IT'S one of our most plentiful natural resources, and it costs us nothing. So why can't Australia, or any other country for that matter, convert rays from the sun into electricity on a mass scale with any degree of success?
News that two of the Gillard government's flagship renewable energy projects are facing eclipse as they struggle to find backers is the latest evidence that solar power's time has not yet arrived, reports The Australian Financial Review.
In the United States, solar systems makers Solyndra and Evergreen Solar have filed for bankruptcy, citing the US's slow uptake of clean energy policies as one of the reasons.
Meanwhile, cash-strapped European governments have taken solar power off their to-do list. Germany, Italy, Spain, France and the Czech Republic have all slashed previously generous industry subsidies.
Tony Wood, energy program director at the Grattan Institute, says a "mishmash" of confusing government policies has confounded attempts to solve the fundamental conundrum: solar energy is too expensive.
"The central answer is that you have to find a way to get the scale right and most of these schemes haven't been able to get that and find a policy that gives people enough confidence and incentive to buy the energy the schemes are hoping to produce," he says.
Here's the rub: electricity from coal-fired power stations, which supply most of Australia's sprawling grid, costs between $40 and $50 per megawatt hour on a wholesale basis; but electricity generated from solar technology, on the other hand, costs $150 per megawatt hour (even though the "fuel" is free).
Even a price on carbon pollution and extra revenue from the sale of Renewable Energy Certificates (RECs) do not make up the difference.
The good news, from the retailers' point of view at least, is that tough competition from Chinese manufacturers, and an oversupply in photovoltaic panels, has caused the capital cost of industrial-scale solar projects to tumble (another big reason for the collapse of Solyndra and Evergreen Solar in the US).
But the price discrepancy between solar and other forms of power is still so great that government intervention is the only lifeline available for large-scale deployment.
The fact that Europe, Australia and the US have set targets to reduce total emissions by 80 per cent by 2050 would seem to play right into solar's hands. Yet policies to encourage take up have failed to bridge the gap.
In Australia there is still a glut of RECs as a result of the botched household solar scheme. Energy retailers hoovered up the excess certificates and so have little motivation to buy solar power right now.
It's one of the reasons that the Moree Solar Farm in NSW and the Solar Dawn project in Queensland, the first two schemes under the government's $1.5 billion Solar Flagships program, have been unable to secure backers.
The oversupply of certificates will eventually subside, but electricity generated from wind is still a less risky and far cheaper option, at about $100 per megawatt hour.
Other hopes are being pinned on the carbon price scheme, which starts on July 1. However, the uncertainty around the policy has added to the fractious atmosphere among potential investors.
"For the foreseeable future, we will have to have an emissions trading scheme in order for solar to be viable," Wood says.
"The problem is that he credibility of the scheme is in doubt, particularly as the Opposition has said they will repeal it. Creating a credible emissions trading scheme is the first challenge."
Wood insists there will be a time at which a rising emissions price and reducing costs of solar technologies will cross over.
But it appears this is some time away, which is one reason Australian investors are fighting shy of large-scale solar projects.
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