Carbon - the more you emit the greater the subsidy!

Recently the Gillard Government warned it might remove solar energy subsidies and review the value of Renewable Energy Certificates (RECS).

In New South Wales Premier Kristina Keneally reduced the gross feed-in tariff from 60 to 20 cents per kilowatt. Anyone installing solar in the future in NSW will receive less for their clean contribution to the grid than they pay for coal-fired electricity.

In the age of climate change, emissions trading and carbon prices, why is Australia’s solar industry being so poorly treated?

Despite Australia being drenched in sunlight (around 300 days a year) we lag behind Germany, Japan, Spain, France, and Greece, among others. Despite its miserable summers Germany has embraced solar technology. Visitors can travel down the Rhine River in solar powered boats even in the rain: but where are the solar boats in sunny Sydney?

Commentators have denounced rebate schemes as “middle class welfare”. Interestingly the take up of solar power in NSW has been largely in Western Sydney and regional areas. The demographics of those using solar power are more working family than merchant banker. Regardless, poor policy at a state and federal level is compromising our most promising renewable industry.

The NSW 60 cent tariff has been overly generous and the industry warned policy makers of this. The Solar Energy Industries Association is calling for a 45 cent gross feed-in tariff with annual reviews (similar to the ACT scheme). Premier Keneally refuses to meet with the association and so far there is no policy from Barry O’Farrell, the NSW Opposition leader, although at least the Liberals are open to dialogue.

Governments do not have a good record of consulting with the renewable energy sector. Hasty policy has swung the industry in cycles that go from boom to bust. Many argue that there should be no subsidies for the solar industry. Fair enough, there’s nothing wrong with that, but let’s examine the real cost of solar power and compare it with that of coal-fired power.

In NSW during the last nine years coal and coal-fired power together have received an annual subsidy of $1 billion. The subsidy for the renewable energy sector for the same time frame is a paltry $67 million a year. Coal-fired power receives 15 times the amount of subsidy compared with the renewable energy industry.

Meanwhile, NSW’s state-owned power companies, Energy Australia, Integral and Country Energy, have CEOs who are earning obscene amounts - $666,000 to $774,000 a year.

The spin regarding the feed-in tariff reduction in NSW was that the solar uptake was increasing electricity prices. The reality is infrastructure upgrades ignored by NSW Labor are the major driver of price increases. How can a $17.9 billion infrastructure upgrade for coal-fired energy be justified when there is a federal government target for Australia to be using 20 per cent renewable energy by 2020?

Germany has proven that major public take-up of renewable energy lessens grid demand and therefore the need for infrastructure upgrades.

Some are quick to judge if the investment in solar is “worth it”. Coal-fired power is treated as a given, yet the costs on many fronts mount up. Additional to infrastructure upgrades, NSW is currently in the process of negotiating low coal prices for electricity production, meaning that NSW residents will be shackled with billions of dollars in dirty coal subsidies tied up in long-term contracts.

NSW’s coal subsidies threaten to unravel the ability of the federal government to put a price on carbon. The rationale of making green energy more attractive through a carbon price will not be achieved with a $25 a tonne subsidy (the carbon price has been estimated at $25-$40 a tonne).

The new multi party Climate Change Committee chaired by Julia Gillard has both Rob Oakeshott and Tony Windsor as members. Interestingly the Coalition chose not send a representative. Rob Oakeshott’s commitment to the renewable sector was evident in the last parliament when he mirrored the Green’s Senate legislation to introduce a national renewable energy feed-in tariff.

The federal government has a 20 per cent renewable energy target by 2020. The only way this can be achieved is through major investment and with clear policy objectives, rather than ad hoc schemes. A national feed-in tariff is essential, as is some certainty for the solar energy sector do they can remain in business.

The solar industry is looking to these key independent MPs to remove renewable energy policy from its present basket-case status to the forefront where it must be.