Solar scheme advice ignored

Age
Wednesday 28/1/2009 Page: 1

AN AMBITIOUS solar energy subsidy system - rejected as too expensive and "unfair" by the Brumby Government - would have cost Victorian households no more than 70 cents a week, according to confidential advice obtained by The Age. The system has been credited with triggering a multibillion dollar solar energy boom in Germany and has been adopted in about 40 other countries.

But despite repeated urgings from bureaucrats and government agencies to have the system adopted in Victoria as an affordable way of boosting renewable energy production, the Government rejected it in favour of a much less ambitious alternative. According to a leaked cabinet committee submission from the Department of Sustainability and Environment, the so called "gross feed-in" solar subsidy scheme would have cost households just $18 a year, or 35 cents a week, increasing electricity bills by just 2%.

The department's submission, seen by The Age, says the system would "provide the required momentum to create a thriving solar industry in Victoria". Instead, the Government chose to take the advice of one department, Primary Industries and Energy, for a cheaper model known as a "net feed-in tariff" - despite its costings showing the more generous scheme likely to cost Victorian households $37 a year or 70 cents a week.

The adopted scheme - to be detailed in Parliament within weeks - is widely viewed by academic and industry experts as unlikely to encourage a broad take-up of solar panels. Well-placed sources across government have told The Age that, until shortly before last year's cabinet decision, Premier John Brumby had been relaxed about the most ambitious scheme, and that it was also strongly backed by Environment Minister Gavin Jennings.

Then, after months of studies, consultant reports, debate and advice, Energy Minister Peter Batchelor produced his own last-minute figures, claiming the cost at $100 a year for households, or 10% on average power bills. He said it would be unfair to impose such a burden on low income households. Mr Batchelor told a public accounts committee hearing that the level of cross-subsidy from non-solar households to those with solar was unsupportable.

The "gross feed-in" system has adopted by more than 40 countries and is credited with fuelling Germany's solar industry, which employs 57,000 people and exports solar products worth $2 billion euros a year.

Under the German system, households, businesses, farmers and community groups receive subsidies for all the renewable power they generate, including what they use themselves. The proposed Victorian system provides payments only to households, and only for the surplus power fed back into the electricity grid after they have used what they need.

Mr Batchelor would not be interviewed yesterday, nor would he respond to questions of whether he stood by his $100 figure or how he arrived at it. Instead, spokeswoman Emma Tyner said the Government had "one of the most generous feed-in tariff schemes in Australia" which "ensures no vulnerable families are left behind". She said the gross model was "unfair".

Ms Tyner said the Government pursued policies that promoted large-scale renewable energy investments, including $50 million for the demonstration solar energy station near Mildura, the largest in the world. "Now the Federal Government has announced its emissions trading scheme, the CPRS will be the mechanism to reduce greenhouse gas emissions, and together with the renewable energy target, they will stimulate the most cost effective forms of renewable energy," she said.