What really killed NSW solar?  

Giles Parkinson at The Climate Spectator has a look at the factors behind cutbacks to the NSW solar feed in tariff program - What really killed NSW solar?.

It seems that the massive take-up of rooftop solar under the excessively generous NSW feed-in tariff was not the middle class indulgence that it was thought to be.

The review into the Solar Bonus Scheme prepared for the Keneally government by the Department of Industry and Investment dismisses the perception that solar panels were a privilege reserved for affluent homeowners in Sydney’s northern and eastern suburbs and the inner west.

It turns out that the greatest demand in Sydney for solar PV under the scheme came from the western and south-western “Aussie battler” suburbs of Prospect, Seven Hills, Mt Druitt and Liverpool.

And the highest numbers per locality were recorded in country areas – Including Lismore, Coffs Harbour, Taree, Port Macquarie, Ballina and Gosford in the north, Bega in the south, Armidale and Wagga Wagga further inland, and in numerous localities in the central coast. The country areas had particularly large appetites, ordering systems of an average size of 2.8kW, compared to 1.9kW in the city.

And while some social service groups had complained about the inequality of the scheme, the report noted that the cost of solar panels had come down so quickly in the last 12 months – from $12,600 per kilowatt to $6,000/kW (they had been $17,000/kW in 2001) – that installations had been offered for zero up front cost by some retailers. Clearly, the battlers in the mortgage belt were quicker to seize a bargain that the toffs in the inner suburbs.

The report also reveals that the Keneally government appears to have ignored the report’s advice that a low cap on rooftop solar would cause the state’s solar industry to come to a shuddering halt.

The report recommended a cap to keep a lid on costs, but warned that placing too low a cap would create a boom-bust scenario, and a heavy loss of jobs.

The Keneally government chose a cap of 300MW – allowing just 100MW of new solar rooftop to be installed at the drastically reduced tariff – a target that its own bullish forecasts predict could be met within 12-15 months. ...

By the report’s own estimates, the 50MW that had been installed by June, 2010, had created 2,500 jobs, with 10 jobs created for every 1MW in manufacturing, 33 in installation, 3-4 in sales and marketing, and 1-2 in research. On those figures, the Keneally government’s decision to place a cap of 300MW would cost 15,000 in future installation jobs alone.

Given the upcoming election, the demographics of the scheme, the identified job sacrifices, and the fact that the NSW Labor government must now explain why new owners will now pay more for coal fired power than they will receive for emissions-free solar, this may have been a more heroic decision than was first realised.

The NSW government’s decision on Wednesday to drastically cut the Solar Bonus Scheme will be disastrous for NSW’s renewable energy industry. Thousands of jobs will be slashed and hundred of megawatts of installed solar capacity sacrificed.

Before making its surprising decision, NSW should have looked to the renewable energy policy progression of Ontario, Canada for inspiration.

Ontario is fast developing into a renewable energy powerhouse. One year after the region introduced North America’s most advanced renewable energy feed-in tariff (FiT), the region has 15,000 MW of renewable energy projects in the pipeline, and is on its way to meet its target of 50,000 jobs in three years.

Ontario’s advanced FiT program covers large and small wind & solar, mini-hydro, landfill gas, biomass and biogas, and is linked to its commitment to shutdown its dirty coal-fired power plants (7,500 MW capacity before the orderly shutdown commenced) by the end of 2014, and also includes bonus payments for community-owned renewable energy projects.

Thousands of residents and organisations have already taken advantage of the scheme and due to the requirement for all wind and solar projects over 10kW to contain a minimum amount of goods and services from Ontario, thousands of jobs have already been generated across the region, as solar manufacturers and wind farm developers set up operations in Ontario.

What are advanced renewable energy FiTs? According to a 2001 European Court ruling they are not subsidies because they are not funded from government revenue. Instead they are a powerful policy mechanism that places an obligation on electricity utilities to make payments per kilowatt-hour for all the electricity generated by a renewable resource based on the cost of generation plus a reasonable profit (much like coal and gas fired power plants).

Advanced renewable energy FiTs are the most successful and egalitarian mechanisms to encourage rapid development of renewable energy technologies because they provide investors with the transparency, longevity and certainty they need to invest.

Advanced FiTs have been implemented in a number of countries including China, Brazil, Slovenia, Germany, Spain, Malaysia, Vermont, South Korea, Switzerland, Taiwan, South Africa, Croatia, Italy and many others.