Solar forecast: cloudy and dull

The federal government’s review of the Renewable Energy Target is well underway. Some have welcomed the decision, others are worried.

The government’s goal is to maintain investment certainty, to review the progress, and to ensure pressure is taken off electricity prices, said Environment Minister Greg Hunt.

“We’re all aware that there is an oversupply of electricity generation in Australia, we need to put that in that context as well. And the bottom line is, we are looking at how we can reduce cost impacts, both on industry and on households, of electricity prices overall,” said Industry Minister Ian MacFarlane.

John Grimes, the CEO of Australian Solar Council has strong concerns. Any changes to the RET, says Grimes, will have a devastating effect on the industry. “The government has said everything is on the table in reviewing the Renewable Energy Target. That means abolishing the Renewable Energy Target is on the table. Recent research shows 8000 jobs could be lost if the Renewable Energy Target is axed.”

The solar industry supports around 4500 businesses and employs around 18,500 people, the majority of whom are electrical contractors, said Grimes. Solar power offers several benefits. It reduces peak and overall demand, cuts wholesale prices, reduces electricity waste and blackouts and cuts cost of distribution and transmission. “Solar also does the heavy lifting for Australia during heat waves and has been a key reason why we have avoided blackouts in recent weeks,” adds Grimes.

Despite this, the industry is plagued by weak demand. The number of solar PV installations has already dropped by 22% over the past 12 months, with a 20% decline in the solar hot water market, according to a January report by the REC Agents Association (RAA).

The RET has helped five million Australians put solar on their roof but the market is in decline due to cuts to government support programs and uncertainty surrounding RET, says Ric Brazzale, President of the REC Agents Association. “Any move to cut the Renewable Energy Target will lead to further job losses and company closures across the country.”

The ASC has launched a ‘save solar’ campaign fearing the government may scrap the scheme. The association has already raised a fighting fund of around $150,000 through the ‘save solar’ campaign. The funding is expected to help the association in engaging professional media and government relations experts to help craft out key messages and to help guide the campaign.

“The government says it is concerned about the impact of the Renewable Energy Target on power bills. The good news is the impact is very small, with the Small-scale Renewable Energy Scheme making up less than 2% of the power bill and even less once you factor in the reduced wholesale cost of electricity caused by five million Australians installing solar,” claims Grimes.

The RAA agrees, saying, “The cost of the Small-scale Renewable Energy Scheme (SRES) currently accounts for 0.54 cents per kWh or 2% of a customer’s bill and is expected to more than halve over the next two years to account for less than 1%.”

The Small-scale Renewable Energy Scheme (SRES) will have a zero net cost impact on household power bills, according to RAA. “The cost of the Renewable Energy Target that gets passed through to residential customers currently amounts to a modest 1.12 cents per kilowatt hour (kWh) or 4% of the average residential electricity bill. The RET puts downward pressure on wholesale electricity prices and, as a result, wholesale prices are considerably lower than expected. The reduction in the wholesale price due to the RET is estimated to be 0.67 cents per kWh.”

The Australian Chamber of Commerce and Industry has a different opinion. The scheme, claims ACCI, now accounts for around 5% of an average household's electricity bill and, along with the carbon tax, has left green schemes as the fastest growing proportion of a consumer's energy bill over the past two years. “The direct cost of the RET across the economy in 2012 was $1.6bn, second only to the carbon tax in terms of the impact of green schemes. The Productivity Commission has already shown that, as an emissions abatement scheme, the RET is a clear failure, imposing costs of abatement of up to $525 per tonne of carbon. The RET is clearly an inefficient means of abating carbon emissions.”

“There are far cheaper ways of curtaining carbon emissions and, ironically, supporters of the RET are undermining Australia’s mitigation efforts by insisting it be achieved through high-cost renewables”, remarked ACCI’s Acting Chief Economist, Burchell Wilson.

The RET review is being undertaken by an expert panel, headed by Dick Warburton AO LVO and including Matthew Zema, Dr Brian Fisher AO PSM and Shirley In’t Veld. The review will be provided to government by the middle of the year, which will, in turn, be an important input into the Energy White Paper process.

The RET will be one of the key topics of discussion at the upcoming Solar 2014 Conference to be held in Melbourne from 8-9 May 2014.The conference will feature three concurrent conference sessions: industry and policy stream; solar installer and designer professional development training; scientific and research stream (a registration fee does apply for this session).

The industry and policy session will host a continuous stream of free-to-attend presentations from industry experts, covering diverse topics, from current policy and market analysis, to financing of projects and industry case studies along with government representative updates.The scientific and research conference session will also be held over the two days and will feature approximately 100 peer-reviewed academic papers