Report finds solar power policy flawed

• Adam Morton
• The Age, April 4, 2009
• http://www.theage.com.au/national/report-finds-solar-power-policy-flawed-20090403-9rmm.html?page=-1

THE State Government has undermined its own solar power policy, releasing expert advice that finds its proposed laws will do little to encourage households to install rooftop panels.

An analysis by consultants McLennan Magasanik Associates found the Government's plan to pay a premium subsidy for home-generated electricity fed into the power grid would fail as an incentive, barely cutting greenhouse emissions over the next 15 years.

The report — simultaneously tabled in Parliament and released to The Age under Freedom of Information laws this week — says only a more generous subsidy scheme would significantly boost the solar industry.

It also contradicts claims by Energy Minister Peter Batchelor that a more generous scheme would dramatically boost Victorians' electricity bills.

The consultants found the Government's proposal, a net tariff that pays 60 cents per kilowatt hour, would lead to about 3000 households installing solar panels in the next five years.

Conversely, a gross tariff that pays a premium for all energy generated at home — a model that led to the rapid expansion of the German solar industry, but was rejected by cabinet after heated debate — would prompt 60,000 households to sign on.

Mr Batchelor has argued against a gross tariff on the grounds it would hurt the poor, citing advice from his office that some models would increase household power costs by $100 a year. McLennan Magasanik Associates found otherwise: that a 60 cent gross tariff would add less than $8 to annual household bills.

Their analysis from November last year mirrors a confidential memo from the Department of Sustainability and Environment to cabinet leaked to The Age in January. The memo said only a gross tariff would provide the momentum required to create a thriving solar industry.

Opposition environment spokesman David Davis said the consultants' analysis showed "Peter Batchelor's push for a net feed-in tariff would achieve next to nothing".

"You can only conclude that Peter Batchelor has cooked up figures, which are not supported by analyses undertaken by his own department," he said.

He said the Opposition would scrutinise the legislation in committee once it reached the upper house next month.

Mr Batchelor said the Government's policy aimed to give a return for those who installed solar panels while containing the costs for electricity customers.

He pointed to other expert advice released by the Government that said a gross tariff was an expensive and inefficient way to cut greenhouse emissions.

"We reviewed the economic, environment and social costs and benefits of a range of feed-in tariff models to create a scheme that was green and fair, but not greedy," he said.

Environment Victoria campaigns director Mark Wakeham said the report questioned the Government's will to act on climate change.

"I can only assume that it comes down to solar and other renewable technologies becoming threats to the established operators such as the coal industry," he said.

"The cost argument has been dismissed, and is no barrier."

He said it gave the Opposition the chance to show some leadership on climate change.

"They have all of the documentation they need now to dismiss the cost argument against a gross feed-in tariff," he said.