Australia's solar paradox

After a 57 percent rise in electricity prices since 2008, and a 12 percent rise on the cards for 2012, Western Australian households are a good example of the difficult situation facing many Australians. However, with electricity bills growing, demand for photovoltaics has fallen off.

The rising electricity prices themselves are a result of a number of factors. Ray Wills, the chief executive of the Sustainable Energy Association told pv magazine that these factors include a lack of investment in electricity infrastructure in the past and rising fossil fuel prices. A third decisive factor has been that "Governments all around Australia are stepping forward to having ‘cost reflective pricing’".

However, despite subsidies for fossil-fuel-generated electricity being reduced, the same has occurred for state-based programs for solar. Many states have wound up, or vastly reduced feed-in tariff schemes in a matter of months. Simultaneously, the Federal Government has reduced its Renewable Energy Credit (REC) multiplier scheme creating a "perfect storm" and causing demand for solar to dry up.

The Sustainable Energy Association has observed enquiries to solar installers plummeting. Wills, speaking from the Solar International Energy Week trade show in Singapore, confirmed the numbers. "We’ve had very big suppliers who have said that they previously had 80 to 90 phone calls a day, now they’re saying that they’re having eight or nine phone calls per week." The impact on installations of a larger nature has been the most pronounced.

Grid parity realities

Additional to this puzzling situation is that retail grid parity appears to have occurred in Australia under three scenarios advanced by Wills and other renewable energy analysts. Earlier in the year, Andrew Blakers from the Australian National University argued that given continuing Federal Government subsidies and the additional costs imposed by a carbon tax, grid-parity has occurred right around the country.

Wills is less bullish, but still sets out two clear scenarios where grid parity has occurred Down Under. The first is remote communities, such as homesteads, indigenous communities or isolated cattle stations, that rely on diesel-generated electricity, photovoltaics is "certainly" a cheaper energy source.

The second scenario is for small installations in the west and east-coast population centers, where those under 1.5 kilowatts (kW) qualify for the Federal Government RECs. In this situation also grid parity is a reality today for the vast majority of Australians. Wills said, "If you put 1.5 kW on your roof, you will save even if you’re not going to export."

Low income schemes

With rising electricity prices, governments are also faced with a problem in that some low-income households are faced with bills that could perhaps outpace their budgets. There is also an opportunity here for photovoltaics, argued Wills.

If solar installations can be provided for low-income households or for state-funded households, a reliance on ongoing subsidies would be avoided and fossil-fuel electricity subsidies further scaled back.

"That’s the policy we’ve long supported – the idea that solar panels are used in place of the subsidy. Households that are facing disadvantage through electricity pricing, because of their own economic situation, can be provided with their own solar panels that provide them with renewable energy that is without cost once it’s installed."

Wills did admit that little progress is being made with advocating initiatives such as this with Australian governments at this stage. "To be honest, I don’t understand why not, it’s logical – it’s a very arguable logical case – but the measures aren’t being taken."