Yesterday’s article by Joe Kelly in The Australian ($) has highlighted the cost of solar subsidies.
Last year subsidies cost households and business $500 million.
This year subsidies are tipped to hit $1.3 billion.
There’s also a misconception by many that the government pays the subsidy when you purchase a solar system. They don’t.
Joe quotes Jeff Bye, founder and manager of Demand Manager in Sydney:
“That subsidy of $500m last year, or $1.2bn to $1.3bn this year, is added on to everyone’s bills.”
That means an extra $100 on your electricity bill this year, to pay for solar you may not even have yourself. That’s on top of the additional $60 last year.
That’s right, you may not have solar, but you’re forced to subsidise your neighbour’s solar panels. This is particularly concerning for low-income earners who probably can’t afford a solar system of their own but pay higher electricity bills to subsidise those who can afford to install a solar system. A reverse Robin Hood scenario; taking from the poor and giving to the rich.
Few people understand how the subsidies work, so here’s a quick overview distilled from the Clean Energy Regulator.
- The Clean Energy Regulator administers the Renewable Energy Target’s (RET) two schemes: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES).
- The solar rebates come under the SRES.
- The RET is designed to add 33,000 gigawatt hours of renewable-based electricity to the grid by 2020.
- Under the SRES this is achieved through the creation of tradable certificates which create an incentive for additional generation of electricity from renewable sources. Certificates are created and issued through the REC Registry — an online trading platform managed by the Clean Energy Regulator.
- Small-scale systems are eligible to create certificates for every megawatt hour of power they generate – creating the ‘supply’ side of the certificate market. Wholesale purchasers of electricity, mainly electricity retailers, buy these certificates to meet their renewable energy obligations – forming the ‘demand’ side of the certificate market. Wholesale purchasers of electricity then surrender these certificates to the Clean Energy Regulator in percentages set by regulation each year.
- The number of certificates issued to an individual or business is determined by the amount of electricity generated or displaced by an eligible system. Eligible systems may include renewable energy power stations, small-scale solar panels, wind and hydro systems, or solar water heaters and heat pumps.
- There is also a secondary market for certificates that does not involve the Clean Energy Regulator and includes financial institutions, traders, agents and installers.
- Small-scale technology certificates are provided ‘up front’ for the systems’ expected power generation over a 15 year period or, from 2017, from the installation year until 2030 when the scheme ends. This renewable electricity replaces electricity generated from non-renewable sources. Generally, householders who purchase these systems assign the right to create their certificates to an agent in return for a lower purchase price. The level of this benefit differs across the country depending on the level of solar energy.
- Small-scale technology certificates can be created following the installation of an eligible system, and are calculated based on the amount of electricity a system produces or replaces (that is, electricity from non-renewable sources).
- The number of small-scale technology certificates required to be submitted by electricity retailers is set each year by the small-scale technology percentage.
- The 2017 small-scale technology percentage (STP) is 7.01%.
- This means liable entities (generally electricity retailers) are required to surrender by 14 February 2018 approximately 12.5 million small-scale certificates (STCs) to meet their Renewable Energy Target (RET) obligations for 2017.
- This figure is derived by subtracting 2.65 million STCs from the estimated 15.1 million supply of STCs in 2017. The 2.65 million STC adjustment is the difference between previous years’ STC creations and the actual number of STCs surrendered in those years.
- Liable entities that do not surrender sufficient STCs to meet their obligations are required to pay a non-tax deductible shortfall charge of $65 for each STC short; with a refund payable in certain circumstances.
Don’t get us wrong. Solar has a place, but it’s important to acknowledge the cost and who pays, so we can work toward balanced energy policy, restoring affordability and reliability to our network instead of planning for load-shedding like they do in emerging nations or paying big business $50 million to shut down.
$1.3bn hit as solar subsidies surge
12 march 2018 | The Australian | Joe Kelly
Energy consumers will be forced to pay more than $1 billion for rooftop solar installation subsidies this year, increasing power costs by up to $100 per household, according to an industry analysis.
Source ($): $1.3bn hit as solar subsidies surge