Solar subsidies costing the nation: report

The Australian solar industry is changing through the arrival of home batteries and the falling cost of solar panels.

The Australian solar industry is changing through the arrival of home batteries and the falling cost of solar panels.

By Courtney Pearson

June 3, 2015

THE costs of installing and maintaining solar panels on homes will largely outweigh the benefits by the time government subsidiaries end in 2028, the Grattan Institute reported.

The institute’s Sundown, sunrise: how Australia can finally get solar power right report stated solar costs would outplace benefits by more than $9 billion, while those without solar in their homes would pay $14 billion in subsidiary schemes to solar owns.

The report stated the government should therefore reject expensive subsidies and set charges that reflect the true cost of providing electricity.

“It’s true the schemes have reduced emissions but at a very high price – we could have found much cheaper ways to tackle climate change,” Grattan Energy program director Tony Wood said.

Governments should set a clear timetable for the mandatory introduction of demand-based tariffs across Australia to encourage consumers to use less power in peak times, according to the report.

“Governments have created a policy mess that should never be repeated,” it stated.

The Australian Government should also deal with redundant assets; ensure network businesses deliver the lowest-cost solutions; annually adjust consumption and demand forecasts; formalise asset write-downs; and make off-grid solutions easier to deliver.

More than one in eight households have rooftop solar in Australia, although rooftop solar only comprises about 3 per cent of Australia’s total electricity, according to the Energy Supply Association of Australia (ESAA). .

However the development of home power storage systems, such as the recently revealed Tesla Powerwall, and the falling price of solar panels are set to change the face of the solar industry.

Home batteries will allow users to store power during the day and rely on the stored power for peak demand.

“This will reduce the load on the network, cutting power prices not just for solar panel owners but for everyone,” Mr Wood said.

ESAA chief executive Matthew Warren said there were two important reasons to reform tariffs.

“It creates incentives for people to deploy solar and other new technologies where they deliver the greatest value to the grid,” he said.

“It also means consumers who are not able to invest in these technologies are not subsidising those who can.”

However, the report has been widely criticised by the solar industry and renewable energy advocates. The Clean Energy Council (CEC) stated the report did not recognise the solar industry’s contributions to employment or other subsidies across the energy sector.

“It is important to recognise that the government support provided to solar power has leveraged billions of dollars in private investment to date, and will have delivered approximately $30 billion in total investment by 2028 – the same period examined by the Grattan Institute report,” CEC chief executive Kane Thornton said.

“The vast majority of the solar subsidies referred to in the report have either been eliminated or are gradually ramping down.”

Every state and territory has reduced solar feed-in tariffs for new customers, with the exception of the Northern Territory, according to the CEC.