On the Grattan Institute’s solar report

Tony Wood and David Blowers write: Re. “What the Grattan Institute gets wrong about solar” (June 1). Grattan Institute’s new report Sundown, Sunrise: How Australia can finally get solar power right, argues that solar power combined with battery storage will help create a lower-cost and low-emissions energy future. But for solar to play this role, policy makers must learn from past mistakes. Writing in Crikey on June 1, John Quiggin charged our report with “sensationalist presentation, tendentious arguments and dubious analysis.” But the claims on which he bases his charge are both incorrect and misleading.

His piece focuses on the impact of solar PV on peak demand and on how we calculate a cross-subsidy within electricity pricing that favours solar PV owners. He says we assert that solar PV does not contribute to meeting peak demand based on an analysis of five days of electricity use data in south-east Queensland. This is entirely incorrect. We did not use the data he mentions to undertake any calculations. Instead, we described the ways in which solar PV can impact peak demand. We found that it is difficult to disentangle the positives and negatives of solar PV’s impact on network costs and we did not calculate a value. But even if solar PV has an impact in reducing peak demand, the benefit is far outweighed by the $3.7 billion cross-subsidy paid to solar PV owners by other electricity users as a result of the way electricity is priced.

Quiggin claims we calculated this cross-subsidy as the difference between the retail price and the wholesale cost. Again, this is false. We calculated the subsidy based on the difference between what solar PV customers pay under the current tariff structure and what they would pay if tariffs were more cost-reflective.

Quiggin says we accuse solar PV of “shirking their obligation to fund the costs of meeting peak demand.” We don’t. We criticise poorly designed and implemented policies, not consumers who acted rationally and in good faith. Even so, this does not mean that cross-subsidies should remain.

Professor Quiggin seems to think we are demonizing solar power. He has a right to his own opinions but not to his own facts. A phone call could have established where his assertions were false, then we could have got down to discussing our central premise: that solar combined with battery storage has a bright future, but we must learn from past mistakes so that everyone can benefit from a more efficient and sustainable electricity system.

*Tony Wood and David Blowers work in the Energy Program at the Grattan Institute.

How property prices are pushed up

Dr Valerie Yule writes: Re. “Another Hockey gaffe reveals a government clueless on housing” (yesterday). Population should not be increased so that builders and developers have more profits from more housing (and less farmland and bushland).

The rules about housing need to take account of what foreign investors are doing.  In my area of Monash in Melbourne, 841 perfectly good brick houses were demolished last year so that McMansions could replace them, which hold just the same number of people but take up more ground with less garden.  The foreigners are allowed to buy these as new houses as they could not buy the “old” houses.  Prices go up – in my street, those McMansions are asking up to $5 million! How can young people afford them? We have eight real estate agencies in our shopping centre with up to 28 staff each. The staff will be up to 99% Asian. (The latter is from the local paper’s estate supplement, which also puts the size of many estates to be sold, indicating they are up for “redevelopment”.)

Building McMansions means at least 3 skips of rubbish result as well as the demolished houses as rubbish. It is so wasteful, but it gives employment and profits now that manufacturing is allowed to be all overseas.

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