6. Indicative Unit Costs (c/kWh) of Alternative Supply
94. The following table provides some indicative unit costs for alternative supply systems. Expected system lifetime is shown and unit costs were calculated under discount rates of 5% and 10%. "Unit cost" includes the capital cost of the generating technology, fuel, maintenance and safety requirements needed to produce a unit of electrical energy (kWh).
95. Note that each technology produces an annual energy output generally much less that the "average" domestic consumer requirement of 8,000 kWh, (although domestic demand per inter-connection point in a remote region may be much less at around 4,000kWh), which increases the likelihood that the electricity requirement would need to be met from more than one source. Electricity demand can be reduced if additional methods to substitute for electricity are used or electricity efficiency measures taken. For example, bottled gas could be used to provide for cooking, water heating and refrigeration (substitution) and lighting can be provided by compact fluorescents.
96. Many remote area power systems may be composed of more than one type of generation and could also include additional costs for equipment such as inverters and battery storage.
97. For supply by lines, the current price4 paid per unit of electricity ranges from 19 – 26 c/kWh, with the high end of the range more likely for rural services. This unit cost includes delivery cost i.e. the cost of the wires, poles and transformers to convey the electricity. For an average annual domestic requirement of 8,000kWh this results in an annual bill of $1,500 - $2,100.
98. Information on standard replacement costs and assets lives of distribution infrastructure5 shows that cost of the infrastructure per kilometre ranges from $12,000 - $50,000, depending on the line voltage and current capacity. A single phase SWER (single wire earth return) line that could supply remote rural areas that did not need three-phase power is given as $21,000 per km. Additional costs are incurred if lines run across difficult terrain; for example, the replacement costs for a 3.5km line running across steep hilly terrain to service a single remote farm was quoted at $150,000.6
99. The use of unit costs for comparison does not convey the delivery risk of the technology (or put another way, the certainty that the supply will be available when needed).
100. Table 1: Indicative unit costs (c/kWh) of alternative supply
→ Full size version of Table 1 [224 kB JPG]
101. Including the costs of energy storage for the intermittent renewable technologies can increase the costs of off-grid systems significantly. In some cases, the cost of energy storage can be greater than that of the generation equipment.7 EHMS cites an example where costs of inverter, battery storage and voltage regulator forms almost 60% of total cost of system. These costs may also decrease in the future, but again, it is unclear the extent to which this will occur.
102. The costs of installing and maintaining off-grid power systems will vary depending on the combination of components installed and the energy output required. The Energy Efficiency and Conservation Authority estimates that:8
- A mid-range system suitable for an average household using 8,000kWh/year using solar panels or a wind turbine as the primary energy source would typically cost between $15,000 and $25,000. A micro-hydro system would cost approximately $12,000 to $15,000 to set up.
- A system with solar panels or a wind turbine, micro-hydro generator, batteries, inverter and a diesel or petrol generator could cost up to $60,000. In addition to these installation costs, maintenance and operating costs can be significant, particularly for batteries and for systems with moving parts such as turbines.
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