Do we still need a Solar Feed-in Tariff in Australia?

I got asked a question yesterday to which I was about to reply when my self-preservation kicked in; ‘hang on, I need to be better informed before I answer this – I could be wrong’. The question was ‘How can PV attractiveness in Australia increase?’ asked by Richard Wykes of Catylis Properties in Sydney.

I’d just posted this graph which shows that Australia is sitting on a solar gold mine [as always just click image for source and credits] – see Oz in top right;

solar-pv-attractiveness-top-countries

I was about to launch in and respond with ‘make feed-in tariffs reliable and valuable’, but I reached out for a second opinion from someone who really knows their stuff in this field, Blair Walter with whom I work.

And Blair’s answer has somewhat changed my mind.

I’ve copied it below with only minor paraphrasing to keep the size of the post down;

  • Why do we need to make it more attractive at all? Solar is making huge strides forward and PV is currently less than half the cost of wind power in Australia on a levelised cost of energy basis.
  • The costs are still dropping [see the graph below] and efficiency is increasing so it will only be a few years before solar starts to be a major part of our energy mix.
  • Solar already has some big advantages like scalability, versatility (can be mounted on rooftops, can be integrated into building materials etc), correlation with demand profile, no moving parts, long life etc.
  • Supporting solar through specific feed-in tariffs or other mechanisms would just increase costs to consumers unnecessarily [check out this post on Renew Economy for a current example in Queensland]
  • Pure economics and demand & supply are going to accelerate solar without additional support.

This graph that I reposted from REnewEconomy highlights how much the costs have come down;

price-of-solar-drop-2008-80-percent

I don’t profess to be an expert on the feed-in tariffs issue so I’m going to leave that alone, and instead add another dimension or two to the answer;

  • As the feed-in tariffs in Australia continue to fall and perhaps disappear [and keep in mind this was always the plan – to bootstrap the solar industry], microeconomics says that people will start looking for ways to avoid rising utility costs – and will look harder at the option of going off-grid altogether.
  • As more people disconnect from the grid, those remaining will have to shoulder more of the network costs, hence their own business case for going off-grid improves… classic death spiral for the network.
  • But we need networks in order to distribute the energy around, so I think the real action will be in how the network evolves – either the existing grid running on 100% renewables, or localised [distributed] grids supporting local communities.

In addition to the financial equations and network machinations I also think there’s something exciting and poetic in the shift we’re currently seeing towards solar. It’s simply millions of Australians just getting on with it – leadership from the grass roots. And the push by the newly formed Solar Citizens may just force the issue to a head anyway.

So now I don’t think we need feed-in tariffs to make solar attractive to consumers, but perhaps we do still need them if we want people to stay connected to the grid.

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