Solar subsidies: who needs them?

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Continuously falling PV prices mean that, by the end of next year, subsidies for solar will no longer be needed to drive rooftop installations.

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The reduction of a solar feed-in tariff in Queensland announced by Premier Campbell Newman is a rational, timetabled change to the feed-in tariff structure.

The Premier has offered forward notice to the industry and customers, allowing forward planning and a 12 month installation timeframe for installations, and provides solar businesses the opportunity to make structural adjustments in an evolving market.

The continuously falling prices of solar photovolatics mean that, by the end of next year, even the small remaining subsidies for solar will no longer be needed to drive solar installations – it will simply make financial sense for a home or business owner to install solar than to but electricity from the grid.

With a carbon price being added to grid based electricity generation, the sunshine falling on your roof becomes even more valuable as of 1 July 2012.

The reduction of the feed-in tariff means the price being offered for electricity exported from domestic solar generation falls below parity price of imported energy – the logical response for solar installation will be for customers to move to smaller solar panel installations that meet self-supply demand rather than large installations on a roof that are geared to export.

This will, in the long term, potentially provide a better structural outcome for the Queensland grid – and will likely further enhance electricity quality and reliability throughout, and continued installation of solar will always amount to lower network costs through upgrades to poles and wires, and will avoid the need for investment in new fossil-fuel based generation.

Better still, solar power will still deliver electricity to their homes direct from their roof tops that will reduce the household electricity bill, and also reduce costs pressures on electricity networks keeping overall prices down too.

For anyone with a mortgage, savings from installing solar redirected to mortgage repayments can take years off of your mortgage, and any business on standard business tariffs will find that the price of electricity from solar panels will prove much cheaper.

Ray wills is a Board Member and Chief Adviser of the Sustainable Energy Association

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  1. Tim 8 years ago

    This means good solar installers will be optimising their customer’s installations to maximise self-consumption and minimise the grid-export (energy storage will come into play here eventually).

    The next point of contention will be how to pay for the network up-keep if less and less electricity is actually purchased…

    • Scott 8 years ago

      “energy storage will come into play here eventually”

      That’s what I hope to see in the next few years. Economical battery storage to extend the PV capacity factor into the evening hours.

  2. Robin Pomfret 8 years ago

    Ray that’s all well and good but what about the huge Subsides on Big Oil ,Gas and Coal.
    Long established industries that still are subsidized I believe to the tune of eight to ten times that of wind and solar.
    Don’t you you think that a new green clean industries need a help to develop, not just the big powerful polluters?

    • Ray Wills 8 years ago

      The answer isn’t to subsidise renewables more but to subsidise fossil fuels less – when the perverse subsidies are removed from the energy market, renewables will really shine (and fossil fuels blow).

      The world committed to remove fossil fuel subsidies last year – see the SEA reporting on the matter

  3. Jeremy Waller 8 years ago

    Yes, installing smaller systems to minimise importation of grid energy and, with discipline, paying off ones home mortgage. May I suggest that owners of larger systems, after a suitable pay back time, modify their systems to use battery storage system when the export price is less than the ” socket price”. Here are possible components: SMA Sunny Island Mdel 4248, and a compatible Sunny Island, compatible battery charger.

  4. Jim James 8 years ago

    Ray, you do know that the Qld Fit will go from 44 cent to 8 cents?
    I would have thought the best that could be said about this, is ‘off grid’ would now look very good.
    If you have to pay 90 cents aday(as per my state of Vic) just to be connected to the grid, plus 29 cents per kwh to get back your own exported electricity, why stay?
    An honest price for a FIT would be 16 to 20 cents at the low end.
    But then if you are trying to sell a coal mine and generator, then it may be a good price!

    • Ray Wills 8 years ago

      Hi Jim – yes – the rate only falls for new systems, existing customers already receiving a FiT keep their 44 c. Therefore new customers installing solar for the first time should rationally look at an installed system size that only delivers self supply, not export – the electricity generated on their roof displacing electricity purchase is then in effect a 1:1 tariff based on the avoided purchase/self-supply of electricity.

      Storage will make sense when the cost of delivered electricity from storage is down at an equivalent cost of 25 c/kwh or less – at the moment electricity from storage is in the ball park of 50 c/kwh. Those getting a FiT of 44 c under the existing scheme are still marginally better off not storing, but exporting and buying back.

      • Brad 8 years ago

        It’ll be hard for many homes to use the energy they generate while they’re at work during the day, while it is still very valuable to the grid – especially in summer.

        I can’t see how a FiT lower than the retail rate makes any sense – especially from an ‘investment certainty’ point of view.

        • Jeremy Waller 8 years ago

          One may use a timer to switch on devices like washing machines, dish washers, seldom used freezers, swamp AC’s (if the system is large enough), device battery chargers etc. this will help soak up excess energy that would be otherwise exported to the grid.

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