Solar power could cause electricity prices to rise in Australia

The price of electricity could skyrocket in Western Australian due to the high number of residents fitting rooftop solar panels, a University of Western Australia study revealed on Wednesday.

With 33 percent growth in the last 12 months, private rooftop solar panels have been hugely popular in the state, which is one of the hottest and driest places in the world.

Although somewhat counter-intuitive, the renewable energy source may actually drive the price of electricity higher.

"As there is more private solar produced, the network has to generate less electricity, but because a lot of the costs in the system are fixed, the unit cost - that is the cost per unit of energy - can only rise," said author of the report and Western Australian University professor Bill Grace said.

"With the current scenario, over the next 20 years we're talking about significant increases in tariffs - 50 percent perhaps."

"To try and protect this legacy, coal-fired generation units will just keep prices high, and will also waste power."

Grace believes the Australian Energy Market Operator has failed to forecast for the exponential growth of the solar power sector.

Since 2010, the amount of solar power being produced by the South West Interconnected System, which is the grid that provides the much of the state with power, has growth of 650 megawatts.

Professor Grace expects that figure to reach 9,000 megawatts by the year 2035.

"The impact will be felt by about 2025, when there will be so much solar energy being exported from private houses that it will start to impact on the generation on the network, particularly coal-fired generation or base-load power," he said.

"The private solar from houses and businesses exported onto that network effectively reduces the demand below the level that base-load coal can operate."

However the Western Australian Government's Energy Minister, Mike Nahan has rejected the study and its findings.

"Australian Energy Market Operator is the trusted authority on providing forecasting and security advice as it draws information from a range of experts, including industry and governments, and I have total confidence in its advice," he told the Australian Broadcasting Corporation.

"The latest Australian Energy Market Commission report confirms West Australians continue to pay among the lowest in Australia for electricity." Endit