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Utilities 'seem hypocritical over solar power complaints'

21st Nov 2012

The stance of utilities providers as to why they are lobbying against solar power subsidies could be seen as hypocritical.

Or so claims Giles Parkinson, editor of Renew Economy, who argued that utilities' calls for incentives to be reduced because of rising electricity prices are in contrast to their position regarding the popularity of air conditioners.

The expert noted that while energy providers have been clambering over themselves to lobby the government about solar incentives, they were conspicuously quiet regarding the spread of air conditioning.

And why is this? Giles believes it's because solar power reduces the demand on the National Electricity Market, whereas air conditioning units do the opposite. 

"Rooftop solar PV poses a greater threat to the business models of the utilities because it gets behind the meter," he explained.

"They are simply not able to deal with the absence of growth."

He stated that there has been a boom in air conditioning unit installations across Australia in recent years - adding $7,000 to the cost of the National Electricity Network for each 1.5kW system.

And this expense is passed on to customers - even those without the technology.

Highlighting the recently published Energy White Paper, Giles pointed to the fact that regardless of whether a household has a unit installed, it will cost them $400 a year to subsidise people who do.

Statistics from a Productivity Commission report found this represents the equivalent of approximately $10 an hour for all customers.

Parkinson said utilities companies are feeling increasingly threatened by the ability of solar to bypass electricity demand from the market, leading them to raise fixed charges or refuse connections.

"The energy utilities will have to cope with this paradigm shift at some point in time, but right now they are just not prepared to do so," he stated.

His remarks followed the recent announcement that the federal government will be withdrawing the Solar Credits mechanism six months early.

Giles admitted it was a bit of a surprise for the industry - especially in the midst of the Renewable Energy Target review.

It could be a worrying trend for the renewables sector if utilities providers are able to exert so much pressure on the government to make these decisions, he stated, with this one in particular seeming very arbitrary.

The justification was that it would reduce electricity bills by up to $100 million next year, Giles added, but the mathematics behind this reveals this is just $10 per household.

Posted by Mike Peacock

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