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Solar electricity subsidies will pay off in the long run

By Thomas Faunce and James Prest - posted Thursday, 13 January 2011

International climate change negotiations came and went at Cancun in Mexico in November 2010, but with ongoing opposition at that level and to a Federal carbon price or tax, unexpectedly large numbers of concerned Australian families have decided on direct action, such as taking advantage of federal and state grants and feed-in-tariffs (FIT) to install solar electricity units.

Yet, the popular Federal Government Photovoltaic Rebate Program (PVRP) and Solar Homes and Communities Program (SHCP), the now reduced NSW Solar Bonus Scheme and the ACT government’s solar feed-in program have recently been criticised as forms of class-warfare that do little to either assist electricity supply, greenhouse gas abatement, or the creation of a photovoltaic (PV) industry in Australia.

Calls have even been made to discontinue such PV schemes as the major cause of rising electricity prices


A recent paper by MacIntosh and Wilkinson published by the Australia Institute claimed that that 66% of successful federal PV grant applicants were from medium-high socioeconomic status (SEC) postal code areas on ABS statistics, creating an "equity problem". Yet, this program in its later years was means-tested to families with a combined income under $100,000. Further, postcodes can only give a very imprecise estimate of extremes of social status and do not take into account the actual income of the applicants.

In addition, under the NSW solar FIT scheme the highest rate of installations were in the lower SEC western suburbs of Sydney and the highest numbers per locality were recorded in country areas (ordering systems of an average size of 2.8kW, compared to 1.9kW in the city).

Such subsidy schemes were and are open to community organizations as well as small and medium businesses, not just households. Renters can participate in community owned solar parks and windfarms (as occurs under solar FITs in Spain, Germany and Denmark).

Finally, the inequity argument fails to take into account the comparatively massive amount of direct and indirect assistance taxpayers have provided for decades to the fossil fuelled electricity and transport industries.

Criticism that PV contributes little to total electricity or greenhouse gas abatement, could have been predicted at the inception of each scheme (given the miniscule support for the sector at that time) and do not estimate the outcome should significant percentages of the total population begin to use PV.

In 2010 the annual growth in the solar PV sector in 2010 was between 115% and 141%, led by residential solar, with between 170 and 190 MW of capacity added.


The International Energy Agency’s predicts solar PV will provide 5% of global electricity by 2030, rising to 11% in 2050.

Criticism under this head also fails to take into account, as ACT environment Minister Corbell pointed out, rapid advances in PV efficiency and new technologies. These will soon include nanotechnology domestic solar into ethanol fuel innovations. The criticism additionally utilises flawed analysis of future PV and electricity costs.

The cost of solar panels is rapidly decreasing due to R&D investments and high industry competition in a $60 billion global PV industry growing at 40%pa for over a decade- down from $12,600 per kilowatt in 2009 to $6,000/kW in 2010 ($17,000/kW in 2001).

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About the Authors

Thomas Faunce is Assoc. Professor at the College of Law and Medical School ANU.

Dr James Prest is a lecturer in law specialising in environmental law with interests in administrative law and litigation and is a Member of the IUCN Commission on Environmental Law. He is currently publishing papers on renewable energy law (particularly on feed-in tariffs and tradeable RE certificates law), and major projects legislation. His research interests are in the areas of renewable energy law, climate change law, special projects legislation, biodiversity law, and environmental offences.

Other articles by these Authors

All articles by Thomas Faunce
All articles by James Prest

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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