Image: markusspiske
The Australian Competition & Consumer Commission appears to be continuing in its advocacy for an end to Australia’s solar rebate sooner rather than later.
The ACCC’s latest report from its inquiry into the National Electricity Market (NEM) was released yesterday. It notes while the average annual electricity bill for households in the NEM fell by $65 or 4 per cent in 2018–19 compared with the previous year, households were still paying approximately 20 per cent more than in 2007–08 and the average cost per kilowatt-hour was around 45 per cent higher in real terms.
The ACCC claims environmental costs have been the biggest driving factor behind the increase in average household bills over the longer term. While focusing primarily on the cost of legacy premium feed-in tariffs this time around, in his comments on the report ACCC Chair Rod Sims also said:
“We continue to seek action on our previous recommendations, which we believe will help drive bills down.”
These recommendations were released in July 2018. Among them was:
“.. the ACCC is recommending that the SRES should be wound down and abolished by 2021 to reduce its impact on retail prices paid by consumers (recommendation 24).”
The SRES is the Small-scale Renewable Energy Scheme. It’s the initiative that provides for Australia’s major solar subsidy, aka the solar rebate. The solar rebate is already being gradually phased out and will cease to exist at the end of 2030.
Solar Rebate Cost Vs. Benefit
So how much is the SRES actually costing households? A graph on page 64 of the report indicates it has averaged out at less than 1 cent per kilowatt hour.
While the cost has increased according to ACCC figures due to rapid uptake of home solar, among the many benefits that <1c per kWh has bought are:
- Thousands of jobs
- Downwards pressure on wholesale electricity prices
- Emissions reduction
The value of the SRES also needs to considered, and that’s something the ACCC report doesn’t do. The SRES is still a pretty good deal – not just for owners of solar power systems, but for everyone.
Will The ACCC Get Its Wish?
In October 2018, Energy Minister Angus Taylor said there was “no plan” to change the SRES and reportedly reiterated the Morrison Government had no intention of abandoning it in March this year.
While politicians have been known to backflip on one or two occasions, given the popularity of the subsidy, the benefits it brings and the fact it is already being phased out, it would be a pretty silly move at this stage to try and accelerate its end.
About Michael Bloch
RSS - Posts
Rod Sims needs to identify and quantify the myriad subsidies thermal coal electricity generation enjoys and then offer a comparative analysis of coal and solar subsidies and benefits.
When he has done that, we can make our own minds up about which subsidies should stay and which should go.
Our current useless politicians look for the worst way to do things for the people of Australia .
Rob,
Not all ‘politicians’ are ‘useless’, there are some around (including within the Liberal Party itself) who don’t agree at all with current LNP policies, but so far as the LNP insiders are concerned, the extent of their disagreement varies, as does their courage and willingness to ‘rock the boat’.
The major problem though is ‘climate change denialism’, which comes in both ‘soft’ and ‘hard’ forms. The ‘soft form’ is to simply spread ‘doubt’ in various ways, so that even those members of the public who are beginning to agree that ‘climate change is a problem’ don’t (as yet) really understand its full implications.
That way, so long as the politicians concerned can create an appearance of ‘being seen to be doing something’, those voters can both quench their mental concerns about ‘climate’ and also justify to themselves continuing to vote them in because of other policies that appeal to them.
The net result of all of that is that any action taken to mitigate the effects of prospective future climate change will tend to be less than whats needed at the time. That has a compounding effect. Today’s ‘minor problems’ eventually becomes to-morrows ‘bigger problem’ requiring huge amounts of money and resources to fix.
The bottom line though, is that the current government are not going to change their ways at all in the long term.
As I see it, the Libs have dug themselves into a deep hole, continue to dig it even deeper, and will ‘carry on regardless’, simply because of pride, arrogance, and greed related motivations. The personal ‘cost’ of admitting you’ve got it wrong or made a huge mistake, thus continues to rise.
A gritting of teeth and an even stronger determination to prove all your critics wrong by achieving ‘success’ usually occurs in the minds of said self-deluded, leading to eventual ‘catastrophe’ of some kind.
Even if this did go ahead, I bet you power prices will not come down and why would they, the power companies are buying power for 12c and selling it back for up to 30c a kWh and didn’t have to invest anything to get the return, that’s a nice 60% profit for doing sod all thank you very much.
Mickdicky wrote:’…. that’s a nice 60% profit for doing sod all… ‘
There is much truth in what you said Mickdicky, but there are some other implications as well, and I’d like to amplify those…
1) Much is made by opponents of solar PV of the initial subsidy/rebate system buyers receive at their time of purchase.
What is never mentioned though is the fact that this ‘subsidy’ in fact gets indirectly, in a fairly short space of time. The moment a system begins feeding into the grid it is (in effect) ‘subsidizing’ other grid users to the extent of – using your figures – 18c per kwh. Whether or not distributors pass this on to those other users via price reduction is unknown though
My point is though – after around a 4 to six year period this .18 cent excess is sufficient to fully repay that initial subsidy. Thus, claims such as ‘greenie ripoff’, ‘rorting other Australians’ etc by those demanding the STC rebate gets stamped out are completely fallacious.
2 My next point is that – assuming a PV system life of around 25 years, then once the time point at which the subsidy is repaid is reached, then for the remaining 20+ years, other grid users have their power bills subsidized by solar PV system owners. That subsidy is a significant amount.
Just to illustrate: Lets assume that the owner of a 6.66 kw system produces 10,000 kwh a year and exports 50% of it. The value of the implied subsidy in any one year is thus .18 cents X 5000 = $900 a year. Over a 25 year period, that’s a total of $22,500
Thats more than sufficient to (a) repay say $4k’s worth of initial purchase in a fairly short space of time, and then (b) subsidize the power bills of other users by some $18,500 over the remaining system life-time.
The economic and social benefits contributed collectively by solar system PV owners to society in general are huge.
Now, I have over-simplified things, and each individual system differs in their details, but nonetheless the fact remains that, in general, solar PV system owners now contribute significantly on a national basis towards keeping power costs lower than they otherwise would be and in reducing pollution.
Oop’s – somehow in my editing the word ‘subsidy’ got omitted a few times, where you see the word ‘initial’ that should have read ‘initial subsidy’.
There are a number of solar retailers doing business in South Australia telling their customers that the rebates available here in SA will be cut Jan 1, 2020, and they need to at least put down a deposit on solar systems to guarantee the full rebate. Any truth to that?
Hi Cameron
As I explain here:
https://www.solarquotes.com.au/blog/solar-rebate-not-ending/
The solar rebate is only being cut by one-twelfth at the end of the year. It is slowly being phased out but still has 11 years and 5 days before it’s entirely gone.