Ministers' quarrels led to watered-down solar plan

Age
Thursday 8/5/2008 Page: 1

AN AMBITIOUS plan to give big subsidies to people who put solar power panels on their homes was watered down on the eve of the state budget after heated clashes between senior cabinet ministers. The Age has learned that Environment Minister Gavin Jennings' plan for a generous scheme to encourage more Victorians to power their homes with "green" energy was rejected after the forceful intervention of Energy Minister Peter Batchelor.

Sources said Mr Batchelor convinced cabinet colleagues the Jennings' plan would mean unacceptable increases in the electricity bills of the vast majority of Victorians who relied on traditional energy supplies. The upshot was an announcement in Tuesday's budget that the Government will pay a premium rate to households with solar panels for excess electricity they feed back into the power grid.

But environment groups - which lobbied cabinet ministers and Labor backbenchers hard for a more generous scheme - have condemned the decision as a "con." They are increasingly disillusioned with the Brumby Government's record on tackling climate emissions, saying it continues to rely too heavily on coal powered electricity and is too pro-car. Government officials calculate that under the scheme adopted by cabinet, the bills of non-solar households will rise by about $10 a year on average.

They say that under Environment Victoria's more generous scheme, the increase would have been about $100. Mr Batchelor last night said under the new scheme, households would be paid nearly four times the retail rate for their excess energy. From next year, households will be paid 60 cents a kilowatt-hour fed into the grid. This compares with a standard retail rate of 17 cents.

Mr Batchelor argued it could cut the time for an average household to pay off the cost of installing solar panels - about $21,000, minus a federal rebate of $8000 - through cuts in their energy bill to less than 10 years. Industry groups and unions have joined environment groups in criticising the decision, saying it offers little incentive to anyone except the rich. An alliance of more than 40 organisations - including BP, Environment Victoria and the Electrical Trades Union - had quietly campaigned for a model similar to that used in Germany, considered a world leader in solar power.

The German model pays a premium rate for all energy generated, whether it is used at home or fed as excess into the power grid. It has helped Germany generate about 120 times as much solar power as Australia. Lobbyists argued the Government's scheme would attract wealthy families with a holiday home by the beach but do little to win over people who spend more time at home.