Solar Subsidies : Let’s get the facts straight

Despite running a popular Solar Power website, whose revenue is seriously helped by generous Federal and State solar subsidies, it may surprise you to learn that I’m not a huge fan of government subsidy in any shape or form. Mainly because I have worked for the government and seen how inefficient they really are. Trust me it is frightening.

I would be happy for the Feds to completely scrap their solar subsidy, called Solar Credits, and let the economics of small scale solar stand on its own merit through innovative finance schemes designed by innovative Solar Installers.

Here’s an example of how unsubsidised solar could work – from the Australian Financial Review no less:

(Yes – it is a bit naive in its simplicity and currently battery backup systems are more expensive – but you get the idea…)

However, if the Feds are gonna scrap solar subsidies then it comes with one condition: scrap all the Federal subsidies for fossil fuels. Fair dinkum?

Here’s an illustration of total renewable subsidies vs. total fossil fuel subsidies courtesy of the ACF:

The black box is the size of fossil subsidies compared to the green renewable subsidies.

So come on pollies, scrap the solar subsidies, along with all the fossil fuel subsides.

I’ll bet that the Solar Entrepreneurs and private companies will out innovate those, complacent, stuck-in-the past, besuited fossil fuel execs every time.

Bring It On!

And for God’s sake let’s place the solar subsidies in the context of all the other subsidies that this bloated government dishes out.

Feed In Tariffs

And what about Feed In Tariffs paid for by the state governments?

Here’s what should happen in my humble opinion.

Force the Energy Retailers to pay the “wholesale price” to customers that export their solar electricity to the grid. This is only what they would otherwise pay the coal generators for the same kWh. That will provide about 7 cents per kWh.

Force the electricity distributors to pay another 7c to thank the solar household for reducing the amount of infrastructure they need to build to get power from their power stations to the cities. (Because the solar energy is generated close to the point of use – it helps to take the strain off the system on the hottest days – and these distribution costs are about 7 cents per kWh).

Finally – and this is not gonna be popular – put a levy on the purchase price any Air Conditioner that is less than 5 star efficient to cover the other 7c. Did you know that what ever amount you pay for that air conditioner, the (massively subsidised) generators have to invest that much again in generating capacity to meet the demand for the energy guzzler?

(And don’t get me started on the fact that anyone who air conditions their home before putting simple eaves on their N, W and E facing windows is being economically insane anyway)

Add all that up and you can easily afford to pay 21c per kWh as a NET, national feed in tariff. And if you are smart about your energy consumption, you can buy a solar system with the right finance package and most likely be cash flow positive almost immediately.

Too Easy?

About Finn Peacock

I'm a Chartered Electrical Engineer, Solar and Energy Efficiency nut, dad, and founder of My last "real job" was working for the CSIRO in their renewable energy division.

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