West Australian
3 August 2011, Page: 20
The only thing saving the Barnett Government from a "pink batts" backlash over its comprehensive bungling of the rooftop solar panels scheme is scale. Luckily, the industry the Government poleaxed this week is smaller than that represented by the home insulation contractors the Rudd government ruined and there are fewer householders directly harmed.
But measuring your disasters against those of the past two Federal Labor governments can hardly be recommended as political best practice. The Liberal Party went to the last State election promising voters they would get a payment of 60¢ for every kW of electricity their rooftop panels fed into the power grid. It was the sort of political greenwash that has now become commonplace in Australian politics, playing on the good nature of those who want to "save the planet".
The essential difference was that this promise made commercial sense to those who liked the idea. It wasn't just green. It offered many people a real opportunity to cut their power bills. But the 60¢ tariff was such a fundamental misreading of the economics of our renewable energy future that it calls into question the Government's ability to deal with the new realities that the carbon tax will foist on the nation next year.
The renewable energy sector confirmed this week that the Australian Photo Voltaic Association told the WA Government in 2007 that a fair feed-in price was between 130-160. Why was that advice ignored? Who came up with the 60¢ tariff and why? When the promise finally made its way into the 2009 Budget, the Government set aside $13.5 million over four years.
By the time Energy Minister Peter Collier axed the program hastily on Monday morning, after this newspaper exposed its imminent demise "within weeks", its cost had blown out to $127 million. That is a massive bungle. And it was despite the fact that the Government had already dudded punters on its original tariff promise by reducing the starting price to 40¢ and then further cutting to 20¢ to try to contain its growth within the 150 MW quota.
Those people not frightened off by the Government's meddling who still want to go ahead with rooftop solar panels will now be offered a 7¢ return by wind.com/" target="_blank">Synergy Energy or Horizon. That tariff is laughably based on the cost of coal-fired power to the energy retailers and means that new entrants selling their solar electricity into the grid are effectively subsidising the State Government.
Why would anyone pay thousands of dollars for a solar system that feeds cheap electricity into the grid for negligible return while they are at work only to have to pay peak power rates for fossil fuelled energy when they come home in the evening and turn on their air-conditioning? Members of the WA solar panel industry met last week, fearing the 150 MW cap would be reached soon, not knowing whether the Government intended to extend the scheme on the basis of its unrivalled success.
"The Government has failed to consult with the industry on the ensuing changes, and this has made it very difficult for any business to plan effectively" Ray Wills, chief executive of the Sustainable Energy Association, said after Monday's brutal decision. "The renewable energy industry continues to be plagued by government decisions that lead to boom-bust cycles and fail to provide the conditions needed to grow the industry sustainably.
"While the SEA expects solar PV is likely to hit retail grid parity potentially by 2014-15, this interim period without some form of price support is likely to significantly erode the value and capability of the industry. The industry does not seek subsidies, just a fair price to be paid for consumers' exported electricity The provision of a fair price will create greater certainty and restore the confidence of solar installers to invest in growing their businesses, and consumers the confidence to buy". The raw politics of this decision are poisonous for the Barnett Government in the current economic climate.
Not only has it axed a program for being too popular a political non sequitur but it is seen to be stopping people from limiting their exposure to ever-increasing power price rises. Economic rationalists will rightly argue that home solar panels do not stack up in any direct comparison with commercial power generators.
The Productivity Commission found that a medium solar outfit produced power for around $400-$473/ MW compared with coal-fired electricity at $78-$91, combined-cycle gas turbines at $97 and wind turbines from $150-$214. But that doesn't take into account that private individuals are bearing the capital cost of the system and it frees up capacity in the existing low-cost State-owned generating system.
A well-priced feed-in tariff within a well-managed program with a realistic and expandable cap would have ensured a steady flow of privately sourced solar power at a lower cost than the Government could arrange through its own means to meet its renewable energy commitments. It is unlikely that the State will be able to extricate itself from ownership of its energy business any time soon. So its needs to get a lot smarter about how it handles the shift to renewables.
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