14 replies from 19). Prior to mailing
the questionnaire, detailed discussions about content and wording were held with a
number of people active in the field of solar energy. The final questionnaire contained 14
36
questions, most of which were open-ended. A copy of the questionnaire is presented in
Appendix 1.
4.3.2 Survey of householders
A random sample of 500 names and addresses was drawn from the most recent Perth
White Pages telephone directory, using a table of random numbers to select entries.
Although the phone book is not an ideal listing of the population from which to draw a
completely representative sample, it is adequate for present purposes. Pragmatic
considerations prevented us from using better sampling techniques. A discussion of
possible sample biases is given later.
Detailed discussions were held with various people active in the solar energy area about
question content and wording. A draft questionnaire was pilot tested on a small
convenience sample (n = 9), to check clarity, ease of completing, and time taken to
complete the questionnaire. This led to rewording and reformulating parts of the
questionnaire, which is contained in Appendix 2, along with other material associated
with this survey.
The final questionnaire was mailed, along with an introductory letter and a reply-paid
envelope, in November 1990 to the 500 members of the sample. Questionnaires returned
(n = 25) due to an unknown address or to the addressee being unknown at the address
were mailed to another randomly selected name. Two weeks after the initial mailing a
reminder letter was mailed to all 500 potential respondents.
Usable returns were received from 321 respondents, giving an overall response rate of
64.2%. This is satisfactory, given the method used to conduct the survey and the length of
the questionnaire. However, it is important to examine the sample to see if and how it
differs from the general population, and to consider what possible biases may exist in the
data set.
First, the sample was drawn from the phone book. Almost all households in Perth have a
telephone (approximately 94% of the Perth population), and the percentage of unlisted
numbers is small (less than 1%). It seems extremely unlikely, then, that any large or
serious biases in the sample would have arisen because of the incompleteness of the
population listing.
Second, the response rate was 64.2%. This may pose problems to the sample's
representativeness if there are systematic, important energy-related differences between
responders and non-responders. The literature suggests few such differences in energyrelated behaviours (Hirst and Goeltz, 1984; Stirling, 1990). It is, in principle, impossible
in the present survey to know what the characteristics of the non-responders are.
To check for sampling biases due to the response rate, every fifth person in the original
listing of the sample of 500 was contacted by phone and asked six brief questions. Only
73 of the 100 people were able to be contacted, despite making four call backs during
evenings and on weekends. Of these 73, 56 (76.7%) remembered receiving the
37
questionnaire, and 49 (67.1%) claimed they had completed and returned it. Of those who
did not return the questionnaire, most said they could not remember receiving it. One said
they forgot about it, and one said it (the survey) would not achieve anything. None of the
reasons concerned that person's views about solar energy or energy conservation. People
were asked their income, what sort of water heating system they have, and what their
attitudes were to each of energy conservation and solar energy (these two questions were
responded to on a five-point Likert scale, from 1 = strongly against, to 5 = strongly in
favour). Comparisons were made on these variables between those who said they had
returned the questionnaire and those who had not. There were no significant differences
between the two groups on attitude to energy conservation (means = 4.47 and 4.63,
respectively), or on attitude to solar energy (means = 4.51 and 4.75, respectively), but
there was a significant difference on income, with responders reporting a higher income
than non-responders (t = 2.13, p = .041). Across all 73 respondents, 26.4% had a solar
water heating system, 45.8% had a gas system, and 27.8% had an electric system. There
was no significant difference between the two groups on system type (chi square = 1.82,
p = .40).
Finally, we can compare the sample with the population on variables for which we have
data on both. The sex ratio in the sample is 57:43, while that in the Perth population
was 51:49 in the 1986 Census. Thus, the sample over-represents males. This is most
likely due to an anomaly in the population listing, wherein a number of households with
more than one adult member have only one directory listing under a male's initial. This is
only a problem if there are systematic sex differences in the variables we are measuring.
The literature suggests that women may be more "environmentally concerned" than are
men,
------------------------------------1 All p-values reported in this chapter and the next are two-tailed probabilities.
but the evidence is equivocal and weak. In a 1980 review, Van Liere and Dunlap found
seven studies which reported 18 different correlations between sex and various measures
of environmental concern (including measures of attitudes to specific energy use and
development issues). Six of these correlations showed men were more environmentally
concerned than women, and 13 showed women were more concerned. The size of the
correlations was small, though. In absolute terms, the average correlation was only 0.8,
meaning that, on average, sex accounts for less than one percent (0.64%) of the variance
in environmental concern. More recently, in her review of the literature on sex
differences in environmental concern, Stirling (1990) found that across many different
populations and measures, 13 studies showed women were more environmentally
concerned than men, five found no difference, and two found men were more
environmentally concerned than women. From the reviews of Van Liere and Dunlap
(1980) and Stirling (1990), it appears that the oversampling of men in this survey will
have negligible effect on our energy-related measures.
The mean age of the sample was 47 years, while that of the Perth population in the 1986
Census was 33 years. The median income of the sample was in the $30 - 40,000 pa
bracket; for the WA population the mean was $29,700 in the 1986 Census. Finally, 29%
of the sample reported having a solar water heating system, 44% a gas system, and 23%
38
an electric system. The corresponding figures for the Perth population are 26.3%, 32.1%,
and 35.5% (National Energy Survey, 1985-86; ABS 8212.0).
Thus, from all the above, we know that the sample over-represents males, and is older
than the Perth population, but in all other respects matches known population
characteristics reasonably well. The phone check on possible differences between
responders and non-responders further confirms that the sample is reasonably free from
sampling biases.
4.3.3 Survey of pastoral lease holders.
A complete listing of all 550 pastoral lease holders in Western Australia was obtained
from the Western Australian Department of Agriculture. Each was mailed a
questionnaire, with an introductory letter, and a cover letter from the Pastoralists and
Graziers Association (PGA) expressing strong support for the survey and requesting the
cooperation of the recipients. Prior to mailing, the questionnaire was circulated for
comments and contributions among various experts in solar energy and rural energy
problems. The PGA was also consulted about the questionnaire and about particular
problems facing pastoralists in their production and consumption of energy. Assistance
with questionnaire design was also provided by the Australian Bureau of Statistics.
Appendix 3 contains all materials relating to this survey.
Twenty five surveys were returned after the initial mailing. These were not readdressed, as
the initial mailing had exhausted the population listing, and there were no replacement
addresses. A reminder letter was mailed two weeks after the survey had been mailed. Of
the 525 surveys that had been delivered, replies were received from 258, giving an overall
response rate of 49.2%. This was better than expected for this population, as surveys
conducted by the PGA typically produce response rates of only around 30%
39
CHAPTER 5
WATER HEATING SYSTEM SURVEYS:
RESULTS AND DISCUSSION
5.1 Survey of Manufacturers and Suppliers.
Eleven suppliers and three manufacturers replied to the survey. Since there were no
noticeable differences between responses from the two groups, responses have been
grouped together. Presentation of results from this survey follows the objectives listed in
Section 4.2.1.
5.1.1 Perceptions of the reasons why people buy SWHS.
Respondents rated the importance of each of nine different perceived reasons for people
buying a SWHS (1 = not at all important, 2 = fairly important, 3 = important), and were
also asked to provide any other reasons we had not listed. Table 5.1 provides the ratings
given by respondents, the mean rating, and the percentage of respondents indicating each
reason is "important". Reasons for purchase are listed in descending order of importance.
Saving money in the long-term, reducing power bills now, and protecting against rising
costs, were clearly perceived to be the most important reasons for people buying a
SWHS. Conserving natural resources and increasing the resale value of the home were
both thought to be fairly important reasons, and the remaining four reasons were thought
to be negligibly important. Thus, financial considerations were seen by manufacturers
and suppliers to be the primary reason why people buy SWHS.
Other factors listed by respondents also referred to costs (e.g., "people believe the booster
costs too much to operate"), although one supplier mentioned new-product resistance to a
new gas-assisted solar system, and one manufacturer stated that referrals from others are
very important.
5.1.2 Perceptions of barriers to purchase.
Respondents were asked to rate the perceived importance of fourteen different barriers to
purchase among those people who seek information about SWHS. Table 5.2 summarizes
these responses.
Ironically, the cost of a solar system compared to conventional sources was seen as the
most important barrier, even though energy bill savings were also seen to be the most
important reason why people do purchase a SWHS. Obtaining credit to cover the cost of
the initial installation was not thought to be a major barrier.
40
Two "structural" barriers were rated as relatively important - people who are renting
rather than owning or buying their own home, and people who have been in their own
home only a short while. Renters are unlikely to make any capital outlays for their
residence, while other data (see section 5.1.6) highlight the fact that most SWHS are
installed as retrofits rather than in new constructions. Presumably, people are not likely to
retrofit their water heating system soon after moving into their home.
TABLE 5.1
PERCEIVED REASONS FOR PEOPLE PURCHASING SOLAR WATER HEATING
SYSTEMS
Importance rating
Reason
not at all
fairly
importan importan importan
t
t
t
mean
rating
%
responding
important
Saving money in the long
term
0
0
14
3.00
100.00
Reducing power bills now
0
1
13
2.93
92.86
Protecting against rising
costs
2
5
7
2.36
50.00
Conserving natural resources
2
9
3
2.07
21.43
Increasing resale value of
home
6
7
1
1.64
7.14
Increasing independence
from the grid
9
4
1
1.43
7.14
Easing the energy shortage
9
5
0
1.36
0.00
Increasing status, prestige,
self-esteem
11
2
1
1.29
7.14
Reducing need for more
large power plants
11
3
0
1.21
0.00
"Lack of knowledge" is perceived to be a relatively important barrier. Presumably this
refers to a general lack of knowledge about solar systems, and perhaps even to anything
about household water heating and energy consumption, since specific concerns
41
(restrictions to the availability of hot water, inconvenience in having to turn on the
booster, cost of maintenance, concern about warranty, and concern about service
availability) are rated as relatively unimportant. Perhaps "lack of knowledge" may
represent a general antipathy toward solar energy in a segment of the population.
The other relatively important perceived barrier is "unattractive addition to house". This
factor is probably even more important in the group of people who do not even inquire
about SWHS. One manufacturer mentioned that some councils' regulations do not allow
solar collectors on the front of a house. To pursue this further, we spoke to a
representative from each of 25 shire councils in and around Perth. One council has a
special planning code governing SWHS installations in one development site. SWHS
may only be installed in this area if they are concealed from the street and parks, the top
of the water heater does not go above the roof line, the water heater is parallel to the roof
plane, and they are painted to match the roof of the house. These conditions were placed
by the developers of the estate, which they consider to be "high status". Another council
requires planning permission to install a SWHS, and "offence to neighbour" is one
criterion considered. So far, no applications have been denied. One further council
requires that SWHS lie flat and not at a reverse pitch. None of the other councils has any
planning requirements for SWHS installations.
42
TABLE 5.2
MAIN PERCEIVED BARRIERS TO PURCHASING SOLAR WATER
HEATING SYSTEMS
Importance rating
Reason
not at all
fairly
importan importan importan
t
t
t
mean
rating
%
responding
important
Cost compared to
conventional sources
0
3
11
2.79
78.75
Rent and do not own
3
1
10
2.50
71.43
Lack of knowledge
3
5
6
2.21
42.86
Unattractive for house
5
3
6
2.07
42.86
Short term of residence
3
8
3
2.00
21.43
Loan for initial cost
6
5
3
1.79
21.43
Restrictions to hot water
availability *
7
3
3
1.69
23.08
Inconvenience of having to
turn on booster
7
6
1
1.57
7.14
Cost of maintenance
11
2
1
1.29
7.14
Concern about warranty
10
4
0
1.29
0.00
Fear of the unknown
11
3
0
1.21
0.00
No effect on resale value of
house
11
3
0
1.21
0.00
Concern about service
12
2
0
1.14
0.00
Prospect of declining cost in
near future
13
1
0
1.07
0.00
* One supplier did not respond to this item.
43
5.1.3 Perceptions of barriers to considering a SWHS.
From responses to this open-ended question, two factors emerged as the major perceived
reasons for why some people do not ever even inquire about purchasing a SWHS - cost
and ignorance. Eleven of the fourteen manufacturers and suppliers cited cost as the major
reason, in one form or another. Some stated that SWHS are simply "too expensive" for
some people, while others qualified their statement (e.g., "doubt that the investment will
be recovered", "perception that the cost involved means deferral of other, more useful,
more pleasurable, or more pressing purchases", and "cost of initial outlay against natural
gas or off-peak electric water heaters"). Likewise, comments about ignorance among the
public (made by half the respondents) ranged from general to more specific or qualified
(e.g., from "lack of knowledge" and "ignorance of the benefits (environmental and
economic)" to "people's lack of knowledge about the cost of their hot water" and "the vast
majority of potential solar water heating system users lack the ability and motivation to
correctly assess their requirements and resist impulse decisions").
Other reasons mentioned by respondents include appearance (by one person), social
influence (by one person who wrote that a major barrier is "friends who complain about
electric boosting costs in winter"), and people's conservatism (by two people, who wrote
that people tend to stick with the water heating system they currently have). Five
respondents specifically cited gas as the heating system which many people find cheaper
or more convenient than solar.
5.1.4 Attempts to overcome perceived barriers.
Given that most manufacturers and suppliers see cost as by far the biggest barrier to the
more widespread adoption of SWHS, it is not surprising that most manufacturers and
suppliers gear most of their efforts to changing people's views of the costs of SWHS.
Only two mentioned directly the use of advertising in breaking down barriers, and one of
these said the company also uses physical displays at shopping centres. One supplier
mentioned that it is hard to get the proper information across in media advertising, and
that the main chance to overcome barriers comes after personal contact has been made by
an interested party. Presumably the tactics reported by most respondents refer more
specifically to interpersonal strategies, rather than to broader advertising campaigns.
The most commonly cited strategy (by 8 respondents) was to address directly the cost
factor. Although the responses did not describe how this was done, reference was made
to "the gas-assisted solar's ability to cut energy bills", "cost savings over the long term
compared with other hot water systems", and "running costs over the long term are less
and maintenance is minimal". Almost all of these responses mentioned long term savings
and payback periods; only one mentioned short term paybacks. One supplier stated they
attempt to overcome barriers by organising finance for customers. One supplier stated
they are attempting to design a better looking and a more cost effective heater, and one
manufacturer mentioned that they are promoting a new design which improves efficiency.
Finally, one supplier wrote "regrettably, our marketing strategies do not address these
barriers".
44
5.1.5 Perceptions of the roles of architects, builders, and the state government.
Only two respondents said that architects and builders do not have an important role to
play in the uptake of SWHS. All respondents supply updated information to architects.
Respondents' views of architects and builders were strong and consistent: architects
oppose SWHS on aesthetic grounds; builders are concerned only with using the cheapest
possible materials and with maximising their own returns. The concerns of architects and
builders obstruct more widespread adoption of SWHS. There seems to be little or no
cooperation between the solar industry on the one hand, and architects and builders on
the other.
All respondents thought the government has an important role to play in the renewable
energy industry, but that it is not currently fulfilling that role. Three factors were
commonly reported as important things the government should do, but currently does not:
provide financial assistance or financial incentives (e.g., tax concessions); lead by
example by installing SWHS in government buildings; and generally promoting
renewable rather than non-renewable energies (especially gas). Only three respondents
indicated that the government is a customer; one said it is a low volume customer; one
has a contract in the Northern Territory and used to fit GEHA houses with SWHS before
the introduction of North West Shelf gas; and the third reported that Homeswest is
starting to use SWHS again and that Aboriginal communities are using SWHS.
5.1.6 Background information about SWHS adoptors.
No respondent had, or reported to us, demographic information about their customers.
Responses were on a much more general level. Of the suppliers, one reported "they
[customers] own their own home and are environmentally conscious", and another said
they "have used this type of information in the past and found it difficult to analyse sales
trends based on it. None of the information has aided in stemming the downward trend in
sales associated with the building industry downturn". None of the suppliers volunteered
any other information.
Two of the three manufacturers supplied demographic information. One said their
customers had "middle of the range" salaries (around $60,000 pa), did not live in high
status suburbs, were in the 25-45 years age bracket, and were second or third home
owners rather than first home owners. The other manufacturer essentially concurred:
customers are home owners, 90% of them are "family people", and are not in the "high
income" bracket.
Five suppliers and two manufacturers had data about the proportion of installations which
were retrofits. Two suppliers said 90% of their installations were retrofits, one said 75%,
and two said 50%. One manufacturer said 60-70% of their systems were retrofit
installations. The other did not have data for his company, but did report that there were
47,000 water heating systems sold in WA last year, that 70% of all systems sold were
replacements, and that 11% of new installations in WA were solar.
45
Few respondents said any of their customers express dissatisfaction with their system
after installation. Of the complaints that were provided, most concerned problems due to
faulty installation. Three respondents mentioned problems with booster use (two
concerned cost, one improper use). One mentioned that some customers have to make
slight lifestyle changes.
5.2 Survey of Householders.
Three hundred and twenty one usable responses were received from a possible 500
sample members. Due to missing responses to some questions, the analyses reported
below will not always be based on n = 321.
5.2.1 Description of sample.
There were more males than females in the sample (56.7% male, 40.5% female, 2.8% did
not answer), and the average age was just over 46 years (SD = 15.07). Three quarters of
the sample said they had grown up mainly in an urban place (75.1% urban, 22.7% rural,
0.9% both). Both the mean and the median income gross household annual were in the
$30,000 - $40,000 pa bracket (see Figures 5.1 and 5.2).
FIGURE 5.1
31-40
41-50
53
73
44
40
18
Frequency
60
52
80
75
AGE DISTRIBUTION OF RESPONDENTS
3
20
0
21-30
51-60
61-70
71-80
81-90
Respondents' Age
As can be seen in Figures 5.3 and 5.4, the majority of the sample lived in a house (83.8%
house, 1.6% flat, 9.0% unit, 0.6% townhouse, 4.7% duplex, 0.3% did not answer), and
46
most were buying or owned the place where they lived (83.4% buying or owning, 13.4%
renting, 1.2% other, and 1.6% did not answer). Mean length of occupancy in current
dwelling was 8.9 years (SD = 9.86), and most people expected to be living in the same
place in five years time (from 1 = extremely unlikely to 5 = extremely likely, the mean
was 3.76 and the SD was 1.30). For more than half the sample (57.3%) their present
water heating system was already installed when they moved into their home (42.4% had
it installed, and 0.3% did not answer). Most people reported gas was available in the
street (84.7%), and nearly two thirds (63.6%) had gas available in the home.
FIGURE 5.2
DISTRIBUTION OF RESPONDENTS' GROSS HOUSEHOLD ANNUAL
INCOME
57
67
80
47
48
18
19
50-60
60-70
23
40
27
Frequency
60
20
0
<10,000
10-20
20-30
30-40
40-50
Annual Income
>70,000
47
FIGURE 5.3
Frequency
300
269
DISTRIBUTION OF TYPES OF DWELLINGS
200
2
5
15
29
100
0
house
flat
unit
townhouse
duplex
Type of Dwelling
FIGURE 5.4
DISTRIBUTION OF OCCUPANCY TYPE
117
100
1
1
2
43
Frequency
152
200
bus/home
lodging
parents
0
renting
buying
own
Occupancy Type
48
FIGURE 5.5
Frequency
300
272
AVAILABILITY OF STREET GAS TO RESPONDENTS
200
2
19
28
100
0
yes
no
don't know
missing
Street Gas Availability
FIGURE 5.6.
AVAILABILITY OF GAS TO RESPONDENTS' HOMES
204
300
108
Frequency
200
9
100
0
yes
no
Home Gas Availability
don't know
49
5.2.2 Current water heating system.
Across the entire sample, 29.0% reported having a solar water heating system, 26.2% an
instantaneous gas system, 17.8% a gas storage system, 11.5% an instantaneous electric
system, 11.8% an electric storage system, 1.9% a wood system, and 0.6% some other
system, while 1.2% did not respond to the question (see Figure 5.7). Those with a wood
system or an "other" system, and those not responding, are excluded from the following
analyses. Table 5.3 depicts a breakdown of ownership of different water heating systems
by the variables sex, age of the respondent, income, number of people living in the home,
number of years lived in the home, likelihood the respondent will still be living in the
same home in five years' time (1 = extremely unlikely, 5 = extremely likely), the
socioeconomic status (SES) of the suburb1 (ABS, 1986), whether or not the respondent
owns the home (buying or owning versus renting), age of home, type of home (house
versus other), whether or not the respondent had the system installed, whether gas is
supplied to the street, and whether gas is supplied to the home.
1 The SES index was developed by the ABS as an index for each suburb, based on information gleaned
from the last Census. The index has a mean of 50 and a standard deviation of 8.
FIGURE 5.7
85
100
92
TYPES OF WATER HEATING SYSTEMS
37
38
elec. stor.
40
elec. inst.
57
60
2
4
other
missing
wood
gas stor.
0
gas inst.
6
20
solar
Frequency
80
50
There was a number of statistically significant differences on these variables across the
five water heating system types. The proportion of males to females was higher for solar
systems than for other systems (chi square = 13.13, p < .05)). Males were more likely
than females to report having a solar water heating system. Solar owners were more
likely to report living in a house than in any other kind of dwelling (chi square = 34.88, p
< .001). The mean age of the dwelling varied significantly across system types (F = 7.47,
p < .001): people with an instantaneous gas system lived in older homes than did people
with any other sort of system. People with a solar system and people with a gas storage
system reported significantly larger households than did people with other systems (F =
7.22, p < .001). Likelihood the respondent would still be living in the same home in five
years time varied significantly across system types (F = 3.40, p = .001): people with a
solar system were significantly more likely to be living in the same place than people
with either an electric storage or an electric instantaneous system. People with gas
supplied either to the street or to the house were significantly more likely to report having
a gas system than were people without access to reticulated gas (chi square = 13.41, p <
.01 and chi square = 107.53, p < .001, respectively). People with gas storage systems had
significantly newer systems than people with any other kind of system, and all other
systems were equivalently old (F = 7.89, p < .001).
When system type is broken down by the same variables, but only using data from those
who installed their current system, a similar pattern of results emerges. However, the
differences for home type, number of people in the household, and likelihood of still
living in the same home in five years are no longer statistically significant, and the
strength of differences for some variables is different. The sex difference in solar
ownership is stronger. Although age of home for instantaneous gas owners is still
significantly higher than for solar and gas storage owners, it is no longer significantly
higher than for owners of either kind of electric system. The relationship between system
type and gas availability was the same as that for the total sample, but not as strong (the
respective chi squares are 11.92, p < .05, and 57.27, p < .001).
51
TABLE 5.3
CORRELATES OF CURRENT WATER HEATING SYSTEM
gas
ALL RESPONDENTS
n
Sex prop. (= males/total)
Mean age of respondent (yrs)
Mdn income bracket ($'000s pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
Buy/rent (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Installed (= installed/total)
Street gas (= yes/total)
Home gas (= yes/total)
solar
92
.74
46.90
30-40
3.16
11.10
4.08
53.53
.92
18.24
.97
.56
.82
.50
INSTALLERS ONLY
n
Sex prop (= males/total)
Mean age of respondent (yrs)
Mdn income bracket ($'000s pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
Buy/rent (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Street gas (= yes/total)
Home gas (= yes/total)
solar
51
.84
49.29
30-40
3.17
15.94
3.83
53.11
.96
22.32
1.00
.78
.49
electric
inst
stor
inst
stor
85
57
37
38
.51
.56
.47
.58
44.50 45.21 48.95 48.95
30-40 30-40 30-40 30-40
2.61 3.24
2.44
2.16
8.18 5.93 10.00
7.32
3.76 3.80
3.35
3.34
52.71 54.58 54.18 55.04
.74
.96
.78
.95
29.76 15.46 19.78 14.24
.77
.93
.73
.61
.35
.58
.22
.21
.98
.95
.91
.90
.98
.93
.23
.36
gas
electric
inst
stor
inst stor
30
33
8
8
.50
.55
.38
.75
47.21 44.00 53.88 56.38
30-40 40-50 30-40 20-30
2.71 3.09
2.25
2.37
14.66 7.24 20.13 12.13
3.74 3.70
3.13
3.30
51.81 55.26 53.75 53.96
.83
1.00
1.00
1.00
34.48 17.24 25.86 21.38
.90
.97
1.00
1.00
1.00
.97
.88
.88
1.00
.94
.13
.25
Median income did not vary significantly across system types: the median income for
owners of all systems was in the $30 - 40,000 pa bracket. The lack of relationship
between income and solar ownership is clearer when we examine the proportion of
people in each income bracket who own a solar system (see Figure 5.8).
52
FIGURE 5.8
PERCENTAGE OF RESPONDENTS IN EACH INCOME BRACKET WHO
REPORT HAVING A SOLAR WATER HEATING SYSTEM
50
Total Sample
Installers Only
% With Solar
40
30
20
10
<$10,000
10-20
20-30
30-40
40-50
50-60
60-70
>$70,000
Annual Income
Multiple regression analyses were run, for all respondents and separately for installers
only, predicting system ownership (solar versus other) from sex, age, whether the
respondent is buying or owns versus renting the home, the socioeconomic status of the
suburb, the type of home (house versus other), income, number of people living in the
home, number of years lived in the home, the likelihood the respondent will still be living
in the home in five years' time, availability of street gas, and availability of gas to the
home. Due to large numbers of randomly spread missing data, a mean substitution
procedure was used. The results of these two regressions are presented in Table 5.4.
The twelve predictor variables together accounted for 16.5% of the variance in system
ownership (solar versus other) in the total sample (p < .001), and for 11.6% in the sample
of installers (p = .04). In the total sample, the type of home (house versus other) and the
likelihood the respondent would still be in the home in five years' time both had
significant positive beta weights, indicating that house dwellers and those more likely to
be residing in the home in five years were more likely to have a solar water heating
system. Sex, availability of gas in the home (but not in the street), and age of home all
had significant negative beta weights, indicating that females, those with gas available in
their home, and those with older homes, were less likely to report having a solar water
heating system. The number of people living in the home and the number of years lived
in the home both had almost significant positive beta weights (p = .07 and .08,
respectively), indicating that the more people who lived in the home and the longer
people have lived in the home, the more likely they were to report having a solar water
heating system.
For the sample of installers, the likelihood the respondent would still be living in the
53
home in five years had a significant positive beta weight, and income had a significant
negative beta weight. Thus, those likely to be residing in the same home were more likely
to report having a SWHS, and wealthier respondents were less likely to report having a
SWHS.
Solar owners who purchased their system were also asked to indicate which of a range of
sources of information were important to them in making the decision to install solar.
The three most often listed important sources were, in order, a solar company, a friend,
and television. They were also asked to rate a number of listed reasons for purchasing a
solar water heating system in terms of how important each reason was to them in making
their decision (1 = not at all important, 2 = fairly important, 3 = important). The most
important reasons were "saving money in the long term", "reducing power bills now",
and "protecting against rising costs". Table 5.5 and Figure 5.9 summarise the results from
these two questions.
54
TABLE 5.4
MULTIPLE REGRESSIONS PREDICTING CURRENT WATER HEATING
SYSTEM FOR THE TOTAL SAMPLE AND FOR INSTALLERS ONLY
TOTAL SAMPLE
dependent variable: water heating system (solar = 2; other = 1)
predictor variable
Sex (males = 1; females = 2)
Age
Buy/rent (buy/own = 2; other = 1)
Suburb's SES rating
Age of home (years)
Type of home (house = 2; other = 1)
Income
Number of people in home
Years lived in home
Likelihood will be in home in 5 yrs
Street gas (yes = 2; no = 1)
Home gas (yes = 2; no = 1)
beta weight
-.199
-.065
-.024
-.018
-.140
.177
.064
.108
.115
.127
-.029
-.144
prob.
.000
.315
.691
.747
.020
.004
.303
.071
.081
.026
.640
.023
R square = .165 (F = 5.075, p < .001)
INSTALLERS ONLY
dependent variable: water heating system (solar = 2; other = 1)
predictor variable
Sex (males = 1; females = 2)
Age
Buy/rent (buy/own = 2; other = 1)
Suburb's SES rating
Age of home (years)
Type of home (house = 2; other = 1)
Income
Number of people in home
Years lived in home
Likelihood will be in home in 5 yrs
Street gas (yes = 2, no = 1)
Home gas (yes = 2, no = 1)
R square = .116 (F = 1.869, p = .041)
beta weight
-.057
-.064
.034
.045
-.029
.058
-.272
.093
.124
.185
-.151
-.085
prob.
.523
.570
.728
.608
.782
.535
.011
.327
.277
.036
.125
.401
55
TABLE 5.5
FACTORS INVOLVED IN DECISION TO PURCHASE SOLAR WATER
HEATING SYSTEMS (SOLAR INSTALLERS ONLY).
What were the most important sources of information to you in making the decision to
purchase a solar water heating system?
Source
Solar company
Friend
Television
Newspaper advertisement
Solar Energy Information Centre
Plumber
SECWA
School/university/college
Department store
Other
% yes
44
35
33
22
13
13
9
6
2
22
Note: Percentages do not sum to 100, since respondents could indicate more than one
source
Rated importance of factors in making the decision to puchase solar
(1 = not al all important, 2 = fairly important, 3 = important).
Reason
Saving money over the long term
Reducing power bills now
Protecting against rising costs
Protecting the environment
Conserving natural resources
Easing the energy shortage
Reducing need for more large power plants
Increasing independence from the grid
Increasing resale value of home
Increasing status, prestige, self-esteem
mean
2.71
2.65
2.44
2.41
2.39
2.27
2.22
2.14
1.91
1.15
percent responding
1
2
3
4
20
76
3
22
72
11
35
64
7
46
48
9
43
48
16
42
42
17
44
39
26
33
40
38
33
29
92
0
8
56
FIGURE 5.9
1.15
Mean
2
1.91
2.14
2.22
fewer power plants
2.39
conserve resources
2.27
2.41
protect environment
ease energy shortage
2.44
2.65
reduce power bills
inflation protection
2.71
3
save money
IMPORTANCE OF FACTORS IN THE DECISION TO PURCHASE SOLAR
increase status
increase home value
0
independence grid
1
5.2.3 Satisfaction with current water heating system.
Respondents were asked to rate their satisfaction with their current water heating system,
on a scale from 1 = very dissatisfied to 5 = very satisfied. Responses to this item were
analysed across systems, and were used as the dependent variable in regression analyses
to find the predictors of satisfaction.
For all respondents, satisfaction varied significantly across system types (F = 6.56, p <
.001). Owners of instantaneous electric systems (mean = 3.70) were significantly less
satisfied with their system than were owners of solar (4.43), gas storage (4.45), or gas
instantaneous (4.38) systems, but not significantly less than owners of electric storage
systems (4.02). Satisfaction with electric storage systems was not significantly lower than
satisfaction with solar, gas storage, or gas instantaneous systems. Across all systems,
satisfaction correlated significantly with age of respondent (r = .12, p = .038), with
likelihood the respondent will still be living in the home in five years (r = .19, p = .001),
with how often the respondent reports running out of hot water (r = -.28, p < .001), and
with respondents' perception of how much of their energy bill goes towards heating water
(r = -.33, p < .001). Satisfaction was almost significantly correlated with sex of
respondent (r = -.10, p = .067), and with number of years lived in the home (r = .10, p =
.072).
A regression analysis was performed to predict satisfaction from respondents' sex, age,
57
whether they are buying or owning versus renting their own home, the age of the home,
the type of home (house versus other), income, number of people in the home, number of
years lived in the home, likelihood of still being in the home in five years, size of last
energy bill, perceived percentage of energy bill devoted to water heating, age of water
heating system, whether the respondent installed the system or not, how often the
respondent reports runnning out of hot water, the number of times the water heating
system has broken down in its lifetime, and the number of times the system has been
serviced or maintained in the last five years. The sixteen predictor variables together
accounted for 18.3% of the variance in the variable satisfaction. Only two had significant
beta weights, though: the number of times the respondent reports running out of hot water
and the perceived percentage of last energy bill devoted to water heating both had
significant negative beta weights. The results of this regression analysis are presented in
Table 5.6.
TABLE 5.6
MULTIPLE REGRESSION PREDICTING SATISFACTION WITH CURRENT
WATER HEATING SYSTEM(TOTAL SAMPLE)
Dependent variable: satisfaction with current water heating system
(1 = very dissatisfied through 5 = very satisfied)
Predictor variables
Sex (males = 1; females = 2)
Age
Buy/rent (buy/own = 2; other = 1)
Age of home (years)
Type of home (house = 2; other = 1)
Income
Number of people in home
Years lived in home
Likelihood will be in home in 5 yrs
Size of last bill
% last bill on water heating
Age of system
System installed (1 = no; 2 = yes)
Run out of hot water (1 = never; 3 = often)
Number of services
Number of breakdowns
beta weight
-.058
.089
.018
-.073
.000
.023
.088
.008
.093
.018
-.211
-.032
.066
-.297
.061
-.033
prob.
.293
.163
.770
.221
.995
.708
.175
.912
.115
.773
.000
.598
.309
.000
.274
.539
R square = .183 (F = 4.26, p < .001)
When these analyses are repeated for solar owners only, we find that satisfaction
correlated significantly with number of times the respondent runs out of hot water (r = .50, p < .001), and with perceived percentage of energy bill devoted to water heating (r =
58
-.64, p < .001). The correlation between satisfaction and likelihood of still residing in the
same home in five years was almost significant (r = .18, p = .084). In the regression
analysis, the same sixteen predictor variables accounted for 44.9% of the variance in
satisfaction. The perceived percentage of last energy bill devoted to water heating and
the number of times the respondent reports running out of hot water both had significant
beta weights, while that for number of system breakages approached significance. The
results of this regression analysis are presented in Table 5.7.
TABLE 5.7
MULTIPLE REGRESSION PREDICTING SATISFACTION WITH CURRENT
WATER HEATING SYSTEM (SOLAR OWNERS)
Dependent variable: satisfaction with current water heating system
(1 = very dissatisfied through 5 = very satisfied)
Predictor variable
Sex (males = 1; females = 2)
Age
Buy/rent (buy/own = 2; other = 1)
Age of home (years)
Type of home (house = 2; other = 1)
Income
Number of people in home
Years lived in home
Likelihood will be in home in 5 yrs
Size of last bill
% last bill on water heating
Age of system
System installed (1 = no; 2 = yes)
Run out of hot water (1 = never; 3 = often)
Number of services
Number of breakdowns
beta weight
-.075
.102
.101
.024
-.004
.154
-.087
-.123
-.040
-.119
-.420
.020
.047
-.363
-.007
.153
prob.
.455
.401
.423
.837
.964
.256
.401
.425
.723
.263
.001
.863
.718
.001
.952
.098
R square = .449 (F = 3.818, p = .000)
For non-solar owners, satisfaction was significantly correlated with age of respondent (r =
.15, p = .023), likelihood of staying five years (r = .17, p = .009), perceived percentage of
energy bill devoted to water heating (r = -.21, p = .017), and with number of times
respondents run out of hot water (r = -.18, p = .007). The sixteen predictor variables in
the regression analysis accounted for 14.2% of the variance in satisfaction. The number
of times respondents run out of hot water was the only predictor to have a significant beta
weight. Age (positive), number of people in home (positive), and perceived percent of
last bill spent on water heating (negative) all had beta weights approaching significance.
The results of this regression analysis are presented in Table 5.8.
59
Analyses were performed for solar owners only, relating satisfaction with system to a
number of characteristics of their system. Almost three quarters of the sample of solar
owners owned one of two particular brands. Fourteen percent said their system had one
collector plate, 80% had two, and just one person had three plates. Forty one percent did
not know the tank capacity of their system. For those who did know, the average tank
capacity was 257 litres (mode = 300 litres). Two people had a tank capacity less than 100
litres, 8 had a capacity between 100 and 200 litres, ten between 200 and 300 litres, and 32
greater than 300 litres. Over 20% did not know what sort of collector type they had. Of
the rest, almost all reported having a black chrome collector. All but one respondent said
their panels faced north, northeast, or northwest. Only one respondent reported having a
gas booster attached to the system, 67% had a continuous electric booster fitted, 29% had
a time clock controlled electric booster, and 2 respondents said they had a wood booster.
TABLE 5.8
MULTIPLE REGRESSION PREDICTING SATISFACTION WITH CURRENT
WATER HEATING SYSTEM(NON-SOLAR OWNERS)
Dependent variable: satisfaction with current water heating system
(1 = very dissatisfied through 5 = very satisfied)
Predictor variable
Sex (males = 1; females = 2)
Age
Buy/rent (buy/own = 2; other = 1)
Age of home (years)
Type of home (house = 2; other = 1)
Income
Number of people in home
Years lived in home
Likelihood will be in home in 5 yrs
Size of last bill
% last bill on water heating
Age of system
System installed (1 = no; 2 = yes)
Run out of hot water (1 = never; 3 = often)
Number of services
Number of breakdowns
beta weight
-.015
.152
-.042
-.078
-.026
-.009
.160
-.005
.103
.068
-.129
-.030
.121
-.199
.094
-.021
prob.
.826
.058
.575
.296
.747
.903
.055
.955
.151
.396
.062
.703
.130
.004
.170
.747
R square = .142 (F = 2.212, p = .007)
Nearly 90% of the boosters were manually operated. Of those with a manually operated
booster, 49% said they operated it only when they ran out of hot water, and 29% said they
operated it so they never ran out of hot water (the remainder failed to answer the
60
question). When asked if they thought their system saved them money, 17% said "no"
and 83% said "yes". When those who thought their system saved them money were asked
to estimate their annual dollar savings, the average was just over $190, with estimates
ranging from $50 to $500.
For solar owners, satisfaction with their system was not correlated with the number of
plates, the tank capacity, or the number of people in the house. It was significantly
correlated with belief that the solar system saved them money (r = .35, p = .001), with the
judged dollar value of that saving (r = .34, p = .01), with the judged percent of their last
energy bill devoted to water heating (r = -.64, p < .001), and with the number of times
they report running out of hot water (r = -.50, p < .001).
5.2.4 Intention to buy new water heating system.
Respondents were asked what sort of system they thought they would purchase if they
needed to buy a new water heating system. Across all respondents, 38.6% indicated solar
with a gas booster, 16.5% solar with an electric booster, 4.7% solar with a wood booster,
TABLE 5.9
CORRELATES OF INTENDED WATER HEATING SYSTEM
ALL RESPONDENTS
n
Sex prop. (= males/total)
Mean age of respondent (yrs)
Mdn income ($'000s pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
But/rent (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Installed (= installed/total)
Street gas (= yes/total)
Home gas (= yes/total)
INSTALLERS ONLY
solar
gas
124
.52
41.50
30-40
3.00
6.20
3.73
54.33
.85
18.38
.85
.41
.85
.72
solar
electric
53
.72
49.72
30-40
2.71
11.55
3.72
52.44
.87
19.35
.89
.45
.75
.34
solar
gas
solar
electric
solar
wood
15
.67
40.60
30-40
4.36
11.80
3.73
53.70
.87
17.07
1.00
.60
.60
.40
solar
wood
gas
91
.60
50.30
20-30
2.57
9.80
3.84
53.78
.89
21.90
.80
.43
.99
.84
electric
23
.61
57.55
30-40
2.27
11.70
3.70
54.38
.96
20.13
.74
.39
.74
.22
gas
electric
61
n
Sex prop (= males/total)
Mean age of respondent (yrs)
Mdn income ($'000s pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
Buy/rent (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Street gas (= yes/total)
Home gas (= yes/total)
50
.55
44.10
30-40
3.02
10.22
4.13
54.67
.88
20.02
.94
.96
.84
24
.88
50.96
30-40
3.00
16.50
4.10
50.82
.96
21.92
1.00
.79
.38
9
.78
42.56
30-40
4.38
15.44
3.55
51.67
1.00
21.33
1.00
.44
.33
39
.61
51.79
30-40
2.62
14.46
4.08
54.32
1.00
29.03
.97
1.00
.85
9
.56
60.78
30-40
2.38
19.11
4.33
52.99
1.00
27.56
1.00
.78
.22
28.3% a gas system, and 7.2% an electric system. Other types of systems were nominated
by 2.8%; 0.6% did not know what sort of system they would buy; and 1.2% of
respondents failed to answer this question. Table 5.9 presents a breakdown of new system
preferences with a number of other variables. Significant differences across intended
systems were obtained for age of respondent (F = 10.12, p < .001), number of people
living in the home (F = 7.81, p < .001), number of years lived in the home (F = 4.41, p =
.002), and for availability of gas to the street (chi square = 27.57, p < .001) and to the
home (chi square = 60.15, p < .001). Those who preferred a solar system with a gas
booster were significantly younger than those who preferred any other system except for
a solar system with a wood booster. Those who preferred solar with wood were
significantly younger than only those who preferred an electric system. These people also
had significantly more people living in the home than those indicating any other system.
Those opting for solar with gas had stayed in their present home significantly less time
than those opting for either solar with electric or straight gas. Finally, all but one of those
who preferred a gas system already had gas available in the street, and 84% had gas
available in their home.
62
TABLE 5.10
CORRELATES OF INTENDED WATER HEATING SYSTEM
(COLLAPSED ANALYSIS)
ALL RESPONDENTS
solar
gas
electric
n
Sex prop. (= males/total)
Mean age of respondent (yrs)
Mdn income ($1,000 pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
Own/buy (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Installed (= yes/total)
Street gas (= yes/total)
Home gas (= yes/total)
192
.59
43.71
30-40
3.02
8.12
3.73
53.75
.86
18.55
.87
.43
.80
.59
91
.60
50.30
20-30
2.57
9.89
3.84
53.78
.89
21.90
.80
.42
.99
.84
23
.61
57.55
30-40
2.27
11.70
3.70
54.38
.96
20.13
.74
.39
.74
.22
INSTALLERS ONLY
solar
gas
electric
n
Sex prop (= males/total)
Mean age of respondent (yrs)
Mdn income ($1,000 pa)
Number of people in home
Years lived in home
Likelihood of staying (1 - 5)
Socioeconomic status
Own/buy (= own or buy/total)
Mean home age (years)
Home type (= house/total)
Street gas (= yes/total)
Home gas (= yes/total)
83
.67
45.94
30-40
3.15
12.60
4.01
53.23
.92
20.73
.96
.86
.65
39
.61
51.79
30-40
2.62
14.46
4.08
54.32
1.00
29.03
.97
1.00
.85
9
.56
60.78
30-40
2.38
19.11
4.33
52.99
1.00
27.56
1.00
.78
.22
When these analyses were repeated for installers only, significant effects were obtained
only for age of respondent (F = 3.14, p = .018) and number of people in the home (F =
3.01, p = .034). Those who indicated solar with wood were significantly younger than
those who indicated gas, and people who indicated solar with gas had significantly
smaller households than those who indicated solar with wood. These differences must be
63
carefully considered, though, since the number of people indicating solar with wood,
straight gas, and straight electric are small. Installers did not significantly differ from
non-installers in their stated new system preferences (chi square = 2.30).
These analyses were performed again comparing those who prefer any form of solar,
those who prefer gas, and those who prefer electric (see Table 5.10). For the total
sample, significant differences were found for respondents' age (F = 13.12, p < .001 :
those preferring solar were significantly younger than those preferring gas and those
preferring electric), number of people in the home (F = 5.78, p = .004 : solar preferrers
have significantly larger households than the other groups), and for availability of gas in
the street (chi square = 19.77, p < .001) and in the home (chi square = 34.78, p < .001).
Of those who have gas available in the street, 34% prefer gas for a new system, compared
to 2% of those who do not; 39% of those with gas in the home prefer a new gas system,
compared to 14% of those who do not.
For the group of installers, there were significant differences for age (F = 6.02, p = .003 :
solar preferrers were significantly younger than electric preferrers), and for availability of
gas in the street (chi square = 7.16, p = .03) and in the home (chi square = 13.93, p <
.001). Differences were almost significant for number of people in the home (F = 3.06, p
= .062).
An important association exists between current water heating system and intended
system (chi square = 124.9, p < .001). The cross-tabulation is in Table 5.11 and is
presented graphically in Figure 5.10. Only 5.6% of current solar owners say they would
buy a non-solar system. Just over half (51.9%) of current gas owners would change
systems - 69 (51.1%) would buy a solar system, and only 1 (0.7%) would switch to an
electric system. Most of those who would switch from gas to solar would buy a solar
model with a gas booster. Only 21 (29.6%) of those who currently have an electric
system would buy another electric system. About half (34, or 47.8%) would switch to
solar; and 16 (22.5%) would change to a gas system. This pattern of association between
current system and intended system holds also for installers only.
5.2.5 Reasons for not having a SWHS.
Those respondents who did not have a SWHS and who installed their current system
were asked if they had considered buying a SWHS and, if so, what were their reasons for
deciding not to buy one. Nearly 40% (39.4%) of those who had installed their current
system had installed solar, 48.0% had installed gas, and 12.6% electric. Table 5.12 and
Figure 5.11 show the percentages of respondents indicating the various possible reasons
for their decision. The cost of purchase was by far the most commonly mentioned reason.
Perceived life span of solar systems, expected savings, and expected maintenance and
repair costs were the next most commonly cited reasons. Thus, three of the four most
commonly cited reasons for deciding not to purchase solar involved cost, and it is
perhaps likely that the fourth (expected life span) is also a cost-related concern.
64
FIGURE 5.10
INTENDED NEXT PURCHASE RELATIVE TO EXISTING SYSTEMS
100
gas
solar wood
80
solar electric
solar gas
60
40
elec. stor.
elec.inst.
solar
0
gas stor.
20
gas inst.
Frequency (total sample)
electric
FIGURE 5.11
100
87.93
REASONS FOR NOT PURCHASING A SOLAR WATER HEATING SYSTEM
(INSTALLERS OF NON-SOLAR SYSTEMS ONLY).
8.62
8.62
8.62
inefficient
adverse comments
17.24
no value to home
expensive maintenance
no savings
0
short life span
20
ugly
22.41
40
25.86
31.03
60
capital cost
% (Yes)
80
65
TABLE 5.11
CROSS-TABULATION OF CURRENT WATER HEATING SYSTEM AND
INTENDED WATER HEATING SYSTEM
TOTAL SAMPLE
current system
solar
gas
Intended water heating system
solar
solar
elect
wood
gas
elect
TOTAL
Solar
45
29
11
4
1
90
Gas instantaneous
Gas storage
Electric instantaneous
Electric storage
36
27
4
10
2
2
12
7
2
0
1
0
39
26
10
6
1
0
7
14
80
55
34
37
TOTAL
122
52
14
85
23
296
INSTALLERS ONLY
Current system
solar
gas
Intended water heating system
solar
solar
elect
wood
gas
elect
TOTAL
Solar
Gas instantaneous
Gas storage
Electric instantaneous
Electric storage
25
24
11
4
9
9
2
0
11
6
4
1
0
1
0
1
23
12
8
4
0
1
0
3
10
39
51
23
27
29
TOTAL
73
28
6
48
14
169
Those respondents who had a non-solar system, and who did not install their current
system, were asked if they had ever considered buying a SWHS, and, if so, what were
their reasons for doing so. Up to three reasons were coded for each respondent. Less than
half (43%, n = 63) said they had considered purchasing a SWHS. Table 5.13 lists the
percentages of respondents providing various reasons for that consideration.
66
TABLE 5.12
REASONS FOR NOT PURCHASING A SOLAR WATER HEATING SYSTEM
(INSTALLERS OF NON-SOLAR SYSTEMS ONLY).
Reason
Cost of purchase
Number
51
Percent
87.93
Life span no better than other systems
18
31.03
Would not save much money
15
25.86
Costs too much to maintain/repair
13
22.41
Makes the house look ugly
10
17.24
Would not increase resale value of home
5
8.62
Would not give an efficient service
5
8.62
Comments from other people
5
8.62
TABLE 5.13
REASONS FOR CONSIDERING, BUT NOT BUYING, A SOLAR WATER
HEATING SYSTEM (NON-SOLAR OWNERS, NON-INSTALLERS)
Reason
Response number
1
2
3
Cost savings
Environmental reasons
Solar is practical/convenient
33
9
2
7
4
4
1
4
1
Solar needs less maintenance
Other (misc.)
0
14
2
0
1
0
Non-solar owners were asked what changes they would expect in their annual energy bill
if they were to install a SWHS tomorrow. Twenty respondents (8.9%) indicated they
thought their energy bill over the next year would increase, 49 (21.8%) said it would
remain the same, 141 (62.7%) said it would decrease, and 15 (6.7%) did not answer. For
those who thought their energy bill would increase, the average expected increase was
$180.77; for those who expected a decrease, the average expected decrease was $106.28.
Eighty percent of non-solar owners reported having a friend, relative, or acquaintance
with a SWHS. When asked to rate the satisfaction of those people with their solar system
67
(1 = very dissatisfied, 5 = very satisfied), the average was 3.95. This contrasts with the
mean reported satisfaction of actual solar owners of 4.43.
5.2.6 Perceived reasons why more people do not install SWHS.
All respondents were asked in an open-ended question to list what they thought were the
major reasons why more people do not install SWHS. Up to three reasons from each
respondent were coded. Fifty different reasons were provided. These were collapsed into
eight different categories: cost (including initial outlay and expected paybacks); concerns
about the supply of hot water; concerns about the aesthetic value of solar units; public
ignorance of, or lack of confidence in, solar energy; concerns about the efficiency and
convenience of SWHS; public conservatism or apathy; "conspiracies" by SECWA or the
state government against solar energy; and other reasons not able to be fitted into the first
seven categories. Table 5.14 provides a breakdown of the percentages of respondents
giving each reason category as their first, second, or third response. The table presents
percentages for the total sample, for males and females separately, for solar owners and
non-owners separately, and for installers and non-installers separately.
Across all respondents, 78.3% indicated cost as their first reason, 5.4% public
conservatism or apathy, and 4.7% public ignorance or lack of confidence. Of those who
provided a second reason (n = 114), 51.8% stated cost, 14.0% concern about efficiency or
convenience, and 12.3% public ignorance or lack of confidence. Of those who provided a
third reason (n = 46), 41.3% indicated cost, 17.4% public ignorance or lack of
confidence, and 13.0% indicated concerns about aesthetic values. This pattern of
responses does not vary much depending on the sex of the respondent, whether the
respondent is a solar owner or not, or whether the respondent installed the current water
heating system or not.
5.2.7 Expenditure on water heating
Respondents were asked what the dollar amount of their last SECWA bill was, and what
percentage of their energy bill they thought was used in heating water. Across all
respondents, the average bill was $124.70 (mode = $120.00, standard deviation = 59.77,
minimum = $4, maximum = $432). When this was expressed in per capita terms (= last
bill/number of people in household), the average per capita bill was $49.79 (mode = $40,
standard deviation = 24.53, minimum = $4, maximum = $167). Figure 5.12 presents the
frequency distribution of energy bills.
The average percentage of energy bill thought to be spent on heating water was 29.15%
(non-zero mode = 50%, standard deviation = 22.67, minimum = 0%, maximum = 90%) see Figure 5.13
The dollar value of the energy bill varied significantly across water heating systems (F =
3.58, p = .007): those with a gas storage system had a significantly higher bill than all
other groups save those with an electric storage system. The pattern for the per capita
energy bill was somewhat different. There was a significant overall difference across the
five groups (F = 4.30, p = .002). This time, though, those with a solar system had a
68
significantly lower per capita bill than either those with an instantaneous gas system or
those with an electric storage system. There was a clear association between system type
and percent of energy bill believed to be spent on water heating (F = 13.50, p < .001):
those with a solar system believed a smaller proportion of their bill was devoted to water
heating than did any other group. The respective means for the five system types, solar,
instantaneous gas, storage gas, instantaneous electric, and storage electric were 15.35,
34.00, 34.61, 43.18, and 47.00.
69
TABLE 5.14
PERCEIVED REASONS WHY MORE PEOPLE DO NOT INSTALL SOLAR
WATER HEATING SYSTEMS
1
2
3
78.3
51.8
41.3
2.0
5.3
6.5
2.0
3.5
13.0
4.7
12.3
17.4
2.0
14.0
6.5
(169)
( 69)
( 31)
80.5
53.6
48.4
1.2
4.3
3.2
2.4
1.4
12.9
3.0
14.5
19.4
(118)
( 43)
( 12)
75.4
51.2
26.7
3.4
7.0
13.3
0.8
7.0
13.3
80.9
57.1
41.7
3.4
7.1
0.0
77.2
50.0
41.2
All respondents
reason 1 (295)
reason 2 (114)
reason 3 ( 46)
By sex
Males
reason 1
reason 2
reason 3
Females
reason 1
reason 2
reason 3
Reason Category
4
5
6
By system ownership
Solar
reason 1 ( 89)
reason 2 ( 28)
reason 3 ( 12)
Non-solar
reason 1 (206)
reason 2 ( 86)
reason 3 ( 34)
By install or not
Installers
reason 1 (125)
reason 2 ( 52)
reason 3 ( 25)
Non-installers
reason 1 (169)
reason 2 ( 61)
reason 3 ( 20)
7
8
5.4
5.3
6.5
0.3
1.8
4.3
4.7
5.3
2.2
3.0
14.5
6.5
4.7
4.3
3.2
0.6
2.9
6.5
4.1
4.3
0.0
7.6
9.3
13.3
0.8
11.6
6.7
5.9
7.0
13.3
0.0
0.0
0.0
5.9
4.7
6.7
0.0
3.6
16.7
4.5
17.9
25.0
3.4
10.7
8.3
1.1
0.0
8.3
1.1
3.6
0.0
5.6
0.0
0.0
1.5
4.7
8.8
2.9
3.5
11.8
4.9
10.5
14.7
1.5
15.1
5.9
7.3
7.0
5.9
0.0
1.2
5.9
4.4
7.0
2.9
84.8
42.3
52.0
1.6
5.8
4.0
0.8
3.3
16.0
4.0
15.4
8.0
0.8
19.2
4.0
3.2
3.8
8.0
0.8
3.8
8.0
3.2
3.8
0.0
73.4
60.7
30.0
2.4
4.9
10.0
3.0
3.3
10.0
5.3
8.2
25.0
3.0
9.8
10.0
7.1
6.6
5.0
0.0
0.0
0.0
5.9
6.6
5.0
Note: Figures in the table are percentages of the number in brackets at the left of each row indicating the
given reason. The reason categories are:
1 = cost (including capital outlay and payback)
2 = concerns about supply of hot water
3 = concerns about aesthetic values
70
4 = public ignorance, lack of confidence
5 = concerns about efficiency and convenience
6 = public conservatism or apathy
7 = "conspiracy" by the government or SECWA
8 = other reasons
FIGURE 5.12
108
FREQUENCY DISTRIBUTION OF ENERGY BILLS
91
120
52
80
60
40
14
20
20
1
1
2
6
Frequency
100
0
0-50
51-100
101-150 151-200 201-250 251-300 301-350 351-400 401-450
SEC Bill ($)
71
FIGURE 5.13
FREQUENCY DISTRIBUTION OF % OF ENERGY BILL BELIEVED TO BE
SPENT ON WATER HEATING
100
9
4
2
51-60
61-70
71-80
81-90
7
12
23
19
21
41
53
Frequency
130
200
0
0-10
11-20
21-30
31-40
41-50
dk
missing
% of SEC Bill
Size of last bill was correlated with both income and suburb's SES rating (r = .39, p <
.001, and r = .18, p = .002, respectively), thus lending some support to the commonly
expressed view that energy consumption increases as income and status increase.
However, these two correlations shrink to zero when we use the per capita energy bill (r
= -.01 and .09, respectively), indicating that the larger energy bills associated with the
wealthier and those in higher SES suburbs are due to their larger households. Size of last
bill was not significantly correlated with sex, age of system, whether the system was
installed by the respondent or not, how often the respondent runs out of hot water, how
often the respondent washes clothes in hot water, or respondents' satisfaction with their
water heater. Per capita bill was correlated, though, with how often the respondent runs
out of hot water (r = -.18, p = .003) and how often they wash clothes in hot water (r = .12,
p = .04).
Perception of how much of the energy bill was due to water heating was significantly
correlated with sex (r = .23, p = .002), with age of system (r = -.31, p < .001), and with
satisfaction with system (r = -.33, p < .001).
Finally, respondents were asked if they believed there should be some form of
government assistance to enable more householders to install solar water heating systems,
and if they would be prepared to pay more (and how much more, expressed as a
72
percentage of their energy bill) for their power to be able to have more renewable energy
systems connected into the SECWA's grid. A majority favoured some form of
government assistance (69.4% in favour, 29.7% against, 0.9% undecided). The average
percentage increase was just under 3%, and the majority of respondents said they would
not be prepared to pay any increase: 56% said no increase, 10.4% said they would be
prepared to pay a 1% increase, 9.4% said 3%, 9% said 3%, 12.3% said a 5% increase,
0.3% a 7% increase, 9.4% a 10% increase, less than one percent favoured increases of
15%, 20% and 30%, and 1.0% favoured a 50% increase in energy rates. For those who
supported some increase, the average was 6%.
5.3
Discussion
The primary objective of these two surveys of manufacturers and suppliers and of
householders was to uncover the major barriers to the greater use of solar water heaters,
through examination of the perceived cost of solar heaters over other heaters, the
characteristics of current owners of solar heaters, and the characteristics of those who
intend to replace their current system with a solar heater.
From both surveys, the major barrier is cost. In this respect, manufacturers and suppliers
have an accurate understanding of consumers' beliefs. The importance of cost as a barrier
is most clearly seen in Tables 5.12 and 5.14. In Table 5.12, 88% of those who installed
their current system, but who installed a non-solar system, cited cost as the main reason
why they did not purchase solar. The next most common reason was cited by just 31%,
and three of the top four reasons all involved cost. Table 5.14 presents what people think
are the reasons other people do not buy solar. Again, the majority (78%) cites cost as the
most important reason. The importance of the cost factor in these two surveys echoes
findings from previous studies (e.g., Foster, 1990; Solar Energy Research Institute, 1981).
Other barriers mentioned as important by the manufacturers and suppliers - namely "lack
of knowledge" and "unattractive addition for house" - were not seen as being as important
by the respondents in the householders' survey.
The above mentioned barriers are perceptions and characteristics of individual
consumers. Manufacturers and suppliers also saw barriers in institutional and trade
practices and prejudices. Architects and builders were seen as almost actively obstructive
to the more widespread adoption of solar heaters. Manufacturers and suppliers also
believed the state government could promote solar much more, especially by providing
financial assistance and by installing solar heaters in government buildings.
Although cost was seen as the major barrier - by manufacturers and suppliers, by nonsolar owners, and even by solar owners (Table 5.14) - saving money was seen by
manufacturers and suppliers as the most important reason in people's decision to install
solar, and solar owners themselves agreed that saving money was the most important
factor in their decision to install solar. This apparent paradox has been noted before (e.g.,
Foster, 1990; Kinsman, 1984; Solar Energy Research Institute, 1981;).
Other factors sometimes claimed to be important reasons for people's decision to install
73
solar (e.g., a concern to use renewable resources to preserve the environment, a desire to
be independent from the grid - Berrill and Fries, 1983) were not found to be exceptionally
important in the present survey. Environment-related reasons were moderately
important; independence from the grid was negligibly important. The most important
sources of information to people deciding to purchase solar were a solar company, friends
and television. This finding, especially of the importance of friends, resembles earlier
findings, both in Australia (Kinsman, 1984) and in the United States (Archer, Pettigrew,
Costanzo, Iritani, Walker and White, 1986).
Analyses of differences between owners of solar heaters and other heaters revealed that
solar owners were more likely to be men, to live in a house, be likely to remain in that
home for five years, and less likely to have gas available in the street or their home.
Interestingly, solar owners did not differ in age or income from non-solar owners. The
sex difference is something of an enigma. It is possible to argue, in principle, for a sex
difference in either direction: either women will be more favourably inclined to solar
because they value conservation and "soft" energy paths more highly than men do; or
women will be less favourably inclined to solar because they have less faith or interest in
the technology than men do. Other studies (see section 4.3.2) provide weak evidence for
the first argument. Table 5.14 provides reasons for why more people do not install solar
water heating systems. Sex differences are not apparent on any of the reasons, thus
leaving the sex difference in system ownership unexplained.
In the regression analyses predicting current system, sex of respondent had a significant
unique association with current system, but only for the total sample analysis. Sex was
not a significant predictor in the analysis for installers only; nor was it a predictor for the
intended system or satisfaction with current system.
For the total sample, current system was predicted from sex, age of home, type of home,
likelihood of staying in the home for five years, and whether gas is available in the home.
There were only two significant predictors in the installers sample - income and
likelihood of staying in the home five years. This is the only analysis in which income
was a significant predictor. The relative unimportance of income across all the analyses
was surprising, and implies, as does Figure 5.8, that disposable income is not a major
determinant of purchase or intended purchase of a solar water heater.
Those people who currently owned solar heaters were very satisfied with them. There
were two important predictors of satisfaction, both in the analysis for the total sample and
in that for solar owners only - the number of times the respondent reports running out of
hot water, and the percentage of the last SECWA bill the respondent believes had been
used to heat water. These two variables predicted more of the variance in the solar only
sample than they did in the total sample. Since the beta weight for "percent of last bill"
was much smaller in the non-solar owners sample (it just failed to reach significance)
than it was in the solar owners sample, this implies that it is, psychologically, a more
important variable for solar owners. Perhaps some people who purchase a solar heater
expect it to have a much bigger effect on their SECWA bills than it actually does, and so
become less satisfied with its performance.
Responses to the question about intended water heating system portray an auspicious
74
future for the solar industry in Perth, with almost 60% of the entire sample saying they
would buy a solar system when they need to replace their current system. Undoubtedly
this is an overestimation of the actual number of people who will end up buying a solar
heater over the next few years. The association between current water heating system
and intended system is important. Of those who currently own a solar heater, there is
very little "leakage" away to other systems. Just over half of the people who currently
own a gas system say they intend switching to a solar system, and just under half of the
people who currently own an electric system say they intend switching to solar. Also,
those who intend switching to solar tend to be younger and to have larger families than
those who intend to purchase a non-solar heater.
The larger family size of those who intend to purchase solar is an important factor when
considering the cost of using solar to heat water rather than gas or electricity. In the
present sample, the dollar value of the last SECWA bill for solar owners was no different
from that of owners of any other water heating system except gas storage, which was
higher. However, when the bill is expressed as a per capita bill, solar owners are better
off by between $5 and $18 per head per billing period than owners of other systems. In
addition, solar owners believe their water heating system uses about 15% of the SECWA
bill, as compared to about 30% for owners of gas water heaters, and about 45% for
owners of electric water heaters.
To conclude, in the literature a common approach to the analysis of the adoption of solar
water heaters has been the "diffusion of innovation" approach (Foster, 1990a, 1990b;
Rogers, 1983). Diffusion models typically stress that information about an innovation
spreads through extant communication networks, and the acceptability of that innovation
depends upon a number of factors related to that innovation such as its economic
feasibility, and the degree of risk associated with it. The data in the present surveys
indicate that solar water heating systems are perhaps no longer seen as an "innovation" by
the residents of Perth. The "newness" and the "risk" associated with this "alternative"
technology have faded. Solar heaters are common in Perth now. Almost everyone
knows someone who has a solar heater. They are no longer "alternative". Few people in
the householders' survey express concerns about the feasibility of solar water heating
technology. Rather, there is only one major barrier to the more widespread adoption of
solar heaters - cost. Respondents were concerned about both capital outlay and expected
payback periods. Manufacturers and suppliers are well aware of this concern, and
attempt to allay the concern by stressing the long term as a focus in economic
calculations.
In addition to cost, communication networks remain important. Solar owners nominated
a solar company and friends as the two most important sources of information to them in
making their decision to purchase solar. Presumably "solar company" refers to sales
representatives providing information in response to enquiries and during visits to homes
to provide quotes. If so, then these two sources refer to direct, personal contact with
people considering the purchase of a solar heater. Social psychology has documented
that information presented in this way, rather than, say, through advertising on television
or in a newspaper or magazine, is more vivid, salient, memorable, easily understood, and
influential (Nisbett and Ross, 1980). Costanzo, Archer, Aronson and Pettigrew (1986)
and Gonzales, Aronson and Costanzo (1988) make the argument more pertinent to energy
75
conservation. The householders' survey also revealed that non-solar owners rated the
satisfaction of their friends and acquaintances who do own solar much lower than solar
owners rated their own satisfaction. This implies either that non-solar owners know
people who genuinely are less satisfied (but still satisfied) with their solar system than is
the population of solar owners, or that non-solar owners systematically underestimate
their friends' satisfaction with solar. Either way, the importance of social influence is
highlighted.
76
CHAPTER 6
PASTORAL LEASE SURVEY:
RESULTS AND DISCUSSION
Two hundred and fifty eight usable returns were received from a possible 525
questionnaires originally mailed out, giving a response rate of 49.1%. Due to missing
data on some questions, the statistics reported below will not always be based on the
entire sample of 258.
6.1 Respondents
The majority of responses (77.8%) came from leaseholders themselves, with 19.0%
coming from the property manager, and 1.2% from a managing partner. Two responses
were from a part-lease holder, and one each from an overseer, a station mechanic, and an
ex-manager. Respondents typically lived on the property (92.6%). Of the 7.4% who did
not, exactly half had a separate manager. On average, there were just over four adults
(mean = 4.10, sd = 3.81), and less than two children (mean = 1.59, sd = 1.82) resident on
the property. Figures 6.1, 6.2, and 6.3 summarize this information graphically.
FIGURE 6.1
80
72.1
DISTRIBUTION OF RESPONDENTS' STATUS
live on property
don't live
0.2
0.2
missing
0.4
0.8
other
0
1.2
managing partner
0.4
part leaseholder
manager
0
1.2
5.4
20
0.4
17.8
40
leaseholder
% Total Sample
60
77
FIGURE 6.2
77.9
NUMBER OF ADULTS ON PROPERTIES
80
40
0.8
0.8
1.6
1.2
20
1.6
16.3
% Total Sample
60
11-15
16-20
>21
missing
0
0
1-5
6-10
Number of adults
FIGURE 6.3
NUMBER OF CHILDREN ON PROPERTIES
42.6
40
30
10
1.6
20
3.2
% Total Sample
50
52.6
60
0
0
1-5
Number of children
6-10
missing
78
6.2 Electricity Generation
Of all the properties, 58.8% had a stand alone diesel generator; 25.1% a diesel/battery
bank; 3.1% a wind/diesel/battery bank; and 4.3% a photovoltaic/diesel/battery bank.
Fifteen properties (5.9%) were connected to the grid, three (1.2%) properties had no-one
living on them; three (1.2%) drew power from a nearby mine; and one (0.4%) used a
petrol back-up (see Figure 6.4).
FIGURE 6.4
TYPES OF ELECTRICITY GENERATING SYSTEMS
150
100
15
15
SECWA
3
6
4
mine power
petrol backup
absent lease holder
wind/diesel/battery bank
diesel/battery bank
0
diesel stand alone
9
pv/diesel/battery bank
71
Frequency (Total Sample)
200
Eighteen properties (7%) reported having a second main generator. Seven of these have a
diesel/battery bank; one a wind/diesel/battery bank; four a photovoltaic/diesel/battery
bank; one has an absent leaseholder; and five have a petrol back-up.
Just over half (53.5%) of all the properties have a portable generator for peak load and
other purposes. More than half of these (59.4%) are diesel, 39.1% are petrol, and only
one has another (unspecified) fuel source. Forty seven properties have two portable
generators: four are diesel powered, and the rest are petrol powered.
Respondents were asked a number of questions about the operation of their electricity
generation systems. The typical system voltage was 240V (94.9% of respondents). Two
79
respondents reported having a 12V system, three a 32V system, three a 415V system,
four a 440V system, and 22 respondents did not answer this question (see Figure 6.5).
The average total rated capacity of homestead generators, excluding portable generators,
was 193.5 kVA (mode = 120 kVA, sd = 203.7, minimum = 12 kVA, maximum = 1450
kVA). The average total rated capacity of portable generators was 79 kVA (mode = 50
kVA, sd = 82.56, minimum = 6 kVA, maximum = 500 kVA). Figures 6.6 and 6.7
present the distributions of total rated capacities for homestead generators and portable
generators.
FIGURE 6.5
HOMESTEAD GENERATOR SYSTEM VOLTAGE
The mean average load of non-portable generators was reported to be 84.1 kVA (mode =
50 kVA, sd = 91.4, minimum = 3 kVA, maximum = 955 kVA). The mean peak load was
128.3 kVA (mode = 120 kVA, sd = 102.4, minimum = 10 kVA, maximum = 755 kVA).
The distributions of average and peak loads are presented in Figures 6.8 and 6.9. These
data are somewhat surprising as they represent a substantial use of electricty and appear
high when set alongside the reported fuel use figures (below).
The average load per capita (= average load / number of people over the age of 18) was
2.38 kVA (mode = 2.00, sd = 2.59, minimum = 0.15, maximum = 25.00).
When asked to indicate the annual fuel cost of electricity generation, the mean was
$6,741.60 (mode = $5,000, sd = 8,389.60, minimum = $0, maximum = $80,000). On top
of this, the average annual operational and maintenance cost of electricity generation
systems was $2,298.15 (mode = $1,000, sd = 4.853.88, minimum = $0, maximum =
$42,500). Figures 6.10 and 6.11 summarize these costs. When annual cost of fuel is
expressed as a percentage of total operating cost (fuel cost / fuel cost plus operational and
maintenance costs), the average is 76.2%.
0
2
2
2
3
201-250kVA
251-300kVA
301-350kVA
>351kVA
missing
n/a
4
38
98
missing
>751 kVA
1
0
651-700kVA
701-750kVA
2
601-650kVA
5
5
4
501-550kVA
551-600kVA
2
4
401-450kVA
451-500kVA
5
6
301-350kVA
351-400kVA
8
251-300kVA
201-250kVA
13
20
151-200kVA
8
151-200kVA
101-150kVA
25
32
31
40
101-150kVA
29
40
51-100kVA
1-50kVA
Frequency
55
60
51-100kVA
80
72
0
1-50kVA
Frequency
60
80
FIGURE 6.6
TOTAL RATED CAPACITY OF HOMESTEAD GENERATORS
80
FIGURE 6.7
TOTAL RATED CAPACITY OF PORTABLE GENERATORS
100
60
20
81
FIGURE 6.8
AVERAGE LOADS OF NON-PORTABLE HOMESTEAD GENERATORS
100
80
74
80
72
Fre
que 60
ncy
40
14
20
7
0
150
kV
5110
0k
10
115
15
120
2
20
125
3
25
130
2
30
135
4
>3
51
kV
mi
ssi
ng
FIGURE 6.9
PEAK LOADS OF NON-PORTABLE HOMESTEAD GENERATORS
85
100
16
missing
4
301-350kVA
7
3
251-300kVA
201-250kVA
151-200kVA
101-150kVA
0
51-100kVA
9
20
>351kVA
40
32
41
60
1-50kVA
Frequency
61
80
82
00
M
00
1
IS
SI
NG
>3
0
00
$1
00
120
00
$2
00
130
00
$3
00
140
00
$4
00
150
00
$5
00
160
00
$6
00
170
00
$7
00
180
00
$8
00
190
00
$9
00
110
00
$1
0
0
00
115
$1
00
5
0
00
120
$2
00
0
0
00
130
00
0
-1
0
$5
01
$1
-5
$0
Frequency
FIGURE 6.10
83
ANNUAL FUEL COST OF ELECRICITY GENERATION
60
50
40
30
20
10
0
85
FIGURE 6.11 ANNUAL OPERATIONAL AND MAINTENANCE COST
70
60
FREQUENCY
50
40
30
20
10
0
$0
$1-200
$201400
$401600
$601800
$8011000
$10012000
$20014000
$40016000
$60018000
$800110 000
$10 $15001001-15 20 000
000
>$20
001
missing
86
87
Diesel generators typically ran for 8-10 hours each day (average = 9.98 hours in summer,
8.95 hours in autumn, 8.06 hours in winter, and 8.79 hours in spring). Figures 6.12, 6.13,
6.14, and 6.15 present the distributions of these seasonal usage patterns.
On average, battery bank storage systems stored 1297.6 kWh, and on average banks had
16.39 batteries.
Forty nine respondents (21.4%) reported having an inverter linked to their system, and
the average rated capacity of these was 54.5 kVA. Fourteen were square wave inverters,
seven were sine wave inverters, and 28 respondents did not know what sort of inverter
they had.
Wood, kerosene, and bottled gas were commonly used on the pastoral properties: 45.3%
had a wood stove, 29.8% a kerosene fridge, 92.6% a large-bottled gas stove, 7.8% a gas
fridge, and 0.8% a kerosene stove (see Figure 6.16).
FIGURE 6.12
DIESEL POWER GENERATION: SUMMER
36
40
25
14
12
15
12
14
21
23
12
8
missing
24hrs
19hrs
1
3
18hrs
1
17hrs
16hrs
15hrs
14hrs
13hrs
12hrs
11hrs
10hrs
9hrs
8hrs
7hrs
6hrs
5hrs
4hrs
3hrs
2hrs
0
0-1hr
2
3
4
7
10
8
9
12
16
20
n/a
Frequency
30
0
missing
24hrs
1
19hrs
6
16hrs
1
7
15hrs
17hrs
7
1
14hrs
13hrs
12hrs
10hrs
9hrs
10
10
10
14
23
23
33
missing
24hrs
19hrs
18hrs
16hrs
15hrs
14hrs
13hrs
12hrs
11hrs
10hrs
9hrs
8hrs
7hrs
1
2
3
6
9
10
13
1
10
11
25
24
23
17
6hrs
7
23
5
5hrs
4hrs
3hrs
4
27
29
30
8hrs
7hrs
38
40
6hrs
26
24
30
5hrs
6
2hrs
0-1hr
8
Frequency
20
4hrs
4
10
3hrs
2hrs
5
n/a
0
0-1hr
9
10
n/a
Frequency
88
FIGURE 6.13
DIESEL POWER GENERATION: AUTUMN
FIGURE 6.14
DIESEL POWER GENERATION: WINTER
20
89
FIGURE 6.15
DIESEL POWER GENERATION: SPRING.
35
40
21
9
10
12
8
9
11
12
16
20
25
24
22
21
Frequency
30
missing
1
20hrs
24hrs
1
19hrs
16hrs
15hrs
2
4
14hrs
18hrs
3
12hrs
11hrs
10hrs
9hrs
8hrs
7hrs
6hrs
5hrs
4hrs
3hrs
2hrs
0-1hrs
0
n/a
1
13hrs
5
6
10
6.3 Electricity Consumption
Respondents were asked to indicate which of a list of appliances and tools were supplied
by the homestead electricity generating system. This list, along with the percentage of
respondents indicating that each is supplied, is presented in Figure 6.17.
6.4 Separate Renewable Equipment
Respondents were asked to indicate if, apart from the homestead electricity system, they
use separate solar or wind equipment for any of a number of purposes. Table 6.1 and
Figure 6.18 list the purposes, and give the percentage of respondents who said they do
use solar or wind equipment in that way.
Of those for whom the question was relevant, the majority (79.6%) indicated they were
satisfied with the performance of their solar or wind equipment used in electricity
generation.
90
FIGURE 6.16
FUEL SOURCES AND USES
OTHER THAN THE MAIN POWER GENERATION SYSTEM
239
300
117
100
Future Renewable Electricity Generation
none
gas fridge
kerosene fridge
kerosene stove
6.5
gas bottle stove
0
wood stove
2
3
20
77
Frequency
200
Relatively few (19.8%) of the respondents knew that the Isolated Systems Subsidy
offered by SECWA now covers electricity generation that incorporates renewable energy
equipment. Almost two thirds (64.3%) indicated that the ISS would make it more likely
that they would consider installing an electricity generation system that incorporates
renewable energy equipment when they come to replace their present generation system.
Respondents were also asked how much fuel prices would have to increase before they
decided to change to a generation system that incorporates renewable energy equipment.
The average reported rise was 58.8% (sd = 52.06). Of those who answered the question,
6.7% said no rise would be enough, 13.3% said a 10% increase, 20.0% said 25%, 27.9%
said 50%, 6.1% said 75%, 18.2% said 100%, and 7.9% said 200% (see Figure 6.19).
Thus, although the average was 58.76%, two thirds of all respondents indicated an
increase in fuel prices of 50% or less would be sufficient.
Respondents were asked to list the factors which made them, or would make them,
consider installing an electricity generation system that incorporates renewable energy
equipment, and, for those who do not already have renewable equipment, to rank the
three most important reasons for not including renewable equipment. Tables 6.1 and 6.2
summarise the responses to these two questions. Table 6.3 presents the rankings of the
three most important economic pressures faced in managing the property.
hi
ng
fr e
to
r
er
a
oo
m
ra
w
ve
sa
st
o
ea
t
m
m
te
he
r
ot
di
le o
vi
si
on
st
w
e
at
er reo
h
sp ea
t
a
re
ce ing
fri
dg he
at
e.
er
a
ev ir c
oo
ap
le
ai
rc r
oo
le
w
o
rk r
el
ec
to
tri
ol
c
s
fe
w
nc
at
er
in
g
pu
ba
m
tte
pi
ry
ng
ch
a
de rgi
sa ng
lin
at
io
n
sh
ea
rin
g
va
c
ez
er
ac
uu
hi
ne
m
cl
ea
di
s h ne
r
m
w
ic
as
ro
fo
he
w
o
pr ave r
ep
o
ap ve
n
pl
ia
nc
es
lig
ht
bu
lb
s
as
w
lr
fig
re
co
o
Frequency
91
FIGURE 6.17 APPLIANCES AND TOOLS POWERED BY THE HOMESTEAD ELECTRICITY
GENERATION SYSTEM
250
200
150
100
50
0
92
FIGURE 6.18 USE OF SEPARATE SOLAR AND WIND EQUIPMENT
140
120
Frequency
100
80
60
40
20
0
solar/electric
fencing
water pumping
with windmill
waterpumping
with PV
workshops
remote lighting battery charging
shearing
other
93
94
FIGURE 6.19
RISE IN FUEL PRICES NECESSARY BEFORE RENEWABLE ENERGY
EQUIPMENT MIGHT BE INSTALLED
72
80
46
30
33
40
13
10
11
20
21
22
Frequency
60
0
0%
10%
25%
50%
75%
100%
200% have REE missing
Price Increase
6.6 Water Heating
Nearly one half of all respondents reported they had a wood water heating system, and
nearly one quarter had a solar water heating system. The most commonly used booster
was an electric one. Nearly one quarter of the sample had a second water heating system,
the most common one being wood. Figure 6.20 summarizes the distribution of owners of
different water heating systems, counting all systems they each own.
Respondents were also asked what sort of water heating system they thought they would
buy if they needed to replace their current one. More than half indicated they would opt
for a solar system. The next most commonly preferred system was wood, and then gas.
Most of the people who preferred a solar system indicated they would probably attach an
electric booster. Figure 6.21 presents the percentages of respondents indicating
preference for various water heating systems.
95
TABLE 6.1
FACTORS INVOLVED IN CONSIDERING RENEWABLE ENERGY
EQUIPMENT IN AN ELECTRICITY GENERATING SYSTEM
Percent indicating as :
Reason
(Number giving each reason)
Reduced cost
Reliability
24 hour supply
Environment
Income
Better efficiency
Need of replacement
Better batteries
SECWA subsidy/tax incentive
Increase in SECWA charges
Low quality kero fridges
Increase in life quality
Other
reason 1 reason 2
196
76
25.0
15.8
13.3
27.6
15.8
7.9
9.2
19.7
9.2
7.9
6.6
10.5
10.2
1.3
2.6
2.6
1.5
0.0
1.0
0.0
0.5
1.3
0.0
0.0
4.6
5.3
reason 3
16
12.5
18.8
6.3
6.3
12.5
12.5
0.0
18.8
6.3
0.0
0.0
6.3
0.0
total
288
21.95
17.43
13.24
11.85
9.06
8.01
7.32
8.48
1.39
0.70
0.70
0.35
4.53
TABLE 6.2
THE THREE MOST IMPORTANT REASONS FOR NOT INCLUDING
RENEWABLE ENERGY EQUIPMENT IN AN ELECTRICITY GENERATING
SYSTEM.
% giving reason as
Reason
Capital cost
Lack of confidence in performance
Lack of service for maintenance
Lack of familiarity with equipment
Lack of service for breakdowns
Other
total
rank 1
rank 2
rank 3
%
51.9
4.7
1.9
0.4
0.4
2.3
3.1
15.1
12.8
10.1
8.5
2.7
1.9
10.5
15.1
15.9
4.7
3.9
56.9
30.3
29.8
26.4
13.6
8.9
Note: Examples of responses included in the category other are: lack of readily understood literature, poor
winds, poor battery quality, decline in income, happy with existing system.
96
TABLE 6.3
THE MOST IMPORTANT ECONOMIC PRESSURES FACED IN MANAGING
THE PROPERTY
Pressure
rank 1
rank 2
rank 3
Total
Commodity prices
44.6
9.3
6.2
60.1
Interest rates
Transport costs
Price of farm labour
Taxation
Access to working capital
Government regulations
Power generation
Availability of farm labour
Land degradation
8.9
6.2
3.1
7.0
4.7
1.6
1.2
0.8
0.0
18.6
13.6
10.5
7.0
3.5
3.5
3.1
4.3
2.7
6.2
13.2
10.1
6.2
7.8
9.7
5.0
3.5
5.4
33.7
33.0
23.7
20.2
16.0
14.8
9.3
8.6
8.1
Livestock replacement
Veterinary costs
Other
0.4
0.0
3.5
1.9
0.0
2.3
2.3
0.4
4.3
4.6
0.4
10.1
Note: Examples of responses included in "other" are: shearing costs, cost of fuel, education costs, lack of
rain.
0
missing
other
7
9
20
32
36
46
50
wood
electric
gas
22
40
solar/unspecified
solar/none
5
10
solar/gas
solar/elect.
31
50
missing
other
none
wood
electric
gas
solar
0
solar/wood
Frequency
9
4
1
39
49
62
Frequency
155
97
FIGURE 6.20
CURRENT WATER HEATING SYSTEMS
200
100
FIGURE 6.21
PREDICTED WATER HEATING SYSTEMS
60
30
20
98
Those respondents who currently own a solar water heating system were asked further
questions about their system. Most (66%) had two collector plates; 20% had one; 12%
had three; and 2% had four. The average tank capacity was 234 litres (mode = 300 litres,
sd = 90.8, minimum = 60, maximum = 480). The average system age was 7.6 years,
(mode = 3 years; sd = 6.6; minimum = 1 year; maximum = 40 years).
Respondents were asked to indicate which of a range of problems they had experienced
with their solar system. The most commonly reported problem was calcium deposition,
followed by lack of access to maintenance services, leaks, and corrosion. Nearly one
quarter of all respondents (22.4%) said they had had no problems at all. The percentages
of respondents indicating each problem are presented in Table 6.4.
TABLE 6.4
PROBLEMS EXPERIENCED WITH SOLAR WATER HEATING SYSTEMS
Problem
Percent
Calcium deposition
24.1
Lack of access to maintenance services
Leaks
Corrosion
Difficulties with self maintenance
Poor quality of installation
System undersized for needs
Overheating
Freezing
High costs of maintenance and repairs
20.7
19.0
17.2
10.3
10.3
10.3
6.9
6.9
3.4
Malfunction due to electric controls or valves
Other
No problems
1.9
20.7
22.4
Note: Included in "other" are: not well enough insulated for the winter; dust on reflector between glass and
copper panel; plate cracks with extreme heat; water cold or just warm in winter; boils in summer but does
not even give warm water in winter; electric elements have a very short life; occasional blockage due to
installation of improper filtration unit.
Satisfaction with their system was very high among solar owners. On a scale from 1 =
very dissatisfied to 5 = very satisfied, the mean was 4.23. More than half of the solar
owners (51.7%) indicated they were "very satisfied" with their system. Only 11.6% were
at all dissatisfied; 1.7% were "indifferent"; and 35% were "satisfied".
99
Satisfaction with solar system was predicted in a regression equation from number of
people in the homestead, age of respondent, tank capacity, number of collector plates,
and experience of the problems listed in Table 6.4. A mean substitution procedure was
used to avoid problems with missing data. Sixty six percent of the variance in satisfaction
was predictable from these variables. The only predictors with significant beta weights
were problems with the system - number of people, age, tank capacity, and number of
plates had insignificant unique associations with satisfaction. Experience of leaks and
with freezing and difficulties with self maintenance both had significant negative beta
weights (p < .05), and experience of calcium deposition and high cost of maintenance
had almost significant negative beta weights (p < .1). These results suggest that as
respondents experience these various problems with their solar water heating systems,
their satisfaction with their system decreases. The regression results are presented in
Table 6.5.
The same variables that were used to predict satisfaction with solar system, along with
satisfaction with current system, were used to predict whether current owners of solar
systems intended to purchase a new solar system or some other sort of system. Sixty
seven percent of the variance in intended system choice was accounted for. Satisfaction
with current solar system, experience of high maintenance costs, and experience of
"other" problems all had significant beta weights. Experience of freezing and belief that
the system is too small had almost significant beta weights. Thus, those who have
experienced water freezing and "other" problems, and those who believe their system is
too small, are less likely to intend buying another SWHS, and those who are satisfied
with their current SWHS are more likely to intend buying another SWHS. The
regression results are summarized in Table 6.6.
6.7
Discussion
On the whole, electricity was generated in traditional ways on the homesteads we
surveyed. Only 7.4% of all properties had either a wind/diesel/battery bank or a
photovoltaic/diesel/battery bank. A futher 5 properties had one of these banks as a
second generating system. The electricity generated was used consistently for 8 - 10
hours each day, year round. The most common uses of the electricity were for domestic
appliances and activities. The average annual fuel cost for generating electricity was
$6,741, and the average annual operational and maintenance costs of electricity
generation was $2,298. This gives an average annual total cost of approximately $9,000.
The use of renewable components or renewable equipment was limited mainly to four
purposes: water pumping with a mechanical windmill, solar powered electric fencing,
water pumping with photovoltaic or solar cells, and battery charging. Nearly 80% of
respondents were satisfied with the performance of their renewable equipment.
Only about one-fifth of all respondents claimed they knew the ISS now covers equipment
incorporating renewable components. The ISS can hardly act as an incentive for the
greater use of renewable components if 80% of the population do not know about it.
However, about two-thirds said the ISS would make it more likely they would consider
100
installing renewable components. Fuel prices would have to rise about 50% before a
majority of respondents would decide to change electricity generating systems to one that
incorporates renewable energy equipment. Other factors which would make them
consider use of renewable equipment were reduced cost of renewables, increased
reliability, the possibility of 24 hour supply, and increased concern for the environment.
The major factor against considering renewable energy equipment was capital costs.
Other factors concerned lack of confidence in the performance of the equipment and the
unavailability of technical or mechanical support for unfamiliar equipment. Related to
capital cost being the major factor against considering renewable equipment is the fact
that the six most commonly cited pressures facing the property concerned finance.
TABLE 6.5
MULTIPLE REGRESSION PREDICTING SATISFACTION WITH CURRENT
SOLAR WATER HEATING SYSTEM
Dependent variable: current water heating system (solar = 2; non-solar = 1)
Predictor variable
beta weight
prob.
Age of respondent
Number of people
Tank capacity
-.079
.137
-.131
.517
.206
.222
Number of collector plates
Lack of maintenance services
Hard to self maintain
Corrosion
Calcium deposition
Leaks
Malfunctions
Poor installation
High cost of maintenance
.105
-.108
-.344
.146
-.218
-.232
-.127
-.101
-.214
.333
.459
.013
.223
.066
.039
.283
.350
.084
System too small
Overheating
Freezing
Other problems
No problems
-.068
-.006
-.607
-.016
-.025
.546
.959
.000
.891
.872
R square = .659 (F = 4.90, p > .001)
Note: Each of the problems was scored so that if a respondent indicated the problem applied they received
a 1, otherwise they received a 0.
101
TABLE 6.6
MULTIPLE REGRESSION PREDICTING INTENDED WATER HEATING
SYSTEM FOR SOLAR OWNERS ONLY
Dependent variable: intended water heating system (solar = 2; non-solar = 1)
Predictor variable
beta weight
prob.
Age of respondent
.011
.930
Number of people
Satisfaction with current solar
Tank capacity
Number of plates
Lack of maintenance services
Hard to self maintain
Corrosion
Calcium deposition
Leaks
-.162
.481
.005
-.109
.052
.176
-.003
.026
-.072
.144
.003
.962
.319
.721
.224
.981
.827
.532
Malfunctions
Poor installation
High cost of maintenance
System too small
Overheating
Freezing
Other problems
No problems
.019
.031
-.319
-.202
-.114
-.275
-.255
-.180
.874
.776
.014
.077
.309
.057
.038
.241
R square = .669 (F = 4.716, p < .001)
Nearly half of the respondents reported having a wood fuelled water heating system, and
nearly one quarter had a solar heater. If they had to replace their present system, more
than half indicated they would install a solar heater.
Only about one quarter of solar owners reported having no problems with the system.
Commonly reported problems concerned problems related to water quality and problems
with maintenance. However, despite widespread experience of problems, satisfaction
with solar heaters was high. Sixty six percent of the variance in satisfaction with solar
system was predictable in a regression equation, mostly from experience with various
102
problems. Sixty six percent of the variance in intended new system was predictable,
mostly from satisfaction with current solar system, experience with high maintenance
costs and with other problems.
It appears, then, that the use of renewable energy technology is limited to a few areas
including solar water heating. Satisfaction with the performance of these is high, and,
with solar water heaters at least, this leads to intended use of renewables. As with the
householders' survey, capital cost is the biggest barrier to greater use of renewables. Lack
of confidence in the technology is higher in the pastoralists' survey than in the
householders' survey. Few pastoralists knew of the ISS, but most said that now they
know of it they are more likely to consider using renewable equipment in the future. The
ISS is perhaps a good example of risks associated with policies using financial incentives
to promote greater adoption of renewable technologies. One easy policy implication
from the householders' survey and the pastoralists' survey is that the cost barrier be
overcome with the use of financial incentive such as tax rebates and subsidies. The
danger lies in the fact that the use of financial incentives relies on an underlying rational
model of human behaviour. For incentives to work, people must first know of them, and
second, they must "rationally" integrate those incentives into their decision making. The
first step has not been met in the case of the ISS; consequently, the ISS as a policy is
unlikely to succeed.
103
CHAPTER 7
RENEWABLE ENERGY USE IN REMOTE ABORIGINAL
COMMUNITIES
7.1
Remote Aboriginal Communities
The number of remote Aboriginal communities is increasing rapidly. This trend has
occurred as Aborigines have moved away from towns and cities and have established
homeland settlements in the outback. These settlements may be considerable distances from
established towns and are composed of extended family units of around 40 members leading
an often nomadic lifestyle. There are approximately 900 such settlements in Australia, of
which about 350 are in Western Australia. The requirements of the Aboriginal people living
in these settlements are quite different from their requirements when they were living in or
close to towns.
7.2
Use of Renewable Energy
Remote Aboriginal communities were originally serviced by SECWA to meet their
electricity needs. However several factors contributed to the withdrawal of SECWA from
the provision of power to these communities. Firstly, as mentioned above, the number of
communities was growing rapidly. Secondly, the energy use in a family unit of around 40 is
very minor and, thirdly, these units are often quite nomadic. This combination of factors
made it difficult for SECWA to supply and service diesel generators that had originally
been provided to these communities. The diesel generators, furthermore, needed regular
fuel deliveries which were often difficult to effect. A further problem arose because the
diesel generators were often either overloaded with a large number of appliances, or were
underloaded. Where they were overloaded they tended to stop functioning. Where they
were underloaded, maintenance difficulties arose because of running at too low a
temperature resulting in incomplete combustion and a glazing of the cylinder walls.
Dummy loads were not generally employed as a technique to cope with this problem.
SECWA approached the then Solar Energy Research Institute of Western Australia
(SERIWA) to enquire whether photovoltaic systems might be a useful alternative to diesel
generators. After subsequent meetings with the Federal Department of Aboriginal Affairs,
SECWA and Aboriginal community representatives, SERIWA sponsored the development
of what is now known as a solar pack. Discussions with Aboriginal community
representatives revealed that the most important requirements in a homeland settlement
were:
• radio communications for access to the Royal Flying Doctor Service and other facilities;
• water;
• lighting;
104
• refrigeration;
• television and video; and
• transportability.
The water requirement could usually be met through an independent pumping device and
solar pumping equipment has proved to be cost effective for this purpose. Lighting,
refrigeration, and television/video requirements were incorporated into the solar pack
design. The solar pack is essentially a shipping container with typically:
• a 100 watt VHF receiver;
• two chest-type refrigeration units with a total capacity of up to 460 litres for food,
medicines and vaccines;
• fluorescent lighting in the form of standard 20 watt fittings;
• a small inverter to convert low voltage DC power to mains voltage AC power for use with
television, video recorder, small power tools and a mains powered battery charger for 12
volt automotive batteries.
A high degree of transportability is required to accommodate the nomadic patterns of some
of the family groups. The solar pack meets this requirement as it weighs approximately 6
tons and can be carried on the back of a truck. Most communities using a solar pack would
have a truck at their disposal. The solar packs appear to be robust during transport and
equipment is rarely damaged in transit.
A complete solar pack costs around $47,000. This can be compared to a diesel engine
which costs around $10,000 capital outlay together with an on-going cost of $10,000 per
annum for fuel and maintenance. At the low power levels required by remote Aboriginal
communities, photovoltaics are cost effective. Photovoltaics cost around 90 c per kilowatt
hour whereas a diesel generator costs around $1.10 per kilowatt hour. On top of this the
advantages of reliability and energy efficiency, together with transportability, make it a
highly desirable option and this technology has been accepted widely throughout Australia.
There are approximately 51 solar packs in place in Australia and most of these are in
Western Australia. The delivery of solar packs to remote Aboriginal communities is being
outstripped by the rapid growth of these homeland communities.
Solar packs employ a staged management technique whereby if power cannot be obtained as
a result of insufficient solar radiation, then non-essential loads are switched off in the
following order: TV first, then lights, then refrigeration, with the radio the last to cut out.
There are no reports to date of the refrigeration being turned off. This staged management is
in contrast to a situation with a diesel generator whereby if the generator breaks down or
runs out of fuel there is a catastrophic and immediate loss of power to both non-essential
and essential loads. Additionally it might be several weeks before repairs can be carried out.
105
Water pumping in remote communities can be achieved either through a windmill/diesel
combination or through photovoltaic cell usage. The whole water supply process including
drilling, pumping, storage and reticulation with a ringmains and one outlet per shelter,
would cost in the order of $70 000 - 100 000. The pumping portion of this process would
normally cost 20 - 25% of the total cost. A windmill/diesel system is considerably more
expensive than a photovoltaic system and photovoltaic systems have been accepted by the
authorities for use in aboriginal communities.
7.3
Provision of Energy Services
Until recently Commonwealth administration of Aboriginal affairs was the responsibility of
the Department of Aboriginal Affairs (DAA). A given community would receive general
funding from the DAA, and would pay for capital equipment for energy generation and, in
the case of diesel generators, the diesel fuel. Whereas it had been the responsibility of
SECWA to install and maintain the diesel generators, there is now no single agency whose
responsibility it is to service electricity generation systems for aboriginal communities.
Recently the Department of Aboriginal Affairs was restructured to form a new body, the
Aboriginal and Torres Strait Islanders Commission. The structure of ATSIC is now a
decentralised one in which responsibility for advice and decision making has been devolved
to regional councils. These councils do not necessarily contain within them members who
are conversant with the issues and technicalities relating to power generation in the remote
homeland settlements.
7.4
Barriers to the Use of Renewable Energy
There have been a number of non-technical and quasi-technical barriers associated with the
acceptance and use of the solar pack systems in remote communities. At first the DAA was
reluctant to pay the high capital outlay associated with the solar pack systems when they had
previously had to pay less up-front for a diesel generator with an annual allocation for fuel.
This policy has now changed in relation to the solar packs and their economies have been
accepted.
The DAA was required to service diesel generators after SECWA pulled away from this
responsibility. Now, with the use of solar packs, maintenance requirements have been very
much lower and the DAA has recognised this advantage. An unresolved problem that is
partly a technical problem but partly a problem associated with poor communication with
outback communities, is the upcoming need for maintenance of the solar packs installed
some seven to eight years ago. Whilst the photovoltaic cells themselves are very reliable
and probably have a lifespan of well over 30 years, batteries need replacement every 5 years.
The appliances themselves in the solar packs are also subject to extreme conditions for
which they are not designed. For example, the refrigerators were designed for low ambient
temperatures not those around 45 to 50o C. Improved refrigerator design is one of the
technical improvements that is currently being worked on by the manufacturers of the solar
packs (Advanced Energy Systems in conjunction with the Murdoch University Energy
Research Institute (MUERI)). With the current design of refrigerators, however,
106
maintenance is probably needed around every three years. Batteries have already been
replaced in two solar packs but there are now a number of solar packs which are probably in
need of maintenance. There is a concern by MUERI that if these solar packs are not
serviced they may start becoming unreliable and the technology will develop a bad
reputation.
There is an additional technical problem for the solar packs associated with the use of lead
acid batteries. These require regular topping up and maintenance otherwise they run dry and
break down. New batteries which employ a gell rather than water do not need topping up.
Alternatively, some lead acid batteries which use water can have an automatic filling system
so that the topping up of water is automatic. These advances have improved the reliability
of the battery photovoltaic system considerably. Other battery types which could potentially
eliminate these problems have yet to be commercialised.
The issue of the maintenance of the solar packs highlights a second barrier to their
continued use. With no central agency responsible for the distribution and maintenance of
solar packs, in the increasing number of homeland communities there may be a lack of
awareness about what a solar pack is or how to go about obtaining one. The Pitjinjarra
Council in Alice Springs is an independent organisation of Aboriginal people who have
taken responsibility for their own maintenance of photovoltaics and for the installation of
solar water pumping and solar packs. They have trained their own people to carry out the
maintenance of solar packs. This arrangement is a useful model to emulate in other parts of
Australia and particularly Western Australia with its vast area. There is a need for an arm of
ATSIC, or an independent organisation of Aboriginal people, to be responsible for the
analysis, recommendation, evaluation and installation of renewable systems. In short there
is a policy and an administrative vacuum associated with renewable energy use in remote
Aboriginal communities. Policy to date has been ad hoc rather than strategic particularly in
relation to power supply (James, personal communication).
A further administrative problem has stemmed from the high rotation rates of personnel
within the Federal Department of Aboriginal Affairs. Regional advisers have historically
been non-Aboriginal people with an interest in remote area communities, but who do not
remain long in their job. This lack of continuity means that the suppliers of solar packs are
obliged to keep re-educating ATSIC personnel and there is also a hiatus in the supply of
information from Federal personnel to the remote area communities.
107
CHAPTER 8
PRIVATE COST COMPARISONS OF WATER HEATING SYSTEMS
8.1
Methodology
Earlier in this report the survey results indicated that consumers believed cost was a major
barrier to the use of renewable energy in the form of solar water heating. A large part of that
perception of the cost comes from the fact that solar water heaters have a considerable upfront cost in the form of the unit cost and the installation cost. This, in many cases, requires
a financing agreement with a source of credit, so that there are additional costs in the form of
interest associated with the purchase of a renewable energy appliance. By contrast, electric
and gas units have considerably lower capital costs and may be financed without resort to
credit or the use of much lower levels of credit. This perception by consumers is, of course
rational because, although solar water heaters provide savings in the form of lower
electricity bills which off-set the initial capital outlays, it is well known that consumers are
typically myopic about benefits and costs, that is, in the trade-off between present costs and
long-run benefits, consumers typically apply a substantial discount rate to that long-term
flow of benefits. In part this reflects uncertainties about the future, for example, where a
solar water heater is installed on the roof of a house it is not certain that the outlays will in
fact be recovered if the house was sold after only a couple of years; the cost of the solar
appliance may not be included in the price received for the sale of the house. This myopic
tendency on the part of consumers then is an obstacle to renewable energy in general,
because the feature of renewable energy is the substantial up-front capital cost.
Where consumers act rationally, however, in the sense of taking full account of present
costs and future benefits and applying an appropriate discount rate to those future benefits,
then it is possible for consumers to capture accurately the benefits of renewable equipment,
and solar water heaters in particular. To do this, however, requires information on the
capital and installation costs of the range of competitive appliances, as well as the charges
for electricity and gas that consumers face. To carry out this exercise SECWA, in the late
1970's, conducted a number of tests over a range of typical appliances with a variety of fuel
sources. The objective of the tests was to enable consumers to have access to accurate
information so that they could make a rational choice on the basis of benefits and costs.
The SECWA test data are shown in Table 8.1. A number of water requirements are
indicated in the Table and the SECWA tests indicate the electricity or gas requirements for
each of the water requirements. SECWA also estimates that the solar contribution to water
heating in a solar water heater is approximately 80% of the total requirement. On that
basis SECWA was able to calculate the annual energy costs associated with the range of
appliances. The SECWA information, however, is not sufficient to reduce these
competing costs to an equivalent level. No attempt has been made to add together the
annual energy costs, and some measure of the annual capital cost that would be associated
with each of the appliances, to give a measure of the total annual cost of using one
appliance relative to another.
For this report, as shown in Table 8.2, the SECWA information was updated by the most
recent estimates of capital and installation costs for the same range of appliances, and the
108
1990/91 tariffs applicable for these appliances were utilised. For a 10% interest rate the
appropriate charge rate for the calculation of annual costs using the levelised cost
approach, was taken from the relevant tables. Levelised costs are a common indicator
within the energy industry of the annual cost associated with an initial capital outlay. It
represents an attempt to put, what is in reality an upfront single charge into a stream of
equivalent annual payments. To calculate levelised costs requires information on
appliance life-times and on an estimate of the real rate of interest faced by consumers who
purchase such appliances.
TABLE 8.1
SECWA TEST DATA
1989
Solar
Standard
Tariff
Storage
Electric
300 litres
125 litres
Off Peak
Electric
Storage
External
Gas
Energy
315 litres Efficiency
Model
134-145
litres
Instantaneou
s
Electric
External
Instantaneous
Gas
2602kWh 3374kWh
3280kWh 4611kWh
3732kWh 5440kWh
1750kWh
2800kWh
3500kWh
3475kWh
4828kWh
5730kWh
9.0 L/m
4.5 L/m
Annual Energy
Requirement
100 litres/day at 60o C
160 litres/day at 60o C
200 litres/day at 60o C
506kWh
692kWh
817kWh
2533kWh
3465kWh
4086kWh
Solar Contribution
70 - 80%
-
-
-
-
-
Tariff A1
Tariff A1
Tariff B1
Tariff A3
Tariff A1
Tariff A3
$57.00
$77.00
$91.00
$283.00
$387.00
$456.00
$192.00
$232.00
$258.00
$161.00
$220.00
$260.00
$195.00
$313.00
$391.00
$166.00
$231.00
$274.00
$1,350
$ 350
$1,700
$ 370
$ 120
$ 490
$ 575
$ 450
$1,025
$ 560
$ 220
$ 780
$ 180
$ 90*
$ 270
$ 399
$ 200
$ 599
Annual Energy Costs
Tariff
100 litres/day at 60o C
160 litres/day at 60o C
200 litres/day at 60o C
Capital Cost
Cost of Unit
Installation
Total Installed Cost
SOURCE: SECWA
NOTES:
1.
Costs are based on replacing existing HWS.
2.
100% fixed charge applied to off--peak electric water heating.
3.
50% of first tariff step applied to gas water heaters.
4.
0% fixed charge applied to continuous electric water heating.
5.
Allowance for sensible heat loss in instantaneous water heaters based on 1 operation per 10 litres.
6.
Solar contribution refers to % solar compared with energy required for standard 135 litre electric unit.
7.
* $204 for new three-phase domestic connection not applied.
109
TABLE 8.2
SIMULATION DATA
TARIFF in cents/kWh
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
CAPITAL COST
Cost of unit
Installation
Total Installed cost (TIC)
EQUIPMENT LIFE
(YEARS)
CHARGE RATE AT 10%
1
Solar
Electric
Boosted
300 litres
Storage
Electric
Off peak
Electric
Storage
Gas
Instant
Electric
Instant
Gas
125 litres
315 litres
135-145 litres
4.5 L/m
9.0 L/m
Tariff A1
12.05
Tariff A1
12.05
Tariff B1
6.37
$1,700
$ 450
$2,150
$ 450
$ 120
$ 570
$ 575
$ 450
$1,025
$ 660
$ 220
$ 880
$ 180
$ 90
$ 270
$ 420
$ 200
$ 620
10.0
10.0
10.0
10.0
7.5
20.0
16.50%
16.50%
16.50%
16.50%
19.50%
11.75%
1
Tariff A3(Av)
5.27
4.86
4.69
Tariff A1
12.05
1
Tariff A3(Av)
5.23
4.81
4.64
Because of the declining block structure of the gas tariff for domestic consumption SECWA assumed
that half the units in the first block were used for water heating, with the balance coming from the
second block. See Appendix 4 for tariff details.
110
TABLE 8.3
COST COMPARISONS: BASE CASE1
ANNUAL ENERGY
REQUIREMENT
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
Solar
Electric
Boosted
300 litres
Storage
Electric
Offpeak
Electric
Storage
Gas
Instant
Electric
Instant
Gas
125 litres
315 litres
135-145 litres
4.5 L/m
9.0 L/m
kWh
506
692
817
kWh
2533
3465
4086
kWh
2602
3280
3732
kWh
3374
4611
5440
kWh
1750
2800
3500
kWh
3475
4828
5730
SOLAR CONTRIBUTION
70 - 80%
TARIFF in cents/kWh
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
Tariff A1
12.05
Tariff A1
12.05
Tariff B1
6.37
Tariff A3 (Av)
5.27
4.86
4.69
Tariff A1
12.05
$61
$83
$98
$305
$418
$492
$166
$209
$238
$178
$224
$255
$211
$337
$422
$182
$232
$266
$1,700
$450
$2,150
10.0
16.50%
$354.75
$450
$120
$570
10.0
16.50%
$94.05
$575
$450
$1,025
10.0
16.50%
$169.13
$660
$220
$880
10.0
16.50%
$145.20
$180
$90
$270
7.5
19.50%
$52.65
$420
$200
$620
20.0
11.75%
$72.85
TOTAL ANNUAL COST
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
$415.72
$438.14
$453.20
$399.28
$511.58
$586.41
$334.87
$378.06
$406.85
$323.01
$369.29
$400.34
$263.53
$390.05
$474.40
$254.59
$305.08
$338.72
TOTAL COST (Cents/L)
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
1.14
0.75
0.62
1.09
0.88
0.80
0.92
0.65
0.56
0.88
0.63
0.55
0.72
0.67
0.65
0.70
0.52
0.46
ANNUAL ENERGY COSTS
100 litres/day @ 60oC
160 litres/day @ 60oC
200 litres/day @ 60oC
CAPITAL COST
Cost of Unit
Installation
Total Installed cost (TIC)
Equipment life
Charge rate
Annualised cost @ % of TIC
1 Assumes a 10% rate of interest.
Tariff A3
(Av)
5.23
4.81
4.64
111
FIGURE 8.1 COST OF HOT WATER BY APPLIANCE TYPE: BASE CASE
c
e
n
t
s
/
l
i
t
r
e
1.20
1.00
0.80
100 litres/day @ 60C
160 litres/day @ 60C
0.60
200 litres/day @ 60C
0.40
0.20
0.00
Solar Electric
Storage Electric
Off Peak
Electric
Storage Gas
Type of water heating system
Instant Electric
Instant Gas
112
Table 8.3 shows estimates for annual energy costs based on the 1990/91 electricity and gas
tariffs and the levelised costs of appliances based on the 1990/91 capital costs provided to
us and a 10% interest rate. The life-time for appliances was taken to be ten years, except in
the case of instantaneous electric which was allocated a seven and a half year life-time and
external instantaneous gas which was given a 20 year life-time.
8.2
Results
The base case calculated from the data made available from SECWA together with the
updated capital cost estimates for a range of appliances shows that at low volumes of
delivery solar is the most expensive in terms of cents/litre of water delivered at 60oC.
Electricity is the next most expensive followed by gas. However what Table 8.3 and the
associated figure 8.1 illustrate strongly is that as drawoff rises from 100 litres a day then
the capital costs associated with the more capital intensive solar and electric storage
decline as these costs are spread over more and more units of hot water. The fall in costs is
not as dramatic with gas because of the initial lower capital outlay associated with gas
appliances.
At the same time the cost of the solar supplied hot water moves close to the external
instantaneous gas and the external gas storage.
In Figures 8.2 and 8.3 we have attempted to assess the sensitivity or robustness of the
results shown in the base case to a change in the interest rate. It is well known that capital
intensive technologies are highly sensitive to interest rate changes and given the range of
the capital intensiveness of each of the methods of delivering hot water under review, then
it is important to see whether the order and size differences for the cost of delivery of hot
water will change with a change in the rate of interest. Figure 8.2 recalculates the base
case data with an interest rate of 12% and what is observed is that the basic rankings
demonstrated in the base case remain unchanged but the gap between solar and gas widens
reflecting the capital intensiveness of the solar appliances. By contrast in Figure 8.3, when
an interest rate of 7% is used with the base case data the ranking is again unchanged but
the gap is closed between solar and gas, though even at the 7% interest rate solar is still
slightly more expensive than the external instantaneous gas though slightly cheaper than
external gas storage.
With the base case data it is also possible to undertake some simulations to assess the
requirements to bring about an equality in terms of costs of water delivered amongst the
different alternatives available.
Table 8.4 demonstrates the changes necessary in the gas tariff to achieve a cost of water
equivalent to that which would be supplied by a solar water heater. At 200 litres a day an
increase of some 30% would be necessary in the gas tariff to bring the cost of water from
external instantaneous gas to equality with the cost of water from a solar heater.
113
FIGURE 8.2 COST OF HOT WATER BY
APPLIANCE TYPE: 12% INTEREST
RATE
160 litres/day @ 60C
200 litres/day @ 60C
Instant
e
100 litres/day @ 60C
1.50
1.00
0.50
0.00
Off
/
l
i
t
r
Solar
c
e
n
t
s
Type of water heating
system
115
FIGURE 8.3 COST OF HOT WATER BY
APPLIANCE TYPE: 7% INTEREST RATE
100 litres/day @ 60C
1.50
1.00
0.50
0.00
160 litres/day @ 60C
Instant
200 litres/day @ 60C
Off
l
i
t
r
e
Solar
c
e
n
t
s
/
Type of water heating
system
116
TABLE 8.4
GAS TARIFF CHANGES REQUIRED TO ACHIEVE SOLAR EQUIVALENCE1
DRAWOFF
EXISTING GAS
TARIFF
REQUIRED GAS
TARIFF
cents/kWh
CHANGE
%
6.64
30.1
cents/kWh
200 litres/day
4.64
1 Based on the gas tariff and capital costs associated with external instantaneous gas.
Table 8.5 shows the capital cost changes which would be necessary for a solar appliance to
achieve the same level of cost for water heating as external gas appliances with tariffs held
at their 1991 levels. With a drawoff of 200 litres a day a reduction of some 32% in the
capital cost of a solar appliance would be necessary to bring about this equality. As it has
been assumed that the installation cost is not subject to technological progress then most of
this reduction in capital cost would have to be achieved in a reduction of the cost of the
unit itself. It has come to our attention that very recently a manufacturer (Swan - Sun
Tech) has been able, with new materials, to make a substantial reduction in the capital cost
of solar water heaters so that it does seem possible for reductions of the order shown here
to be possible with technological changes. In addition, the technology referred to is
claimed to have a longer life than the ten years that has been assumed in this study because
of the material used in the construction of the unit and its ability to withstand the corrosive
effects of the water supply, because no metal comes in contact with the water and instead
plastics are used.
TABLE 8.5
SOLAR STANDARD CAPITAL COST CHANGES REQUIRED
TO ACHIEVE GAS COST2 EQUIVALENCE
DRAWOFF
200 litres/day
EXISTING CAPITAL
COST1
$
REQUIRED CAPITAL
COST1
$
CHANGE
2,150
1,456
32.33
%
1 Total installed cost.
2 The cost/litre of external instantaneous gas.
3 If installation costs were held constant the cost of the unit only would have to fall by 40.8%.
117
Table 8.6 demonstrates the impact of extending the lifetimes of solar appliances. An
extension to 25 years would bring about a reduction in the cost of water from solar water
heating to that equivalent with gas for a drawoff of 200 litres/day.
TABLE 8.6
SOLAR STANDARD EFFECTIVE LIFETIME CHANGES
TO ACHIEVE GAS EQUIVALENCE1
DRAWOFF
200 litres/day
EXISTING EFFECTIVE
LIFETIME-YEARS
10
REQUIRED
LIFETIME-YEARS
CHANGE
%
25
150
1 The cost/litre of external instantaneous gas.
Table 8.7 seeks to assess the complex situation involving the use of offpeak electricity
tariffs for water heating. In the base case examined earlier it was shown that where
offpeak electricity was available then the cost of water from offpeak systems, particularly
at high volumes, was comparable with instantaneous gas. A concern has always been felt
that the availability of offpeak electricity tariffs would militate against solar water heating
systems. And indeed, if the offpeak tariff shown in Table 8.2 was widely applicable that
would be the case. In Western Australia, however, very few households have installed
offpeak water heating and this mode has not been encouraged by SECWA particularly in
the context of SECWA's excess supply of gas and its promotion of natural gas for water
heating. Nevertheless, it is important to assess the tariff which would be required in terms
of an offpeak tariff which would eliminate the advantage of offpeak water heating over
solar heating where the solar booster is in fact boosted not at the offpeak rate but at the
standard domestic tariff. In Table 8.7 for a drawoff of 200 litres a day an increase in the
offpeak tariff from 6.37 cents/kilowatt hour to 7.62 cents/kilowatt hour would have the
effect of eliminating the advantage of offpeak water heating over solar appliances.
TABLE 8.7
OFF PEAK ELECTRICITY TARIFF REQUIRED TO ACHIEVE
EQUIVALENCE WITH ELECTRICALLY BOOSTED SOLAR
ON THE DOMESTIC TARIFF
DRAWOFF
200 litres/day
CURRENT OFF-PEAK
TARIFF
cents/Kwh
REQUIRED OFF-PEAK
TARIFF
cents/Kwh
CHANGE
6.37
7.62
19.6
%
Table 8.8 demonstrates the tariff changes which would be required for an electrically
boosted solar water heating system to achieve an equivalent cost of water with gas external
instantaneous appliances. For a low drawoff of 200 litres a day the electricity tariff would
118
have to be less than zero to make a solar water heating system equivalent in cost to
external instantaneous gas.
TABLE 8.8
DOMESTIC ELECTRICITY TARIFF REQUIRED FOR ELECTRICALLY
BOOSTED SOLAR TO ACHIEVE GAS EQUIVALENCE
DRAWOFF
CURRENT DOMESTIC
TARIFF
cents/Kwh
REQUIRED DOMESTIC
TARIFF
cents/Kwh
CHANGE
200 litres/day
12.05
less than zero
N/A
%
119
CHAPTER 9
POLICY ANALYSIS
9.1
Social Costs
A recent review of the literature by Stocker, Harman and Topham (1990) indicates that
decisions made about electricity generation based only on the costs and benefits accruing to
the generating entity (be it a public or private company) do not reflect the costs and benefits
accruing to the society as a whole. This perspective is, however, only a special application of
the general principle that where an industry creates costs, only part of which are borne by the
consumers of that industry's product, then a misallocation of society's economic resources
occurs. In this circumstance the interests of the industry do not correspond with the public
interest, taking into account both the short term and the long term.
The first systematic treatment in economic theory of the failure of consumers to pay the full
cost of production was given by Pigou (1920). External costs occurred according to Pigou
when total costs (sometimes referred to as social costs) are paid only in part by consumers, so
that private costs (the amounts paid by consumers) are below social costs. The difference
between private costs and total costs is the external cost paid by some other section of the
community. The payment of these external costs is, of course, unrequested because there is no
corresponding benefit as occurs when a consumer purchases goods. Furthermore the payment
of these costs is not directly in a monetary form. For example pollution imposes costs through
health impacts, and the payment of these costs is in the form of medical expenses, shortened
life expectancy, and relocation expenses. If, however, some technique was used to make an
industry, and hence the consumers of that industry's output, pay to eliminate pollution, then
those costs previously external would become internalised. Pigou suggested a system of
taxation to internalise external costs. More recent proposals involve setting acceptable
pollution standards and issuing marketable pollution rights.
Although the existence of external costs has been universally recognised, there has not yet
developed a perception or consensus that their pervasiveness and size is of such a scale that a
market economy in general is not able to give rise to an acceptable degree of efficiency. The
area in which there is agreement is that external costs associated with environmental factors particularly those arising from waste disposal - do need particular treatment if the external
costs are not to impact severely on the quality of life.
Not unexpectedly, external costs associated with energy supplies have been the subject of
substantial debate. Initially this debate involved the relative external effects of coal versus
nuclear power generation.
In the debate over fossil fuel versus renewable sources of electricity, the existence of external
costs has been indicated as a reason for the relatively slow market penetration of renewable
sources (Hohmeyer, 1988). Failure to include these costs means that fossil fuel sources of
electricity appear to be lower cost than renewable sources. Unlike the nuclear versus coal
debate in which the supply cycle is comparable - mining of fuel, construction of plant, large
scale generation and extensive transmission systems and eventual decommissioning - with
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renewable sources the process is different, and so problems of an analytical nature become
important. Nevertheless, a number of studies have been undertaken, with mixed results. On
the basis of studies undertaken so far, no conclusive view has emerged to bring about a
redirection of decision making in favour of renewable sources simply on the basis of external
costs.
The most comprehensive discussion of external costs in electricity generation to date is found
in Hohmeyer (1988). The analysis covers wind and solar sources as well as fossil and nuclear
fuels. His work is not original, however, in that it draws on earlier attempts to provide
monetary values for external costs, largely on the basis of those experienced in the Federal
Republic of Germany.
While comprehensive, Hohmeyer's work is also contentious in a number of areas. In particular
his concept of external costs is broader than that found in the Anglo-American literature on
external costs. For him, external costs include the political cost associated with imports for
electricity generation, and amongst benefits the employment gains from local production of
generation technologies. Other criticisms by Jones (1990) include:
• no consideration is given to providing reliable back-up capacity in the form of fuel-based
generation plant for variable sources such as solar or wind. Renewable sources should carry
the external costs associated with the back-up plant;
• no allowance is made for the impacts of pollutants where they are subject to different
dispersion patterns;
• depletion premia for fuel resources have been overstated because, especially with
uranium, the resources are abundant;
• socio-economic benefits of renewable sources have been seriously overstated;
• the per/kWh measures of external costs arrived at by Hohmeyer can have little confidence
attached to them because of the associated estimation methods.
Other studies which have attempted to measure the value of external costs in electricity
generation include Ramsay (1979), Meade and Denning (1986), New York Public Service
Commission (1989), and Pearce et al.(1989). A number of government and intergovernmental
agencies have documented the environmental and health impacts and costs associated with
electricity supply, in particular the OECD.
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TABLE 9.1
APPLICATION OF DAMAGE/AVOIDED DAMAGE COSTS TO WESTERN
AUSTRALIA
Source of Damage/Avoided Damage
Mining
CO2
NOx and SO2
Resource Depletion
Total
Cost (c/kWh)
0.2
1.2 - 10.0
0.5 - 4.0
1.3 - 13.8
3.8 - 28
SOURCE: Stocker et al. (1990).
Further studies attempt to pull together data from a variety of sources on external costs in
electricity supply and attempt to aggregate the data to derive some overall estimate.
Examples are Schulze et al. (1982), Nicklas (in ASES, 1989) and Viziroglu (1987).
Authors who have attempted to improve the conceptual framework for assessing external
costs include Pearce (1989b) and Freeman (1982).
On the basis of the above studies Stocker et al. (1990) estimated the possible range of
external costs in Western Australia from the use of coal for electricity generation as shown
below in Table 9.1.
These figures are largely based on overseas experience with coal as a fuel source. If gas were
being considered, the CO2 component would be reduced by 50%, the NOx/SO2 component
would be reduced by at least 50%, and the mining component would also be reduced
significantly. A resource depletion surcharge would still apply. Thus, taking the lower limits
of the estimates, it appears that the external costs for gas would be around 2.1 c/kWh
compared to coal at around 3.8 c/kWh. In round terms these figures are respectively 2 and 4
c/kWh.
By contrast the estimates provided by Hohmeyer for the external costs of electricity from
renewable energy resources are negligible, at least at the generation stage. Stocker et al.
(1990) indicate that there may be more significant external costs at the manufacturing stage of
renewable energy equipment because of its capital intensive nature.
Nevertheless, on the basis of the best estimates to date when total costs are considered
renewable sources do become more competitive with conventional energy sources.
The practical problem, however, is that in the market place, the relative prices for alternative
energy sources faced by the consumer reflect only the private costs. Until a range of policy
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measures are implemented which internalise external costs, the market will offer a systematic
bias against renewable energy sources in favour of high external cost sources.
External costs may be internalised by a variety of mechanisms including taxes and regulations.
The effect would be to remove the systematic bias against renewable energy which the
existence of external costs generates.
9.2
Subsidies
Just as the failure to take account of external costs leads to a barrier against renewable
energy, so too does the provision of subsidies to conventional energy sources militate
against renewable energy sources where they are not the recipient of equivalent subsidies.
A comprehensive analysis of subsidies and their impact is given in Stocker et al. (1990).
For the purposes of this study the relevant subsidies in the Western Australian contexts
which form barriers to renewable energy are:
• the uniform tariff policy;
• the Contributory Extension Scheme;
• subsidies to SECWA.
The uniform tariff policy is a policy whereby all consumers in the same customer class pay
the same charge for electricity regardless of their location in Western Australia. Although
the geographical cross subsidy is paid for by other electricity consumers and hence
internalised in SECWA, a cross subsidy is undesirable because consumers of high cost
electricity do not confront the real cost of electricity. Hence, they make a choice of
electricity supply technology in the face of market distortion. It is this distorted choice
which works against renewable energy sources. Where SECWA supply is available on a
subsidised basis, consumers would be reluctant to pay the full cost for their own renewable
source such as wind or photovoltaics. The uniform tariff policy constitutes a serious
disincentive for consumers to use non-SECWA supply sources.
SECWA's Contributory Extension Scheme has operated primarily to enable rural
consumers who required extensions to the distribution system to connect into the
electricity supply system. A consumer paid the basic capital cost of the extension
determined by a fixed charge per metre. Depending on whether the customer was part of
the interconnected system or not, amounts paid in excess of $3000 (interconnected system)
or $1500 (non-interconnected system) are refunded after 30 years. The non-refundable
portion may be returned in stages as any new customers join the extension line.
The subsidy element to new consumers was in the fact that charges for the extension are
determined on the basis of average costs, not the individual costs associated with each
particular extension. In addition the charges actually levied did not cover the full costs
including a contribution to SECWA overheads. Finally, the average costs of extension
have generally not escalated with inflation. As well, SECWA incurs administrative costs
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in the maintenance of records for 30 year periods with each extension scheme. The fact
that the consumer did not pay the full cost for the extension means the provision of a cross
subsidy from other SECWA customers. SECWA has recently announced that because
electrification of rural areas for primary production purposes is now considered to be
completed, the charge for future extensions is proposed to be on a full cost basis.
The Rural Contributory Extension Scheme, and the uniform tariff policy, constitute the
main sources of bias against stand alone energy systems, including renewable systems, in
favour of conventional generation and supply by SECWA in remote locations. An isolated
systems subsidy of a $1000 contribution every eight years to assist in the purchase of
generating plant for own use provides some offset to this bias, and the contribution is
available for either renewable or conventional plant.
As well as the cross subsidies discussed above, there are a number of other policies which
give rise to direct or indirect cost reductions for SECWA's customers.
9.2.1 Payments under the Agreed Statement of Principles
In 1985 the State Government achieved a renegotiation of the North West Shelf Gas Sales
Agreement. The objective was to reduce the debt liabilities of SECWA that would be
incurred under the take or pay provisions of the Sales Agreements. Under the so-called
"Agreed Statement of Principles" (or ASOP) changes to the gas pricing arrangement were
made and additional funding for SECWA to meet its obligations under the amended
agreements was provided for. In particular:
• The State Government agreed to forego royalties to the value of $145 million, in net
present value terms, and assign the money to SECWA to enable it to meet its
commitments;
• SECWA would also receive a return of the 3% levy on gas sales normally taken by the
State Government to the extent of $100 million in net present value terms;
• SECWA would receive a return of royalties from the Commonwealth Government to the
extent of $70 million in net present value terms.
Payments actually received by SECWA to date amount to $6.9 million in 1987/88 and $8.9
million in 1988/89. In 1989/90 the State Government ended its contribution to SECWA.
These payments from the State and Commonwealth Governments may be best thought of
as an alternative to the negotiation of gas price reductions. The political realities of the
time would not allow gas prices to be reduced directly, and so they were reduced at the
expense of governments rather than the North West Shelf Joint Venture Participants.
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9.2.2 Preferential Interest Rate
Because SECWA is a State government instrumentality, borrowing by SECWA is
effectively borrowing by the State government. Lending agencies view governments as
low risk borrowers also and so the interest rate paid by SECWA through the State
government is lower than if the utility were a private sector operation. The effect of the
relatively lower rate of interest is for the utility to borrow more than it would if it faced
commercial interest rates.
Governments have become aware of the impact that the preferential interest rate has on
borrowing decisions by utilities and have taken policy steps to remove the bias. The
government guarantee cannot be withdrawn, but the utility can be charged for its
borrowings below market values. In South Australia the government puts a charge of
0.75% on all borrowings by the Electricity Trust of South Australia (ETSA).
9.2.3 Absence of a Rate of Return Requirement
The financial obligations of utilities such as SECWA have largely been to break even on
operating expenses. Tariffs are set to achieve the revenue requirement for such an
objective. This break even requirement sets no obligation on the utility to ensure that the
capital stock within the utility earns a rate of return consistent with that on capital
elsewhere in the economy. Studies by the Australian Bureau of Statistics have shown that
the estimated rate of return on capital in public enterprises in Australia is very low.
The absence of a rate of return requirement means that there is no explicit measure of the
efficiency with which capital is used in the utility. In that situation there may be a
tendency to over capitalise the operation.
The State Energy Commission of Victoria (SECV) sets a required real rate of return of 4%.
In Western Australia port authorities are required to operate so as to generate a real rate of
return on their capital. The Commonwealth is also introducing a real rate of return
requirement for its government business enterprise (GBE's). It is anticipated that a real
rate of return requirement for SECWA will be instituted in the near future.
9.2.4 Special Coal Royalties
Until recently coal mined for sale to SECWA attracted only a 5 cents/tonne royalty. By
contrast coal sold to private consumers attracted a royalty of around $2 a tonne in recent
years. This two tier royalty system clearly should have favoured SECWA in the form of
lower than otherwise coal prices. With the possibility of a private coal fired power station
being part of the interconnected electricity supply system, it was impossible to maintain
those arrangements and it was announced in 1990 that the royalty on SECWA coal would
be raised to the same basis as coal to private consumers over a three year transition period.
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This decision to put both SECWA and private sales on the same royalty basis still neglects
the question as to whether the existing royalty is appropriate. The private sales royalty is
set at approximately 10 per cent of the mine head value of the coal. In a competitive
context a royalty system would not influence the price of coal. Ideally the price of coal
determines the royalty, where the royalty is a part of the net value of the coal, that is, the
difference between market price and extraction cost. A net value approach to royalty
determination was suggested in the Bradley Report (Bradley, 1986) to the Western
Australian government, but subsequently rejected.
If a Bradley style approach were adopted the impact on coal prices would be difficult to
assess as the coal producers' response to the royalty system would be determined by
conditions in energy markets and the ability of coal producers to pass on royalty increases
in the form of higher prices rather than accept a reduced rate of return.
9.2.5 Reservation of Coal Reserves for SECWA Use
Under the development agreements with each of the Collie coal producers (Griffin Coal
and Western Collieries) one half of the coal reserves available to the coal producers under
those agreements must be reserved for SECWA use. The actual terms and conditions on
which the coal is made available to SECWA are settled in long term supply contracts
between SECWA and the producers.
The reservation of coal for SECWA use is no doubt motivated by concerns over the long
term supply of coal. The economic effect, however, ought to be that SECWA obtains its
coal at a lower price than it would if it operated without statutory controls over coal
reserves. To what extent the price may be lower is difficult to determine because SECWA
is in any case the major purchaser of coal from the Collie coal producers. The market for
coal is not a broad one and non SECWA sales only account for 20% of total coal sales
from the Collie producers. If the reservation policy were eliminated the bargaining power
of the producers would be strengthened, but in the face of SECWA dominance on the
demand side the impact might well be small. Nevertheless, the situation clearly does
indicate a bias towards coal and SECWA in the supply of coal.
9.2.6 Exemption from Wholesale Sales Tax
The Commonwealth wholesale sales tax is a tax on certain goods at the wholesale level.
The coverage is fairly arbitrary and the tax as a tax has many failings. What is important
for this study is that State government departments and instrumentalities are specifically
exempted from the tax. The value of this exemption to SECWA would be difficult to
quantify without a detailed classification of SECWA's purchases.
Relative to renewable sources, the effect of the tax varies with the type of equipment
involved. A solar water heater, for example, is exempt from the tax on the solar collector
plate, but the tank is taxed at the rate of 10%.
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9.2.7 Exemption from Company Income Tax
As a State authority, SECWA is exempt from company income tax. In a formal sense
exemption from company income tax makes it easier to achieve an acceptable after-tax rate
of return on capital, and lends a bias towards being capital intensive. As SECWA does not
base its accounting procedures on those required by the Income Tax Act, it is not possible
to estimate the implicit subsidy provided to SECWA through this exemption. It should be
noted that another State authority, the R & I Bank, although also exempt from company
income tax, is required to construct its accounts as though it were a taxable entity.
It has been claimed that the State government levy on SECWA acts in effect as a substitute
for company income tax. SECWA pays 3% (rising to 4% 1991-1992) of its sales of
electricity and gas to the State government. In 1988/89 the proceeds amounted to $33
million. A sales levy of this nature does not have the same meaning and management
implications as a company income tax which is in principle a tax on the income of capital,
and hence reflects the efficiency with which capital is used.
9.2.8 Exemption from Rates and Taxes
The legislation governing SECWA quite explicitly exempts it from rates or taxes on
property or land used to carry out its functions. This exemption would not apply if the
property or land were in private hands for the same purposes, and so it acts as a further
indirect subsidy for electricity supplied by SECWA.
9.2.9 Crown Rights
A further implicit subsidy to a State agency such as SECWA is the possession of Crown
rights. In particular, powers of land resumption and a special position relative to land use
planning authorities gives rise to a lower level of costs than would be the case if the supply
authority were privately owned.
While there is an intuitively appealing case that the removal of subsidies from SECWA
would increase the cost of electricity generation by conventional fossil fuel sources, it
would also increase the cost of renewable energy from SECWA sources of supply. What
would change, however, is the cost of energy from SECWA supplied sources, be they
fossil or renewable sources, relative to the cost of energy from private renewable sources.
These changes in relative costs as a result of the removal of subsidies (and the
internalisation of SECWA's external costs as well) would not however necessarily lead to a
switch to renewable sources for electricity supply. Indeed the substitution possibilities
may lead to a switch out of SECWA supplied electricity as an energy source and into fuels
such as coal and natural gas for private own-use generation. This substitution possibility is
an example of the second best problem in that the correction of external costs and the
removal of subsidies in the electricity generation stage will not lead to an efficient outcome
if the external costs and subsidies in all other stages associated with the supply of all
energy sources are not also corrected and removed.
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A further consideration is that while the removal of subsidies (and the valuation of external
costs) for SECWA operations may be expected to increase the private cost of electricity, it
is possible for this effect to be offset. This offset could occur through improvements in the
efficiency of SECWA's own operations. The Industries Assistance Commission recent
inquiry into Government (Non-Tax) Charges (IAC, 1989) pointed to substantial
inefficiencies in the electricity supply industry in Australia. This IAC Report has lead to a
further inquiry being established by the IAC's successor, the Industries Commission (IC).
The IC inquiry is to examine specifically the scope for improving efficiency in the
electricity supply industry. The IAC study estimated that electricity production costs in
Australia could be reduced by some $820 million annually. The savings identified largely
came from reductions in capital requirements and work force levels.
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9.3
Other SECWA Policies
In 1984, with the first delivery of North West Shelf Gas to the south west of the State,
SECWA embarked upon a large scale promotion programme for the use of gas to heat
water. The circumstance giving rise to this promotion campaign was the fact that, under
the take or pay contracts with the Joint Venture participants on the North West Shelf
project, SECWA had undertaken to take far more gas than market conditions prevailing in
the early 80's could sustain. Although domestic consumption of gas was still only a
relatively small proportion (approximately 5%) of total gas sales by SECWA, it was
necessary to explore every possible avenue to expand sales of gas to avoid the financial
difficulties faced by SECWA associated with the excess supply of gas under the take-orpay contracts. For this reason the sustained campaign by SECWA is the source of the
dramatic falling away in the installation of solar water heating in the metropolitan area.
The outcome of the policy has been that, while solar water heating installation peaked in
1983/84, there has been a substantial decline thereafter, with the expansion in gas storage
and gas instantaneous water heating units.
Not only was there a promotion campaign in the sense of advertising directed towards the
public to install gas water heating, but SECWA very deliberately set the gas tariff structure
for domestic consumers, to make it an extremely attractive option for water heating. As
discussed in Chapter 8 when we come to look at the comparative costs of alternative types
of water heating units, the sensitivity of gas water heating to changes in the gas tariff is
important. From the perspective of the 1990's it is clear that alternative sources of demand
for gas are becoming available, particularly in the electricity generation context. In these
circumstances it may well be that SECWA will change its policy on the domestic tariff for
gas in a way which reduces the unfair competition between gas and solar water heating,
and allows a more competitive gas tariff, so as to remove this particular barrier to the use
of renewable energy for water heating. The current gas tariff is in the nature of a declining
block which has very low cost units on the last step of the block. It is anticipated that tariff
restructuring will give rise to a flat rate tariff for gas supplied by SECWA and a change of
this nature will have, as shown in Chapter 8, a significant impact on the competitive cost
of gas versus solar water heating.
Another policy of SECWA which has acted to hinder the use of renewable energy, has
been the lack of a buy-back policy for electricity supplies from non-SECWA renewable
sources. It is feasible to consider that private sector firms may be interested in generating
electricity from renewable sources in part for their own use, and supplying any surplus into
the SECWA system, either in the interconnected system or the remote areas. To date,
however, SECWA's approach has been to offer any buy-in supplies of electricity from
renewable and co-generation sources, at only the cost of SECWA's avoided fuel cost based
on coal prices into Muja Power Station. The logic behind the SECWA position is that
renewable energy appliances only act as fuel savers to SECWA, they do not constitute an
addition to firm generating capacity available to SECWA. This perception comes about
because of the inability of individual renewable sources to supply electricity on demand.
Hence SECWA is unwilling in its buy-in prices to make any contribution to the capital cost
of renewable energy appliances in the belief that the capital cost does not in any way
represent a gain, or avoid an expense, to SECWA. This policy of basing buy-in prices at
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avoided fuel costs has, in effect, meant that renewable energy is not a feasible option for
supply into the South West Interconnected Grid. Beyond the Interconnected Grid,
however, the prices paid by SECWA for fuel in diesel generators are at such a level that a
buy-in price based on avoided fuel cost of liquid fuels does give rise to a more competitive
position for renewable supplies.
Despite SECWA's perception, it has been demonstrated for some time that for small
penetrations of wind power into the grid, the capacity credit is approximately equal to the
average wind power output, while for large penetrations the credit tends to a limit which is
determined by the probabiity of zero wind power and the conventional plant characteristics
(Haslett and Diesendorf, 1981).
A further policy of SECWA which militates against the use of renewable energy is the
calculation of the worthwhile subsidy for remote area stand-alone systems purchased by
consumers. The logic behind the subsidy for stand-alone systems is that if SECWA were
actually required to arrange distribution to isolated customers then it would incur
substantial distribution costs. In this circumstance it is clearly preferable to provide a
subsidy to a stand-alone system and in this way reduce the cost of providing power to a
remote area customer. It is reasonable, however, to conclude that the present $1000 every
eight years, does not accurately capture the costs avoided by SECWA through the
provision of stand-alone systems. In other States the amount provided for equivalent
stand-alone systems has been increased to levels like $3000, as a reflection of the value of
a stand-alone system to the supply authority. A more realistic subsidy for stand-alone
systems would then reduce the barrier to renewable energy in remote area applications.
9.4
State Government Housing Policies
Homeswest is the state agency in Western Australia responsible for building houses
associated with welfare purposes. It is also responsible for building houses for the
Government Employees Housing Authority (GEHA). Homeswest has two major building
schemes, the first is by public tender and the second is called Select and Construct. In the
Public Tender Scheme, Homeswest supplies builders with full specifications for the design
and building of the house. Under the Select and Construct Scheme, Homewest supplies
builders with a design brief and builders provide their own specifications and plans. The
Select and Construct Scheme is used mostly for rental accommodation and also for
Government employees housing. Two new schemes are underway presently, the Key Start
Scheme and the One Thousand Homes Scheme. In these, Homewest provides subsidised
land but people build their own homes according to their own specifications and plans.
These schemes are not used for rental accommodation purposes. In the first two schemes,
the Public Tender and the Select and Construct Schemes, the builders are obliged to
conform to Homewest requirements in relation to passive solar design. Specifically, the
builders must include:
• wide eaves (600 - 800 mm);
• ceiling insulation in southern parts of the State;
130
• insulation in framed walls (reflective foil insulation); and
• insulation in steel roofs (Anticon: bonded fibreglass and reflective foil).
Homeswest, however, does not require the installation of solar water heating systems in
any of its houses. Homeswest policy is to provide instantaneous gas hot water systems of
the external balance flue design. These are used in the metropolitan area or where natural
gas is reticulated. In areas where natural gas is not available, Homeswest supplies (in
bottled form) liquid petroleum gas (LPG) for cooking and water heating. In Albany,
tempered natural gas is used.
The majority of Homeswest houses do not include solar water heating systems because of
the high maintenance and capital cost requirements. Clearly, the capital cost outlay for
solar water heating systems is more expensive than for instantaneous gas systems but
Homeswest also believes that ,over a five year period, maintenance costs are lower for
instantaneous gas systems than for solar water heating systems.
GEHA requests that solar water heating systems be installed in their houses in the North
and North East of Western Australia. GEHA housing in the South West of Western
Australia use LPG or natural gas where it is available. GEHA used solar water heating
systems in their houses in the north of the State until 1986 when they converted to instant
gas on a trial basis. The reason for this change was the high capital cost of solar systems,
together with high maintenance costs for solar water heating systems. In 1988, however, a
reassessment was made and it was found that tenants were being disadvantaged by $16 $30 per month if they had to heat by gas rather than solar. It was also shown that the
capital cost of solar water heating systems had risen only marginally in that two year
period, whereas the gas heaters were substantially more costly, resulting in only a marginal
advantage to GEHA's costs. The decision to revert to solar was made by the Minister for
Housing, although the initial impetus came from the Civil Service Association. In the
North of the State, GEHA tenants with gas are subsidised $16 per month until gas units
become unserviceable and replaced by solar.
The difference in the economics of solar water heating systems between the north of the
State and the metropolitan area where they are not considered by Homeswest to be
economic, appears to be a function of the level of solar insolation and hence the need for
an electric booster to be used some of the time in the metropolitan area, but probably little
of the time in the north of the State.
In June of 1990 Homeswest began a pilot scheme which involved the retrofitting of 39
solar hot water units to Homeswest houses in South Hedland. The trial was begun under
the State Government Scheme of Energy Efficiency. Homeswest believes that a trial
period of five years is an appropriate time over which to make a comparison of
maintenance costs with an LPG water heater. ( Homeswest, personal communication).
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9.5
State Government Industrial Development Policies
In Western Australia there is now a heightened perception that energy prices and in
particular electricity prices, are substantially higher than those applying in the rest of
Australia. This outcome reflects a number of conditions that are in part unavoidable, for
example, the low density of the electricity distribution system, but the avoidable elements
include the high cost of coal and the inefficient operation of power stations. The effect of
relatively high costs in Western Australia means that for industrial development policies
Western Australia is at a disadvantage relative to the eastern states for the location of
electricity intensive resource processing industries.
This perception of higher electricity costs is having a substantial impact on the choice of
the future generation technology and the current coal cost and power station operations. A
recent review of future generation options came down firmly in favour of using natural gas
in combined-cycle gas turbines as the best way of reducing electricity costs. Subsequently
the State Government entered into agreements with coal mining companies and coal
mining and power station unions to reduce costs in existing electricity generation facilities.
This context of heightened sensitivity to the cost of electricity has meant that renewable
energy appliances, for example, wind power, are not receiving support from SECWA or
the Government where the costs of renewable energy are believed higher than could be
provided by conventional generation techniques. The State Government is unwilling to see
any actions taken by SECWA which would further disadvantage Western Australia in
terms of electricity costs. For this reason SECWA has decided as part of its immediate
generation plans not to install wind turbines for supply into the interconnected system.
At the same time, however, the Government and SECWA realised that there are
substantially higher costs associated with electricity generation in the remote areas of
Western Australia and that, furthermore these remote areas, as discussed in Section 9.2
receive a cross-subsidy through the Uniform Tariff Policy. The State Government has to
fund this Uniform Tariff Policy through, in effect, a tax on consumers within the
interconnection system which adds to the costs of electricity in the major industrial areas of
the State. Hence in the remote areas of Western Australia renewable energy equipment
will be consistent with cost reductions, not only because it reduces the cost of local area
generation but also because it eases the burden of the cross-subsidies between the
interconnected system and remote areas. Any modification to the Uniform Tariff policy
which increased the price to consumers in remote areas will give rise to a renewed interest
in renewable electricity generation in remote ares of Western Australia.
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CHAPTER 10
CONCLUSIONS
10.1
What the Surveys Show
The survey of manufacturers and suppliers of solar water heaters identified cost as the
major factor influencing consumers' decisions against solar water heaters. Consumers
share this view and the results in Chapter 8 confirm it. Compounding the cost factor,
however, are a number of associated factors including:
• people in rental dwellings have no control over the hot water system, and the landlord has
no incentive to supply a system which confers only costs on the landlord and benefits to
the occupants;
• people are unwilling to change systems while an existing system is still functional.
Thus important determinants of the penetration of solar water heaters are the proportion of
dwellings that are owner occupied relative to rental dwellings, and the age profile of
existing (installed) water heaters.
The cost factor is also important in that suppliers indicated their belief that consumers
would not want to incur the capital outlay for a solar system if they felt that they would not
be residing in the house for a long enough period to capture the benefits of the outlay.
Even if the house were sold during the effective lifetime of the heater, the value of the
solar heater may not be incorporated into the sale price, and if it were financed under a
separate financing arrangement from the house mortgage, part of the sale proceeds would
have to be used to pay out any remaining debt for the solar water heater.
Short term residence expectations then are believed to act as a barrier to solar systems.
Other factors given substantial weight by suppliers were a lack of knowledge of the
technology and the impact on the aesthetics of the residence. Given lesser weight was the
need to obtain financing for the outlay of a solar water heater.
Suppliers also felt that architects, builders and governments gave little encouragement or
assistance for the use of solar water heaters.
The survey of householders provided a considerable volume of information on the
characteristics of people who have solar water heaters. In addition the strongest predictors
that a solar system had been purchased emphasised home owners with larger families who
expect to remain in their house for another five years. Other characteristics such as income
and age did not appear as significant predictors.
High satisfaction was recorded by owners of solar and gas systems, less satisfaction with
electric systems. The determinants of satisfaction related to the perceived percentage of
the energy bill devoted to water heating, and the number of times the hot water supply had
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been exhausted. Breakdowns and service requirements did not feature as measures of
satisfaction or dissatisfaction.
With regard to any future system, a clear majority indicated a preference for a solar system,
with the bulk of them preferring a gas booster. Only just over a quarter of the respondents
opted for a gas system and 7% indicated they would purchase an electric system. Those
opting for a future solar system were in general younger in age and living in a relatively
young house with a relatively larger number of occupants than was the case for
respondents expressing preferences for future gas and electric systems.
Importantly, only a small proportion of current solar owners (5.6%) indicated they would
buy a non solar system. Half of the current gas system owners would switch to a solar
system, and only 30% of those who currently have an electric system would buy another,
with 48% of them indicating a switch to solar.
When respondents who had actually installed their current water heating system were
asked why they did not install a solar system, their responses reflected the perceptions of
the solar water suppliers. In particular the initial cost, and other aspects of cost (working
life, expected savings and expected maintenance) were the dominant reasons. Other
survey questions reinforced this perception of cost rather than ignorance or lack of
confidence in the technology.
The results of the two surveys relating to solar water heaters clearly indicate that the solar
technology does have a wide degree of public acceptance. The technology as such does
not appear as a barrier. The dominant barrier is the perception of cost. As shown in
Chapter 8 this perception is realistic in the current market for water heating equipment, and
consumers appear to be behaving with individual economic rationality in their choice of
water heating equipment.
Answers to an additional question about power generation suggest that the majority of
people are not willing pay more for electricity generated from renewable sources.
Nevertheless 44% indicated they would be willing to pay, on average, 6% more.
The clear commercial and policy implications which flow from this are that:
• manufacturers and suppliers must find ways to reduce the initial capital outlay on solar
water heaters if they wish to expand sales;
• appeals to concerns such as the environment and greenhouse effects are unlikely to be
effective in influencing water heater choice without a significant educational campaign;
• relatively young owner occupiers of houses in which they expect to stay for some time
with a large family are the group most likely to purchase a solar water heater when their
existing water heating system comes to the end of its useful life;
• government policy with respect to electricity and gas tariffs could significantly influence
the choice of water heating equipment by influencing the cost of the alternatives to solar
water heaters.
134
The survey of pastoral leases also provided a large amount of descriptive information on
how electricity is generated and used on pastoral leases. It also provided information on
water heating, in particular the use of solar water heating, on pastoral leases.
Only 24 properties reported the use of wind power or photovoltaic systems as part of their
main generation plant. A high degree of satisfaction was reported from properties using
wind or solar equipment.
The capital cost of wind or solar equipment was the dominant reason for not using it in
electricity generation, but other important reasons were a lack of confidence in the
performance of renewable energy components, a perception that there would be inadequate
maintenance and service facilities, and a lack of familiarity with the equipment.
Thus the survey reveals that, unlike the situation with solar water heaters in the
metropolitan area, electricity generation with the use of wind power or photovoltaics is not
an accepted technology for pastoral properties in Western Australia.
In addition, the perceived costs of renewable systems are such that respondents indicated
that fuel prices would have to rise considerably (almost 60%) before leaseholders would
consider switching to renewable components.
Only some 20% of respondents were aware that the Isolated Systems Subsidy offered by
SECWA would cover generation equipment that incorporated renewable energy
equipment, though having been informed by the survey, two-thirds of the respondents
indicated that this would make it more likely that they would consider incorporating
renewable equipment.
Photovoltaic cells are also used for other purposes on pastoral leases, with 24% of
respondents using them for electric fencing and 18% for water pumping. Thus small scale
application of renewables is more widely accepted than for electricity generation in the
homestead.
The commercial and policy implications flowing from the information relating to
electricity generation are:
• the use of wind and solar equipment is seen as costly, unfamiliar and lacking in aftersales support;
• perceptions about the initial capital outlay factor may be offset by greater familiarity with
the technology and with the savings which may be made through the use of renewable
generation equipment;
• information especially relating to performance and reliability is required to enable
pastoral leaseholders the opportunity to assess the possibilities of using renewable energy
components;
135
• demonstrations of renewable equipment in remote areas could be an effective means of
disseminating information;
• some system of providing service and maintenance on a reliable basis would be required
to overcome the perception that these are unavailable;
• the Isolated Systems Subsidy should be made more visible and more useful by accurately
reflecting the costs SECWA (and hence all other consumers) would incur if a grid
connection were made instead of a stand alone system.
Nearly one quarter of pastoral lease respondents used a solar water heating system with an
electric booster. When asked what they would buy in future, more than half indicated they
would purchase a solar system.
Calcium deposition, a reflection of the water quality on pastoral leases, was seen as the
major problem associated with solar water heaters, followed by lack of access to
maintenance services, then leaks, then corrosion. Nevertheless satisfaction with solar
water heaters was high with 52% of owners indicating that they were "very satisfied" with
their system. These results reflect levels of satisfaction with older technology which has
been superseded equipment incorporating technical improvements such as heat exchange
systems and new materials.
136
10.2
The Analysis of Private Costs
Detailed analysis of the costs of hot water from a range of water heating appliances
supports the perceptions of consumers that in the context of the prevailing appliance costs
and current electricity and gas tariffs, solar water heating is an expensive option relative to
gas. Data were only available for electrically boosted solar systems, and the relatively new
gas boosted systems were not included in the analysis.
Solar is less expensive than storage electric and instant electric systems for larger hot water
requirements, where the consumer has the appliance for the full equipment life.
Simulations carried out with the data show that solar could be made competitive with
external instantaneous gas with gas tariff changes in the order of 20 - 30%, equivalent
reductions in the capital cost of an installed solar unit or by an approximate doubling of the
effective lifetime of a solar unit.
The provision and widespread use of an off-peak electricity tariff would pose a severe
competitive pressure on solar heaters boosted with electricity at the normal domestic tariff.
This pressure could be removed by either regulation to exclude water heating from the
benefits of an off-peak tariff, or by increases in the current off-peak tariff in the order of 20
- 30%.
One option not feasible is the reduction in electricity tariff for electricity used to boost a
solar water heater, as the tariff would have to fall to less than zero.
The commercial and policy implications of the analysis are that:
• changes to capital costs of solar water systems are required to achieve greater market
penetration;
• change is also required to the effective lifetime of solar units, though this would be less
effective than a reduction in initial capital outlays because of the fact that people
perceive that they change their residences without taking their solar heater with them
either physically, or in the form of a higher sale price for the residence;
• changes to electricity and gas tariffs would also have an impact on the perceived costs
and benefits of a solar water heater.
10.3
What the Policy Analysis Shows
The generation of electricity and the use of natural gas involve the creation of significant
external costs. Failure to internalise these external costs means that the prices faced by
consumers for water heating and electricity generation equipment and electricity and gas
do not fully reflect the real costs imposed on society by those choices. Furthermore
137
because renewable energy use involves less external costs, the failure to internalise
external costs constitutes a considerable bias against renewable technologies.
A similar bias occurs through the provision of subsidies for electricity and gas
consumption. These subsidies may be provided either directly to consumers or through the
institutional framework in which electricity and gas are provided.
The analysis of both forms of subsidy has shown them to be widespread, though it is
difficult to be quantitative about the size of the subsidies.
Once again the subsidy framework creates a bias against renewable energy systems
because the institutional framework within which renewable energy equipment is supplied
does not significantly benefit from current subsidies, especially those delivered through
state owned, centralised energy utilities such as SECWA.
State government housing policies for welfare housing reflect the same position as that
taken by private landlords. Solar water heaters add to capital costs while the benefits are
taken by rental occupants. Homeswest instead sees itself as providing housing and would
prefer to use its limited capital for the provision of housing rather than energy.
By contrast the agency responsible for housing government employees, GEHA, has
adopted a policy of solar water heaters on GEHA homes. A major reason for the
difference in policy is that GEHA operates almost completely in areas outside the natural
gas reticulation system. Bottled gas for water heating then becomes an expensive option.
Industrial development policies in Western Australia give no comfort to renewable energy
because the State government sees its industrial future in the energy intensive value adding
minerals processing arena. Faced with already high costs for electricity and natural gas,
the competitive position of Western Australia in the resource processing field is not seen to
be strong. There is thus a perception that the use of renewable sources of energy does not
assist with the overall thrust of industrial policy because of the even higher costs which
would be involved.
One immediate use for electricity generation from renewable energy is in the remote areas
of the State where generation costs with conventional diesel generators are already high,
and where renewable energy is competitive.
10.4
Barriers And Their Removal
This Report has identified a number of barriers to the diffusion of renewable energy in
Western Australia. The comprehensive list of barriers uncovered is as follows:
• the capital outlay required for equipment to make use of wind or solar power;
• the inability to capture the full benefits of renewable energy by being unable to take
advantage of the complete lifetime of the equipment because of changes in residences;
138
• the imbalance between costs to property owners and benefits to tenants in rental housing;
• the reluctance of architects and builders to embrace renewable energy into home design
and construction;
• the age profile of the existing stock of conventional water heating or electricity
generation equipment will determine the rate at which conventional equipment is
replaced by renewable equipment; some progress has already been made towards
integrating solar systems into existing non-solar systems for example through the use of
storage tanks associated with gas and electric storage water heating;
• the existence of external costs means that conventional energy sources are underpriced
and will distort consumers choices in their favour;
• conventional systems are also associated with significant subsidies which will also
distort consumers' choices in their favour;
• the nature of existing SECWA primary fuel supply contracts means that, faced with an
oversupply of coal and gas, the dominant energy supplier in Western Australia has no
financial incentive to promote renewable energy in the interconnected electricity grid and
the gas distribution region;
• the State government has other priorities for the use of scarce capital than the use of solar
water heaters in welfare housing;
• industrial development strategy in Western Australia is in general associated with a
search for lower cost sources of energy than renewables and even the way in which
conventional fossil fuels are used currently;
• for remote areas, familiarity with renewable equipment and access to service and
maintenance are perceived disadvantages;
• an information gap exists with respect to wind and solar electricity generation
performance, capability and reliability.
Overcoming these barriers will require action by both the private and public sectors.
The private sector manufacturers and suppliers will have to face the cost barrier. New
materials, larger markets or new production techniques are required to bring the cost down
and the effective lifetime up. In addition the clear preference indicated in the survey for
gas boosting in the gas reticulation area may see a change away from the currently
dominant electrically boosted systems.
Manufacturers and suppliers of renewable electricity generation equipment need to
overcome the information and other attitudinal barriers associated with what is perceived
as an untried and untested technology.
139
For their part the agenda of the State government should be clear. First, internalise
external costs for electricity and gas supply. Second, eliminate subsidies by placing
SECWA operations on a completely commercial basis and scaling back the cross subsidies
associated with the uniform tariff policy and the contributary extension scheme. At the
same time, and without paradox, the Isolated Systems Subsidy should be enhanced.
Homeswest policy constitutes a barrier until there is a change in the understanding of what
constitutes a house. If a solar water heating system were seen as an integral part of a house
rather than an add-on, the uptake of SWHS would increase significantly in homes and the
over-all energy usage in these houses would decline, as would the occupants' energy bills.
The State's overall industrial policy heavily emphasises value-added resource processing
which is an energy intensive process. Maintaining this policy would require a reduction in
energy costs relative to those in Eastern Australia. This policy stance leaves little room for
renewable energy as a source for these industries. Nevertheless, where cost conditions
indicate it, renewable energy should be used. For example, in the remote areas it may
replace conventional, and expensive, energy sources.
140
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