Feed in and reap the benefits
Monday, April 14, 2008 at 03:24PM I get a lot of questions about why solar power is so expensive and when it will get cheaper. There are so many people who want to install solar power but are 'scared' off by the price tag. There is some important news that means solar power is going to become a lot cheaper and will be subsidised by the government.
Canberra is moving towards becoming the nation's solar capital with the introduction of a feed in tariff. So I thought I would take this opportunity to explain about feed in tariff's and how they will affect solar power in Australia. So here goes:
When we use electricity, we are charged according to a usage tariff or cost per kWh e.g. 14c/kWh. Most energy providers currently pay the same rate to customers that have a solar photovoltaic system for electricity fed back into the mains grid. The principle of so-called feed-in tariffs is that energy providers pay a premium rate for electricity generated from renewable sources.
There are currently feed-in tariff regulations in place in more than 40 countries around the world. Although the idea originated in the United States, it has been used most successfully in Europe and is finally being introduced in Australia .
Australia has among the best solar resources in the world yet take-up of solar is lagging way behind other developed countries. This is largely due to the abundance of cheap fossil fuels available locally and artificially low energy prices. Conversely, the solar industry in Germany has been a huge success thanks to feed-in tariffs.
Due to the feed in tariff in Germany over 1,500MW of solar power was installed in a five-year period. By comparison, Australia has just 7MW of grid connect solar capacity – less than 0.5% of that in Germany! There are now more than 1.3 million in operation. Australia has the potential to become a solar nation, and it is the introduction of feed in tariffs will lead the way.
In Australia there is currently a feed-in tariff in South Australia of 2:1 since October 2006. Although this was a landmark initiative, the tariff is disappointing since it only applies to excess electricity fed to the grid and not total production. In reality, this means that very few homeowners will see any benefit.
However in May 2007, the ACT announced its intention introduce a 3.88:1 tariff on gross renewable energy production. This mean that for every dollar spent on electricity in the territory, solar system owners will be paid almost four times as much for feeding the same amount of electricity back into the grid. This is of the order of feed-in tariffs already in place in Germany and Spain, and would transform the solar industry in Australia.
The intention to introduce a feed-in tariff for renewable energy has also been announced in Victoria and in Queensland (July 2007), although both states are yet to propose the rate.
Watch this space!!
It is an exciting time for solar power in Australia!
Check out Todae's solar power packages!
Cheers,
Lee.
Reader Comments (3)
Wow Lee, I had no idea that Germany had so much domestic solar power – you would’ve thought I would’ve noticed when I travelled there. I guess I will have to look out for it next time!! Let's hope NSW introduces a tariff ASAP!
As far as I'm aware the feed-in tariff in SA was only legislated to begin in mid 2008.
When one compares Australia's miniscule solar energy industry in comparison to overseas countries such as Germany, the government's introduction of a means test on the rebate because as Mr Garrett explained 'the industry was over-heating' is ludicrous if not farcical!