Solar PV industry has a fight on its hands

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Gillard Government still singing from AGL song-sheet and labelling rooftop solar an indulgence for the rich.

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Prime Minister Julia Gillard’s speech about the need for electricity market reform is hugely welcome, but it highlights some of the challenges that the solar PV industry will face in the near and medium term future.

Gillard today outlined her plan to gain COAG agreement on changes to energy pricing regulation, moving energy towards a service than a commodity, and recognising the value of demand management and energy efficiency.

But like the rest of Labor, she and her advisors do not yet get solar. As Energy Minister Martin Ferguson and Climate Change Minister Greg Combet have said in recent weeks, Gillard trotted out the old canard: solar PV is the plaything of the rich. And who should we blame for such nonsense? Well, let’s start with AGL Energy.

Here’s the quote from Gillard’s speech:

“As a recent AGL Energy review noted, while wealthier households can cut power costs through more efficient devices and solar panels, the poorest customers are exposed to the full cost of the increases.

“As a Labor Prime Minister, I feel very deeply concerned about the plight of pensioners and poorer families who spend a greater proportion of their income on power.

“The less disposable income you have, the harder it is to manage large lumpy bills, like power bills. And buying clean energy appliances – everything from new and more efficient whitegoods to rooftop solar panels – is plainly easier if you earn more.

“Solving these kinds of problems in people’s real lives is exactly the kind of thing Labor Governments are elected to do.”

That last bit is critically important. Solar PV is on the cusp of becoming a game changer in Australia because it is able to deliver electricity to households cheaper than via the grid. Some say it could be the the  first mass-market for solar PV in the world. Its availability will increase massively as new financing models are introduced that offer zero cost upfront. That message is understood by some, but not by many. It has the potential to change the nature of the electricity debate and the political debate too.

AGL Energy is happy – via its highly influential series of economic papers – to demonise solar PV as a rich person’s indulgence that penalises the poor, because having great swathes of panels installed across the roofs of Australia, as envisaged by recent AEMO forecasts, does not fit easily into its business model. Nor does it fit easily with other generators and network operators, which is why many are trying to push back against its deployment with tariff changes and other regulation as we highlighted in this story How utilities propose to kill solar PV.

Yet, solar is having a demonstrable impact. According to the REC Agents Association, an industry body, the combination of energy efficiency and solar PV will reduce demand on the network by around 10,66gGWy, or 5 per cent, by 2015. Around one fifth of Australian households already have solar power or a solar hot water system.

The challenge for the solar industry is to make sure that their message is understood – not just by the public, but by the politicians too.

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14 Comments
  1. Robert Johnston 7 years ago

    Interestingly AGL’s “Chief Economist” Paul Simshauser is also responsible for Government Relations at AGL – AGL’s chief lobbyist reports to the chief economist, so there we have government lobbying dressed up as “economic papers”. At least they seem to recognise the role of economist at AGL for what it is!

  2. Finophile 7 years ago

    without some sort of storage method for the energy generated by PV systems it can not be any sort of Game Changer without there being a lifestyle change. IE we use energy in the times where Solar does not exist and generate power when noone is at home using it.

    Until that point is addressed Solar Energy can not do what the grid can do – provide energy when we need it.

    Further a few rainy days and your fridge will not be powered.

    • glen 7 years ago

      Hi Finophile, I would recommend to you the excellent report by Beyond Zero Emissions to answer your questions as to how storage would work with renewables in the grid. The main methods use molten salt at 500 celsius, hydro and biomass.

      • Finophile 7 years ago

        Hi

        sure, I didn’t say we don’t have any technology, only that we are not currently implementing it. Without that in the mix then solar on the grid is a bit pointless.

        I believe we should be moving towards having storage of generated energy.

        However there is also the issue of scale and effectiveness. Losses in the grid are significant and so we still face the issues of reduction of effectiveness of efficiency measures in the homes if that is then lost by reduced demands on the grids.

        That homes generate the power and transfer it to a storage location (which we are not currently set up to do that way in our grid) would also incur losses in transmission too. It would be unacceptable to have the storage at homes being stuff like molten salt 🙂

        Its whole of picture stuff which is missing

    • Tim 7 years ago

      Just like “baseload” coal produces power 24 hours in the day… even at 3 am when “everyone” is asleep?

      Solar PV alone won’t get you to 100% renewable electricity production. But you can make good progress pretty quickly with PV.

      That said, I agree it would make more sense to have businesses with solar on their roofs to offset the power that they use mostly during the day. I think the tariff structure is the impediment there.

  3. Tranh dong 7 years ago

    I don’t even know the way I ended up here, however I thought this submit was once great. I don’t understand who you are however definitely you’re going to a famous blogger should you are not already. Cheers!

    • Giles Parkinson 7 years ago

      Hi Gillian. I meant to say that the recommendations of the AEMC and the White papers will be food for thought for COAG. I’d imagine that after the AEMO review of demand, its assessment of solar pV, and the BREE re-assessment of energy technology costs, then the white paper will have to be largely rewritten.

      • Gillian 7 years ago

        Thanks Giles for the clarification. I agree that the draft EWP will have to be rewritten – it was a dog’s dinner. Perhaps the new data gives them a face saving way to turn out something of professional standard.

        Various Aust govts over the past 20 years have been well served by excellent advice from depts like Treasury. Let’s hope that Energy policy gets the same high level of professional competency in future years.

  4. Barrie Harrop 7 years ago

    Lets see Govt provide a solar package to pensioners if they are serious.

  5. Ben Courtice 7 years ago

    It’s true that the really poor – pensioners, students, underemployed casuals and so on are disadvantaged disproportionately by rising energy prices. Especially renters like yours truly: very hard to get solar panels, solar hot water, double glazing etc!!

    But it’s completely wrong that only wealthy people are installing solar panels. Gillard should know this. It’s been reported in the Age that the biggest solar postcodes are in her electorate, outer suburban, working-class Werribee, Hoppers Crossing, Tarneit and so on.

    http://www.theage.com.au/environment/out-on-the-fringe-solar-comes-of-age-20120727-22zo3.html

    In fact, I’d suspect poor people with some means (not the poorest) have far more incentive to invest in energy saving and solar technology than truly well-off households, who often have enough disposable income that they barely notice the changes in their energy bills.

    • Alastair Leith 7 years ago

      Several of the people I know with solar are house painters and the like with young families and not a cent to spare. They got great discounts on 2 for 1 solar systems at the rebate run-out prices in some cases. I know one of these family in West Heidlburg to be very very cost and cash flow sensitive but they are smart and watch the meter everyday to see the money they are saving and how quickly there couple of thousand dollars investment will be paid off before delivering energy.

      They even make sure they use grid energy in preference to solar energy which is a bit of an upshot of FiTs at scales of >1 for grid energy but someone is using the Solar energy at least and until we’re 90% renewable it probably doesn’t matter.

      So maybe Gillard wants to press the flesh with some Labour heartland “working families” to use the new lingo who have invested modest capital in Solar. And with leasing SolarPV arrangements coming on-line there is zero barrier to entry. Gillard does her best to make it hard to support her with her scripted nonsense doesn’t she?

  6. Gillian 7 years ago

    Oh lord! Can someone tell PM’s dept that Dubbo tops the list of LGAs with rooftop solar!!

    Dubbo – that nest of wealthy households who are cutting their bills by installing solar.

    Or

    Dubbo – that community of sensible folk who are prepared to invest in energy security.

    Dubbo isn’t exactly the North Shore, or Toorak, so I opt for the second explanation.

  7. Sleiman Azizi 7 years ago

    Clearly, green energy is the future, but only if government policy helps to support the private sector.

    I think this is where creative taxation comes into play.

    If the poor cannot afford it, and you are serious about the future, then subsidise their purchases.

    I don’t think governments really care all that much though. I suspect it’s all just a fad for them, something to jump onto while the public seems interested in it.

    I guess we’ll see.

  8. Jo Muller 7 years ago

    It is very obvious, why solar faces so much resistance from power industry and from state governments:
    Because of the merit-order effect (just look it up, I did not know it either one year ago) electricity from solar and wind will be used before electricity from gas and coal. This is reducing the high price spikes during peak times of electricity usage. As electricity is traded very 5 minutes this drop in price costs the traditional power industry and the state governments (=owners of fossil power plants) dearly as these high price is one of the major sections of their income.

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