The Sun’s power is free, and it sustains everything that we do on a daily basis, and more and more, we are being given the opportunity to harness this resource to ensure that we have an ongoing renewable future. The technology employed today is some 50 years old, tried, tested and proven over time, however we have come to the point where technology is allowing us to become more efficient at the way we use photovoltaics, and the way we manufacture products that help us extract the sun’s power. Efficiency is the name of the game, but it should not just be efficiency in physical solar generation that we are focussed on, it should be efficiency of government process to allow us to make the most out of the technology, and to encourage the take up of not just micro-solar installations but larger installations as well.
Currently there are two ways to receive benefits from solar power systems in Australia – federal government based rebates, and state government feed-in tariffs. The federal government system is built around what are now called Small-scale Technology Certificates or STCs. These certificates (also referred to as RECs previously) notionally represent one megawatt hour of renewable energy that is deemed to be generated in the future by the solar system. These certificates are then used to offset mandatory targets of the energy companies to surrender these as a part of their renewable energy generation. The government has put in place a multiplier of 5 for the first 1.5kW of solar generation as well, so this increases the number solar credits from 26 to 133 in Melbourne. This will be reduced to 106 from July 1st, and with STCs currently being able to be sold at around $34 each in the market, this will reduce the rebate by about $918 (ex GST).
This means that you will pay around $1000 more for your solar system after July 1st, but there is the ongoing repayment factor also to consider. State based Feed-in Tariffs have been the means by which we receive the return on investment. Currently in Victoria, we receive a 60 cent base feed-in tariff from the Government, which is added to by some energy providers, allowing a correctly and appropriately sized system in Victoria to generally be paid off in around 5 years. The Victorian approach to date has been one of sustainable rollout, with currently around 45MW of a 100MW allowance installed. With the expected rush of customers trying to get installed by June 30th however, it is expected that the remainder of the feed-in tariff in Victoria will be allocated by around September this year, if not earlier, where it was expected to continue until the end of the year at least.
The good news is, that there is still time for residential customers to ensure that they get in on the deals, however some suppliers currently are reaching their installation capacity even now, so people will need to ensure that they get an installation guarantee by June 30th to get the most from their solar system.
The challenge in Victoria for the Premier, Mr Ted Ballieu, the Minister for Energy and Resources, Mr Michael O’Brien and Minister for Environment & Climate Change Mr Ryan Smith, is to come up with a long term plan which is not only focussed on micro-solar, but also to look at a mechanism which will encourage medium to large scale solar plants to be established. The Ballieu government through Mr Smith has undertaken to continue the commitment of the previous Labor government to 5% of energy being generated by solar technologies by 2020, and they are to be commended for this commitment. Creating the right environment for business investment in Victoria however is still a long way off, and is the real solar challenge for this Government.
If a scaled tariff system for small scale solar (5kW to 20kW), medium scale solar (20kW to 200kW) and large scale solar (200kW+) is set so it can encourage business to install solar plants on the millions of square metres of warehouse and factory space that is currently underutilised, then we will have the opportunity to meet the 5% generation target that has been set. Certainly, such a scheme will require directed commitment of the government as it will not be a cheap scheme to implement, however a moderate, indexed business feed-in tariff of 1.5 times the chargeable energy rate, which is capped at 100% of the energy bill would allow businesses to install a solar system to meet their own business requirements, and would not create the “solar rush” that we saw in NSW. This would be one way to encourage businesses to be solar self-sufficient, and would require significantly less infrastructure investment, because the solar systems are in place where the energy is being used, not at some remote location where generated power needs to be transported back to the local grid.
The solar opportunity will still be in place after July 1st, it will still be a very viable option for micro-generators. The plans for review of the current feed-in tariff are already in place, so when Victoria reaches its 100MW target, we will know where we are going. The challenge to meet the 5% solar generation target set down by the government however still looms large. Only by making some tough and directed, expensive decisions will we achieve this target. The real concern however should not be the cost of doing something about it, but rather the cost of doing nothing.
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Enviromate Australia 