Climate Change Budget slays solar power silently

Australia once more is being denied the enormous environmental and economic benefits, which a well-developed local solar power installer network could bring to the country.

Australia once more is being denied the enormous environmental and economic benefits, which a well-developed local solar power installer network could bring to the country. For that the sudden demise of the solar industry is taking place despite the Rudd's Government pre-election hype about climate change, can only mean that the Government either suffers from climate ignorance, is beholden to the powerful clean coal lobby or simply does not realise what this decision will do to the local solar industry. This backward step is happening in a country, which as a continent receives twice as much sun as the whole of Europe, but only produces 5% of solar electricity compared to the whole of Europe.

With the 2008 Budget, the Rudd Government has once again shunned the logical way forward towards harnessing one of Australia's most abundant natural resources the sun, with the means testing of the solar power system rebate. It's ironic that this initiative was part of the same budget, which in the pre-budget publicity sold itself as the "climate budget" only to earmark $500 million for clean coal, at a time that the coal industry achieves record profits.
Now many times politicians make decisions, which in hindsight do not look too smart, just ask George Bush about Iraq, but this particular decision brings the solar industry back into the boom/bust cycle of earlier years, something that most of its operators thought they had been left behind.
Since the $8000 rebate came in May last year as a rather desperate looking initiative by the Howard Government to win the green vote, the rebate program has been "too successful" and created a budget shortfall of more than $20 million against the originally budgeted amount of $30 million per annum. So the simple answer put the foot hard on the brake and make it nearly impossible to get the rebate.
A solar system which will take care of about 50% of the typical household consumption still costs $13 000 after the rebate, and 80% of the purchasers of grid-connect solar power systems in the last 12 month were households earning over $ 100 000. So the $8000 rebate allowed the industry to go through a mini boom, with a number of positive outcomes.
Firstly the price of systems came down by more than 10% over the past 12 months, because manufacturer discounts increased as buying volumes increased, and in order to stimulate business and because of a competitive market, the industry passed these saving on. Secondly a reliable network of solar installers started to spread across the continent, stimulating small business and creating the vital infrastructure in the field of local renewable energy, which Australia will need - should we be at all serious about tackling climate change. Thirdly, the purchasers of solar power systems started to monitor the use of their own electricity consumption, which in households over $100 000, with large fridges and plasma TVs can only be a good thing.
Now the Rudd Government has made much use of the term " working families", but this solar mean means test denies exactly the same working families, which had to be freed from the Medicare surcharge, the opportunity to go solar and lower their carbon footprint.
Since budget night the solar industry has reported cancellations of solar power systems on mass especially in Sydney and Melbourne and this exactly what the Government hoped to achieve. After all, who in Sydney or Melbourne can afford to purchase a home on less than $100 000 household income, and you need a home to put a solar power system on the roof.
Even the future purchasers of luxury vehicles got a better deal from the Rudd Government, with new increased luxury car tariffs coming into effect on 1 July, while the solar rebate means test came into effect immediately.
So where to from here? Now the solar industry themselves always felt that the $8000 rebate was too good to be true in the long run, despite the signing of the Kyoto Protocol and the Garnaut report. What the solar industry wants and needs now is a framework for a sustainable solar power support mechanism rather than boom bust rebates, announced at the eve of an election and throttled down soon after. One such successful framework has been operating overseas for nearly ten years and in the 50 or so counties worldwide which have seen solar power take off, it has been thanks to gross feed-in laws.
Gross feed-in laws require electricity retailers to pay renewable energy generators such as roof-top solar panel owners a prescribed price over a guaranteed period of time for all electricity they generate with their system and feed back into the grid.
Because the energy retailer pays the owner of the solar power system on the entire electricity production, the owner will gain a specific return on investment and as overseas examples demonstrate can pay their solar power system off in between seven to nine years. This certainty has also allowed banks to become financiers of solar power systems.
However, the feed-in schemes introduced in South Australia, Queensland and Victoria recently are net feed-in tariffs, meaning they only pay homeowners for the electricity exported to the grid minus what is consumed in the home at the time of production. This system of metering significantly discriminates against both owners of smaller grid-connected systems and those who are more likely to consume electricity during the day, such as pensioners or stay-at-home parents. Alternatively, double incomes families who are typically away from home during the day do ok under net metering, but they are exactly the ones who will now not get the solar rebate, due to the $100 000 per household income means test.
When Germany introduced gross feed-in tariffs in 2000 it set its 2010 renewable electricity target at 12.5% of total consumption. It has now doubled the amount of electricity it generates from renewable energy sources and reached the 2010 target three years ahead of schedule. As a consequence of this success, Germany recently increased its renewable energy target to 27% of all electricity generation by 2020. Also the gross feed-in tariff has created nearly 250 000 new jobs in the renewable energy industry, soon surpassing the car industry as number one employer. Solar power creating now three times the number of jobs per installed megawatt compared to coal fired electricity, and all of this with a sun radiation half as strong as what we get here in Australia.
International experience tells us that gross feed-in tariffs can be very successful in stimulating the uptake of renewable energy, addressing climate change and creating strong local industries and employment. However our state governments, through inventing a net feed-in tariff have made a fine mess of a policy, which has delivered so much for the solar power industry oversees. It's time for the Federal Government to introduce a gross feed-in tariff as the sustainable and fair support mechanism for the local renewable industry. Only then can the solar means test make any sense.
Many years ago when working in local government a local Mayor explained to me a poor decision this way - if Government has made a decision, which turns out to be a poor decision, then it was either made deliberately or because of stupidity - please always assume stupidity, because as a Government we do not make stupid decisions deliberately. Let's hope the solar means test was not one of those decisions and that something positive can be gained from this decision.
Markus Lambert is the Marketing Manager for Energy Matters, one of Australia's largest online renewable energy equipment retailers, installing 100's of solar power systems across Australia. Prior to entering the renewable industry he worked for 18 years as communications manager and policy advisor for state and local governments. He migrated from Germany in 1982.

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