Rooftop solar future boosted as Labor pledges support

The future of the muli-billion dollar rooftop solar industry in Australia is looking more secure after Labor leader Bill Shorten pledged support for the small-scale component of the renewable energy target to stay as is.

Shorten’s pledge on the rooftop solar scheme comes as he prepares to join the Save Solar campaign, which moves this week to the marginal Sydney seat of Barton this week, and reflects the growing traction that solar is having as an emerging political issue.

The Australian Solar Council is to move its campaign to the Melbourne seat of Deakin in October and will also target by-elections in NSW and state elections in Victoria, Queensland, and NSW.

In an interview with the Australian Financial Review published on Monday, Shorten was scathing of the Warburton Review and called on the government to disown the recommendations.

“If the Prime Minister wants to work with Labor to fix the mess he created, he has to rule to the recommendations in the Warburton review,”Shorten said.

“That’s the job for Tony Abbott. This is the Prime Minister’s report with the industry and job-decimating recommendations he wanted. It belongs in the bin.”

The Abbott government has managed to convince some in the media that it is moving away from the Warburton findings, but all that Industry Minister Ian Macfarlane has said is that the target will not be scrapped. But scrapping is not the language that Warburton used – he urged it either become a 16,00GWh target (where it is now, so effectively closed to new business), or a 26,000GWh target, or a true 20 per cent. The renewable energy sector says either option would be a death knell for the industry.

Warburton also urged the small-scale scheme to be ended now, or changed significantly to rapidly phase out upfront rebates. He also called for eligible rooftop installations to be cut from 100kW to 10kW – a move that the industry says would kill commercial scale solar just as it starts to build.

Rooftop solar is a particularly threat to incumbent coal fired generators because it is reducing demand from the grid, and doing so a the time of the day that the generators used to make most of their revenue.

Macfarlane has been seeking to put pressure on Labor to “compromise” on the target, but this has been rejected by both Labor and the renewable energy industry. In any case, says Labor, Macfarlane is yet to make any approach.

Solar Citizens , which has helped orchestrate the Save Solar campaign that targets marginal seats with large numbers of rooftop solar installations, welcomed Labor’s commitment to the rooftop solar scheme.

“Solar users around Australia will hold the Coalition to their pre-election promise that there would be no cuts to the Target,” Solar Citizens Campaigns Director Claire O’Rourke.

“Eighty-two per cent of Australians want to keep the Target strong – any attempt to weaken it will come at a political cost to the major parties.”

The Coalition does have the option to impose changes on the SRES by regulation, but there is growing speculation that even this could be resisted – a highly unusual move.

Asked about this, a spokeswoman for environment spokesman Mark Butler said: “We don’t want to see any changes to the SRES and won’t enter into hypothetical discussions. The Government has offered no plan to negotiate with Labor.”

Labor is however, prepared to negotiate with the Coalition on the large-scale component of the target.

But, it would seem, according to Shorten’s remarks to the AFR, that it will only go only as far as the recommendation of the chairman of the Climate Change Authority, Bernie Fraser, who said last week the target should stay at 41,000GWh, but the deadline could be pushed back a few years.

As we reported last week, the clean energy industry could likely accept this, as long as the target was not pushed back much beyond 2022 – otherwise is would simply create another void where there would be no new investment in coming years.

As it is, there has been no new commitments since late 2012, and the industry will continue to stagnate until the policy certainty is resolved. Modelling for the Warburton review rejected the complaints of the fossil fuel generators that the target could not be met, but if uncertainty remains, then that 2020 target becomes more difficult.

The Coalition knows this and is trying to use it as a blunt hammer, although there are signs some parts of the party are now starting to appreciate the political consequences of acting so deliberately in the interests of coal–fired generators.

This is in stark contrast with the US, where the combination of state-based-renewable energy policies and federal emission rules is likely to reduce the amount of coal-fired generation in that country by one quarter. And in China, where coal imports have actually declined for the first time.

Still, some environmental groups are disappointed that Labor is not taking a more ambitious stance, suggesting that it should be seeking an even higher renewable energy target.

“Labor does not need to back down from the existing target,” said Andrew Bray, from the Australian Wind Alliance.

“The government’s own modelling showed that keeping the current target delivered the best result for the consumer. Labor needs to be saying to Australians we can have more renewable energy, to clean up our power supply and reduce our cost of living.”

Any delays in the target, however, is likely to result in more solar projects than wind projects, as the price of utility-scale solar is expected to fall and crowd out all but the best tier-one wind projects.

Bloomberg New Energy Finance has suggested that by 2018, around half of new large-scale renewable energy projects being constructed could be solar. The key is the cost of finance. There is little doubt there are several dozen solar projects ready to roll out, some already with planning approval.