Solar industry cash dries up

• Royce Miller
• The Age, January 27, 2009
• http://www.theage.com.au/national/solar-industry-cash-dries-up-20090126-7q08.html?page=-1

AUSTRALIA is forfeiting billions of dollars in investment and thousands of jobs through its lack of support for solar energy, according to European companies that have shunned the sunburnt country.

An Age investigation has found that potential investors courted by federal and state governments have rejected Australia, the world's sunniest continent, citing a lack of business incentives such as tax breaks and the nation's unwillingness to regulate in favour of renewable energy.

Victorian cabinet committee documents obtained by The Age include a "commercial-in-confidence" list of predominantly European solar firms supposedly interested in Victoria.

The 2008 cabinet submission says that with appropriate support, Victoria alone could attract solar investment worth $2.5 billion along with 2500 new jobs.

The companies listed have since rejected advances from both the federal and state governments.

Norwegian solar cell manufacturer UMOE tops the confidential list. Last year it combed the world in search of a home for an $800 million solar cell plant that would eventually employ 1300.

Drawn to Australia by its natural solar strengths, UMOE talked to a number of states and the federal investment arm Austrade about a location for its poly-silicon plant.

But this month UMOE opted instead for cloudy Canada. Its renewables chief, Oystein Oyehaug, said: "In the 10 to 15 countries we visited we got substantially better packages than from Australia, whether it was tax or investment incentives or bank underwriting."

He said the solar industry had been hopeful the Federal Government would embrace renewable energy. But the "key problem" for solar energy in Australia was the Government's "lack of a policy".

Mr Oyehaug said it was "amazing" that the Australian economy remained so reliant on old industry favourites such as coal and iron ore mining. "In the long term you should be doing more than mining for the Chinese," he said.

However, Austrade said international interest in Australia's solar industry was growing as Labor implemented its energy and environmental policies and more investment was likely.

Australia was among the world leaders in solar energy in the early 1990s, but it has fallen behind as Germany, Japan, Spain and California have invested heavily and/or regulated in favour of renewable energy.

While few doubt that solar energy will fare better under Prime Minister Kevin Rudd than his predecessor, John Howard, leaders from the renewables industry and the environment movement say they are disappointed with Labor's effort so far.

The Government defended its record on encouraging renewable energy and solar in particular.

Michael Bradley, a spokesman for Energy Minister Martin Ferguson, pointed to projects and programs such as the $500 million renewable energy fund, the $150 million energy innovation fund, and the $100 million Australian Solar Institute.

Mr Bradley said solar energy development would also benefit from the Government's target of producing 20 per cent of all electricity from renewable sources by 2020, and the carbon pollution reduction scheme, which would make renewables more attractive.

Germany's solar panel industry boomed in 2000 when the government introduced generous payments to solar producers. Western Australia and the ACT have embraced the German model but Queensland, South Australia and Victoria have adopted or are about to introduce, a watered-down version.

The Federal Government has not backed the more generous scheme.

Another company on the Victorian list is German-based solar panel specialists Solon, which visited in December but has decided against investing.

Sales director Ulrich Prochaska told The Age Australia was unlikely to build a substantial solar industry without providing a kickstart. He said a German-style pricing system would trigger a solar "boom" in solar investment in Australia.

Third on the international list is German solar panel manufacturer ALEO Solar. Again, the company has chosen to invest elsewhere, this time in China. Spokesman Pascal Bertolone said it was "surprising" that Australia seemed unwilling to regulate in favour of renewables.

The Victorian cabinet committee list also included Australian solar company Spark Solar as a possible investor in Victoria but Spark is almost certain to establish its $70 million factory and 115 jobs in the ACT or NSW, as close as possible to the solar-friendly ACT.

Mr Bradley would not comment directly on the Government's decision not to back a German-style tariff, instead stressing the importance of competition. "We need competition in the market so that the best and the most efficient technologies succeed," he said.

While Australia has lagged on solar energy, it at least had countries with like-minded governments such as the Bush administration US for company.

But it now risks being outshone even by the US, with new President Barack Obama declaring his aim of doubling renewable energy production in three years.

With LIZ MINCHIN