A report to be published today by Andrew Macintosh, for the Australia Institute, provides a damning indictment of the federal government’s support scheme for residential solar PV and highlights the chaos and the huge costs created by multiple, badly co-ordinated and poorly conceived support schemes.
The scheme — known under the Howard government as the Photovoltaic Rebate Program but rebranded by Labor as the Solar Homes and Communities Program — was introduced in 2000 and finally closed, with less than 24 hours notice, in early 2009 when the costs got out of control.
Macintosh, associate director for the ANU Centre for Climate Law and Policy, notes that for most of the time under the Howard government, the rebate was regularly scaled back at the first sign of extra demand. While this kept costs under control, it also stifled investment and it didn’t appear to achieve any of its stated goals, which were to reduce emissions, support a local industry, engage the community and promote renewables.
Under Labor, rebranded and with the rebate doubled thanks to a Howard government budget initiative carried through by Labor, the scheme took off. Combined with the introduction of state-based feed-in tariffs, and even some local government incentives, it caused a “perfect storm” that, Macintosh says, magnified its flaws and created a massive cost over-run of more than $1 billion within 18 months.
Macintosh questions why the residential market should be targeted for such subsidies in the first place, apart from political point scoring. He argues that if the government wants to achieve scale, then it’s probably better to target commercial and large-scale installations.
“The question is, should they do these things? There is private benefit in residential PV subsidies, but I can’t see a lot of public benefit,” Macintosh says.
“If you are trying to reduce industry costs, then residential is not the way to go, and it’s not the way to create an industry. If we are going to do it, let’s do it at scale and subsidise some decent projects.”
MacIntosh says the federal scheme was a classic case of bad policy development and design. He says it was a major driver of a six-fold increase in PV generation, but this was from a very low base, and its share of the Australian electricity market in still just 0.1%.
He say the average abatement cost was between $257/tCO2-e and $301/tCO2-e, although in some sun-deprived areas such as Tasmania the cost of abatement went above $1,000/tCO2-e. And he says that most of the industry benefits flowed through to foreign manufacturers (although this might skip over the fact that the BP solar manufacturing facility in Sydney closed because the industry wasn’t big enough to support it).
Finally, he says, if the goal was marketing, then it could have been done at considerably reduced cost using conventional methods.
Macintosh estimates that 128MW of solar PV was installed as a result of the scheme, although the NSW Solar Bonus Scheme appears to have now driven demand in that state to more than 200MW before its gross feed-in tariff of 60c/kwh was slashed to 20c — another example of the boom-bust scenarios engendered by Australian policy making.
“The Australian experience with the PRVP-SHCP highlights how care needs to be taken to ensure that renewable energy programs are designed and administered to generate public benefit outcomes,” Macintosh says.
“Low- and zero-emission energy is required to address climate change and there is a need for government programs that help lower the cost of these technologies and promote their deployment. However, when poorly targeted and designed, these programs can be wasteful and produce predominantly private rather than public benefits.”
This article originally appeared in Climate Spectator.
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Here is an idea – instead of the govt paying each individual a small amount to install panels on the roof and then paying them feed in tarriffs why don’t they pay the same amount in large slabs to the electricity generators to manufacture the panels and install them on private households roofs. The electricity company would pay a minimal rent, say $100 a quarter for retning the roof space. Something similara is in effect in England.
To me this would reduce the consumers electricity costs without them haveing to outlay capital, help offset the loss of jobs in coal and ensure govt money is getting the biggest bang for it’s buck.
Here’s a different idea. As the article shows, and it’s hardly anything new, the whole circus (or more accurately collection of circuses) has been little more than an emotively driven p.r. process, even if not all the ‘sponsors’ understood this.
Dr Harvey M Tarvydas
Good stuff Macintosh, JIMMY & NORMAN HANSCOMBE.
There is a Lithuanian bacteria that infects human brains (the political gurus) in the southern hemisphere and its main (not as harmless as it sounds) effect is a mental confusion between the words ‘idea’ and ‘vote’.
Dr Harvey M Tarvydas
CORRECTION to previous post
Good stuff Macintosh, JIMMY & NORMAN HANSCOMBE.
There is a Lithuanian bacterium that infects human brains (the political gyrus) in the southern hemisphere and its main (not as harmless as it sounds) effect is a mental confusion between the words ‘idea’ and ‘vote’. I am not sure if there is a treatment available yet.