Australia: scrapping of carbon tax unlikely to stop solar

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Since being elected last September, Australia’s conservative coalition federal government has attempted to wind back a range of climate change mitigation measures. A fractious Senate has largely thwarted these moves, however last week the government managed to repeal the county’s carbon tax regime.

“What’s gone today is not a policy to reduce emissions, what’s gone today is the world’s biggest climate tax,” said Prime Minister Tony Abbott after the repeal legislation was passed. “We’re certainly not going to do anything that damages our economy or that puts our people or our businesses at an unfair competitive advantage.”

The carbon price was seen to have sent an important price signal to electricity markets and foster the transition towards renewable energy. Its repeal therefore may have worried some that the breaks will now be put on solar PV Down Under. This, according to John Grimes the CEO of the Australian Solar Council, is not likely to occur.

“The carbon tax in its own right was not acting as a major driver for the take up of renewable energy and solar PV in particular,” Grimes told pv magazine. “Where it was set, the carbon tax by itself wasn’t doing enough – in terms of electricity pricing – to really move people [towards PV]. But I think that combined with rising electricity prices in general a lot of people to thought, ‘what can I do to slash out power bill?’ And of course solar PV and solar hot water are the obvious answers to that.”

Role of the RET

Where policy is remaining a driver for PV growth in Australia is the Renewable Energy Target (RET). This mandates roughly 20% of Australia’s electricity is to come from renewable sources by 2020. Under the RET, there is a support scheme for small-scale solar – which reduces the up front cost of an array. As the RET looks likely to be maintained until 2016, Grimes said that PV will continue to grow.

“The reality is that families, self-funded retirees and single parents still need to get over the capital hump in terms of investing in PV technology,” said Grimes. “The RET plays an essential role in just lowering the bar slightly and allowing more people to get over that upfront cost.” Grimes said that the Australian Solar Council has been very active in lobbying key Senators to support the RET.

Uncertainty regarding the RET has however put the breaks on larges scale solar in Australia. Grimes said the uncertainty means that it is unlikely any potential offtaker will sign a PPA to see a utility scale project developed. There is currently a review into RET being led by a climate change skeptic and former fossil fuel industry executives. It will report directly to the office of the Prime Minister, who himself has previously referred to anthropomorphic climate change as being “crap.”

700 MW of PV in 2014

With a number of large scale PV projects being built out, combined with the strong residential and fast-emerging commercial rooftop sectors, Grimes said that he expects around 700 MW of PV capacity to be added in 2014.

“In the first six months we saw 364 MW [of new PV capacity installed],” said Grimes. “Given that today we have the numbers [in the Senate] to stop the RET from being repealed, that saves the small-scale scheme and there is no reason that we shouldn’t be on track to 700 MW this year.”

The government has also announced moves to do away with the renewable energy bodies such as the Clean Energy Finance Corporation, the Australian Renewable Energy Agency and the Climate Change Commission. As Grimes said, there are still insufficient numbers of Senators supporting these moves for them to go ahead. The Australian Solar Council reported that it is conducting political campaigns in key marginal electorates to endeavor to ensure that remains the case.