Australia: The Politics of Environment - A Brief Round-Up

australia drought photo

photo: Tim via flickr.

They say "a week is a long time in politics." And this was my first thought when Matthew asked me, a month ago, to consider a round-up of business and politics events from Australia.

It may be a large sunburnt land blessed with many natural assets, but the so called Lucky Country might be using up some of its nine lives, if recent events are anything to go by. Some of the worst weather since records began suggest the climate is a changing. And not just atmospherically, politically as well. Not only are international icons like the Great Barrier Reef at risk via climate change, so are one of the oldest indigenous peoples on the planet. So what should a country, which can claim the dubious distinction of being the world's highest emitters of carbon dioxide per capita, do to improve it's environmental footprint? We peek at a smattering of the issues below.

Renewable Energy Feed-In Tariffs

Australian feed-in tariffs photo

Photo: Peak Energy

Australia has a bit of reputation for being world class innovators, but lousy entrepreneurs. We can problem solve with great flair, but we're not particular brilliant at bringing products to market, oftentimes selling the new technology to someone else to commercialise. This has been our experience with solar. As a staffer at one of our leading photovoltaic research universities recently told me, "We make engineers, we don't make solar panels."

So Australia has the technology. In many cases we invented it. We certainly have the sun. But we have just lacked the political and commercial will to forge this country into the solar dynamo it should be. One of Australia's leading suppliers of renewable energy, Energy Matters, put its bluntly. Germany, " while having half the sunshine of Australia, have 200 times the solar production capacity of our country " And they put this down to Germany having a generous feed-in tariff program.

A feed-in tariff is where the owner of a a grid connected renewable energy system, like solar, is paid a premium (usually greater than the retail price of electricity) for the energy they feed into the grid (that their electricity utility can on-sell to other users.) There are two basic types of tariffs, net and gross. Net is only paid for any energy supplied to the grid that is greater than what was used. For example, if the system generated 12 units of power, but also drew down on the grid for 10 units, then the tariff would only be paid for the 2 units that were in surplus. With a Gross Feed-In Tariff (FIT) the premium is paid for the full 12 units.

Australia has no national feed-in tariff, with some of the states only just implementing their own disparate versions in the past couple of years. At the time of writing, the Australian Capital Territory (ACT) had the most generous solar program. In this our tiniest self governing region, they offer, to those of their 340,000 residents who have grid-connected photovoltaic systems, just over 50 cents AUD (38c USD) per kilowatt hour, for up to 10kw of solar capacity. This is roughly four times the retail price of electricity, depending on the plan an ACT customer is on. The program went live for residential solar systems in March 2009.

However, according to the recently announced Western Australian budget, the ACT has been trumped by a more generous feed-in tariff of 60 cents AUD (45c USD) per kilowatt hour. This high premium will only be open to those customers who also sign up for 100% GreenPower for the energy they purchase. With these rates it has been calculated by the WA Sustainable Energy Association that a solar system could be paid off in nine years. (Most solar panels are designed to function for 20-25 years.) The most populous Australian state of New South Wales (NSW) is currently deliberating on what form of feed-in tariff it will legislate. A result is expected by June 2009. The rest of country has a mish mash of tariff, but there remains a push for a national gross feed-in tariff of 80c /kWh.

Solar Power Adoption

Australian largest rooftop solar installation photo
Photo: PV-Tech

The feed-in tariff argument has recently reached prominence, due the success that Germany and Spain have had in rolling out photovoltaic systems. But it has not been the only influencing factoring in the slow adoption of solar technologies in Australia. Being a long way from anywhere has meant panels have been expensive to import. And with a relatively small population, (only 57% that of California!) sparsely spread around the country, they have tricky to produce locally, given high wages and small economies of scale. BP Solar, the only on-shore producer of PV panels announced in December 2008 they would close their Sydney plant to concentrate on production out of Asia.

In the face of such pricing pressures, various Australian federal and state governments have, over the years, rolled out different rebates for solar panel purchases. Initially these were to assist people in remote areas, but more recently with utilities embracing grid-connect systems, rebates for photovoltaics became more pervasive. In general the federal government will pay $8,000 towards the cost of 1 kW residential solar installations. In the 2008 budget the government announced the $8,000 rebate would 'means tested' and only available to those households with a combined income of less than $100,000. This sent a tremor of fear through the Australian solar industry. However, they need not have worried as, inexplicably, installation applications increased in such demand that rebate processing times about doubled.

It may have been that the political debate over the changes alerted more people to the fact that rebates were available, or maybe the announcement raised concerns that the rebate was being reviewed and interested parties needed to get in quick while it was still on offer. If the latter, then their instincts were spot on, for change was coming. For as of 30 June 2009 the $8,000 is gone, replaced by a new Solar Credits scheme.

Under this new process, there is no direct cash rebate, but tradable renewable energy credits (RECs) will allocated on a sliding scale of points, depending of the carbon reduction efficiency of the installed system. RECs are already in place for the likes of solar hot water rebates, but with the new Solar Credits program their value will be artificially increased five fold.

This process has drawn flak from many quarters. Some believe it means polluters, like coal-fired power stations, buying the exchangable credits on the market, will be purchasing much cheaper credits to allow them to continue their carbon dioxide emissions,negating the efforts of the homeowner to reduce CO2 output . In pure economic terms, the RECs will not, in many instances, reward the residential householder as much as the current lump sum $8,000 rebate.

Couple these rebate changes, with the aforementioned move to gross feed-in tariffs and with the newly emerging business model of communities, co-ops and businesses bulk buying panels and inverters to bring the price down even further, and you have a mad rush of residential solar installations.

More (Renewable Energy Targets, Emissions Trading Schemes, Water Buy Backs, Consumer Rebates ... ) on page 2!

Australia: The Politics of Environment - A Brief Round-Up
They say "a week is a long time in politics." And this was my first thought when Matthew asked me, a month ago, to consider a round-up of business and politics events from Australia.

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