Victoria’s Solar Panel Rebate Scrutinised

Was the Victorian solar panel rebate necessary? SolarQuotes founder Finn Peacock suggests it’s had no effect on solar demand in Victoria.

Transcript begins:

Today, I’m going to talk to you about the Victorian Solar Homes Program, aka the Victorian solar rebate. Or as we like to call it in the SolarQuotes office – the Victorian solar fiasco. Now, I don’t know if you remember about this scheme, but it kicked off two years ago. Almost exactly two years ago is a long time in solar, but I’ll give you a reminder of exactly what happened.

The Victorian State Government decided they wanted to give their citizens a special solar rebate. It was an election promise, so they felt they had to do it. And the Victorian Auditor General’s office has just released a rather scathing report into the whole boondoggle. It is a $1.3 billion scheme and the Victorian Auditor General’s office found that they never made a business case for it. And two years on, they still haven’t got a proper business case for it.

Now, just to recap exactly what happened.

A Disastrous Start

The Victorian solar rebate, when it started for the first few months, was an absolute disaster for the solar industry. Why? Because the design of the scheme, which was super-rushed – as the Victorian Auditor General has pointed out – was nuts.

What they did was they were going to have 3,333 rebates available for Victorian homeowners of $2,250 extra off their solar system – on top of the federal rebates. What happened was they released all those rebates towards the beginning of the month. And once the rebates were snapped up, everyone in Victoria stopped buying solar because they didn’t want to pay $2,250 more for their solar system. And they waited for the next month’s allocations.

So in July 2019, they released 3,333 rebates. That was fully subscribed in three days. Three days into the month with 28 days left to go, everyone stopped buying solar in Victoria. Victorian solar companies ground to a halt. Their income went to zero, unless they were really, really good at getting rebates – which most of them weren’t. They’re installers, not rebate grabbers!

So what happened the next month? Another 3,333 rebates were released. These were snapped up in 90 minutes. So 90 minutes into the month, boom, the solar industry grinds to a halt. So they decided to go to a fortnightly release and release more. Now the demand is really, really wound up. 5th of September 2019, they release 6,500 rebates. They were snapped up in 14 minutes. No one bought solar for another two weeks until the next allocation came along – 3,500. They were snapped up in 18 minutes.

As you can see, it was an absolute cluster-f***k.

I can tell you now that good solar companies folded. And I can tell you now that some solar [business] owners were either really stressed and some were suicidal. It was absolutely awful economically and emotionally – it was a disaster.

Anyway, the good news is it’s finally sorted out. They’ve finally matched demand with supply of the rebates and everything’s okay.

Was The Rebate Necessary?

Two years ago seems like a long time, but then this Victorian Auditor General’s report came out and well, it’s really interesting. One of the most interesting paragraphs that came out – for me at least  – it was the Department of Premier and Cabinet that designed the system. The DPC did not identify any other option to address the identified need to reduce Victorians’ electricity bills and carbon emissions. DPC also did not consider the “do nothing” option.

Now, that’s really interesting because in the SolarQuotes office two years ago, when this was announced, we were all scratching our heads because we’re pretty much on top of solar interest in Australia in all the states and territories. And the Victorian solar market was really buoyant.

We were thinking it does not need an extra rebate. People in Victoria, they can see the value. They’ve got big bills. They’re going to buy solar anyway.

But it was too hard for the department of Premier and Cabinet to do. So I did it in 10 minutes. You can pull the numbers of installed solar systems off the Clean Energy Regulator’s website. It takes about five minutes and that’s exactly what I did. So I made a graph.

This is how solar installations have grown in every state and territory to 2020. Like I said, it took me five minutes to pull it off the internet, put it into Excel and graph it.

Now, if the Victorian solar rebate had increased demand for solar in Victoria, this is the bit of the graph you want to look at – this line between 2019 and 2020 – because that captures all the installs in 2020, which was, for that entire 12 months, the Victorian rebate scheme was running.

So the gradient of that line tells you how much solar sales increased over 2020 compared to the years before. You’d expect the Victorian line, which is the blue one here between 2019 and 2020 to be steeper than the rest.

But look! It’s parallel or even shallower than all the other states. Orange is New South Wales, yellow is Queensland, blue is Victoria, brown is WA and light blue is SA. So it doesn’t matter whether they are relative. The relative position on the graph is basically about population. It’s the gradient of the line you’re looking at. And as you can see, Victoria, if anything, the growth was a bit less than most of the states.

So what’s that graph telling us? It’s telling us, as far as I can see, that the Victorian rebate had no effect on solar demand in Victoria. It was a buoyant market, people are going to buy the systems anyway.

The systems, if it did make them a bit cheaper – which is questionable, didn’t affect how many people took it up because people had big bills, they could see the value. Just like all the other Australians in the other states and territories, the growth trajectory continued anyway.

Now, this is interesting because in the conclusion to the big report, the Auditor General says Solar Victoria is not yet able to report to what extent it has reduced consumer’s power bills and their carbon emissions through this $1.3 billion investment. That’s $1.3 billion of Victorian taxpayers’ money.

Net Value Of Victoria’s Solar Panel Rebate?

So in the near future, you’re going to see an announcement from Solar Victoria. And guess what they’re going to do. I reckon and I’m pretty confident they will look at every rebated system that was sold in Victoria, and they’re going to claim the electricity savings and the carbon emission savings from those systems.

They shouldn’t be able to do that because as you can see by the graph, people were going to buy those systems anyway. So I would like to hypothesize that the net value to Australia and Victoria of the $1.3 billion solar home system [Solar Homes Program] rounds down to zero.