Thursday, April 5, 2012

Riding the Solar-Coaster

AUSTRALIAN SOLAR BUSINESSES have been through so many ups, downs, stops and starts over recent years that the industry has coined its own phrase to describe it: the solar-coaster.

The Federal Government provided the latest dip downward just last week, when without warning it effectively closed the solar hot water rebate scheme four months early. This was a program that helped families ease the strain from rising power bills, cutting the cost of new solar hot water systems by $1,000 and heat pumps by $600. The decision left thousands of staff in the industry with concerns about their future and companies with warehouses full of stock.

Much to the frustration of both consumers and the industry, abrupt changes like these have become all too common, particularly when it comes to programs that encourage people to buy household clean energy technologies like solar hot water systems, solar panels or heat pumps. Incentives targeted at homeowners are vote winners, because they help people to save on their basic living expenses. And they would be a very welcome boost for the industry as well, if governments around the country could refrain from turning the boom to bust with ad hoc decisions that repeatedly leave the industry in the lurch.

The major issue here is stability from state and federal governments, which is as important to a clean energy company as it is to a clothing manufacturer or a brewing company. Can you imagine the outcry if the Australian Rugby League decided to make everyone play the game with a round ball mid-way through the season? But this is effectively the kind of change that solar companies are asked over-and-over to suddenly factor in to their plans. If you want to attract local and international investors, you need to give them a stable set of policies that they can bank on.

Unfortunately stability has been the missing piece of the jigsaw for clean energy. In recent years, sudden changes have been made to solar support programs by state governments in New South Wales, Western Australia and Victoria. Big business is better able to find its way around these policy shifts, as they have more capital at their disposal to cover income shortfalls. For small businesses it's a combination of luck and sheer dogged determination to hang on - if indeed they manage to, which many haven't.

Polls consistently show that around 9 in every 10 Australians want more renewable energy, but this will only happen with well designed and efficient government support that allows businesses to plan and grow and reduce their costs until they are competitive with other forms of energy. We now have a 20 per cent Renewable Energy Target supported by all major political parties, and a price on carbon will start on 1 July this year. These investment-grade policies will form the centrepiece of a national approach to reduce carbon emissions and help clean energy technology become fully competitive with mainstream energy.

But a carbon price on its own it won't be enough to drive a range of otherwise sensible energy efficiency and carbon abatement activities in the short term. We still need a range of complementary measures - such as support for household solar power or solar hot water units - until we are further down the road and their costs have reduced a little further. In many cases these programs already exist, and it is premature to be slashing schemes like the solar hot water rebate that are actually doing something to cut power bills, reduce emissions and support jobs.

While we are all looking forward to a time when clean energy incentives and subsidies are not required, we are not there just yet. So while a bit of a policy trim around the edges is fine, let's leave the pruning shears in the shed until we can start seeing and measuring the effects of a carbon price on our daily lives.


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