Bright solar power plan has dark side

Age
Friday 9/5/2008 Page: 10

THE State Government announced this week that Victoria would join Queensland and South Australia in offering an incentive for people to install solar power panels. Under the "feed-in" tariff for solar power, home owners will be paid more than three times the retail price for each kilowatt-hour of electricity fed into the grid from a rooftop solar power system.

Feed-in tariffs have become the incentive of choice for increasing the take-up of solar and other renewable energy technologies. They have been implemented in more than 45 countries, states or provinces around the world. South Korea, Switzerland, Germany, Japan and even Britain - not countries typically known for their sunlight - have more solar systems feeding more power into the electricity network than Australia.

Since introducing feed-in tariffs in 2000, Germany has doubled the proportion of electricity generated from renewable sources, reaching the 2010 target of 12.5% three years ahead of schedule. As a result, Germany has increased its renewable energy target to 27% of all electricity generation by 2020. About 400,000 homes in Germany have solar panels on their roofs, compared with fewer than 1500 in Victoria. Even per head, Germany leads Australia in electricity produced from solar power by more than a factor of
10.

In addition to increased adoption of renewable energy, feed-in tariffs can help build a local renewable energy industry. Germany now employs nearly 250,000 people in renewable energy, with 23,500 people involved in making solar panels. But while all international feed-in tariffs are paid on the entire production from the chosen renewable energy source, Victoria, like the other states, is offering to pay home owners only for the electricity exported to the grid after what is consumed in the home.

This raises serious concerns about equity issues and the ability of these schemes to produce the desired levels of renewable energy take-up. By only paying for the excess power generated, the scheme will discriminate against owners of smaller grid-connected systems and those who are more likely to consume electricity during the day, such as senior citizens and stay-at-home parents.

Additionally, calculating payback times becomes unworkable. While generation over the year is easily calculated, it is virtually impossible to know what portion will be returned to the grid. Feed-in tariff schemes paid on total production from renewable energy systems suffer none of these problems. They provide certainty of return and it is this that creates the incentives for people to invest their own capital in solar power.

By not providing this certainty, the Australian schemes run the risk of not only being discriminatory, but being ineffective. Solar photovoltaic (PV) systems generate electricity at times of peak demand - hot, sunny afternoons - when wholesale prices frequently skyrocket. By closely matching peak demand, solar electricity generation results in a reduction in the wholesale cost of electricity.

Further, rooftop solar systems generate electricity at or near the point of demand, reducing the need for expensive poles and wires. With Australia earmarked to spend about $24 billion on network infrastructure over the next five years, any means to reduce this will bring savings for consumers. As a result of these and other savings, a recent German Government report concluded that the economic benefits of feed-in tariffs outweighed the costs.

Recent peaks in electricity demand have brought calls to build more coal-fired power stations. With more than half of Victoria's greenhouse gas emissions coming from burning coal for electricity generation, it is time we looked elsewhere for supplying summer peaks. Solar fits the bill perfectly.

It is not too late for the Victorian Government to go one better than South Australia and Queensland and introduce a world-class, progressive and effective feed-in tariff paid on the total generation from rooftop solar systems. Such a scheme would build a robust renewable energy industry in Victoria, fulfill the Government's election commitment, and help households play their part in tackling the challenges of climate change.

Brad Shone is energy policy manager with the Alternative Technology Association, a not-for-profit group promoting sustainable technology and practice (ata.org.au).