The subsidisation of home solar systems in Australia has been a “policy mess” according to a new report, with capital costs outpacing benefits by in excess of $9 billion.

A new report claims that large-scale government subsidization of household solar systems has come at immense cost to taxpayers and vastly outweighed any benefits.

According to the report by the Grattan Institute the total cost involved in the creation of over one million home solar installations around the country has been $9 billion greater than any benefits accrued.

The Grattan Institute calculates that the capital cost for the installation and maintenance of home solar systems has been $18 billion since 2009, as compared to $9 billion in benefits from GHG reductions and diminished use of conventional power sources.

The authors of the report contend that Australia should have followed the lead of other countries in directing subsidies towards commercial and large-scale solar instead of home installations.

Their calculations indicate that the 1.4 million solar systems installed around Australia have achieved a reduction in greenhouse gas emissions than is less than 10 per cent of that needed for Australia to meet its 2020 reduction target of 5 per cent as compared to 2000 levels.

“Australia could have reduced emissions for much less money,” Grattan said. “Governments have created a policy mess that should never be repeated.”

The report said that government policy has distorted the economics of rooftop solar installation, with individual households reaping the rewards of incentives that “have made an uneconomic decision financially viable.”

The rigid nature of electricity distribution charges has also meant that the benefits enjoyed by households equipped with solar systems comes at the expense of those that do not, with the later essentially subsidising usage of the network by the former to the tune of more than $14 billion.

Distribution costs are levied based on the average power usage of a household, so solar homes pay lower network fees because they use less electricity from the grid. They actually place just as much stress on the network at night, however, when photovoltaic panels cannot harvest energy.

The report further notes that it will soon become economically viable for homeowners to install solar power systems even in the absence of subsidies from the government, due to ongoing declines in the cost of photovoltaic panels and energy storage technologies.

Despite its scathing assessment the institute does not advocate annulling the small-scale solar scheme prior to its scheduled conclusion.

“We’ve got it now and we should just let it run through to its completion,” said Tony Wood, energy program chief, Grattan Institute. “Don’t continue it beyond 2020. Don’t replace it with anything else.”

  • Sounds like sour grapes. Do they account for the fact that solar owners have helped the government avoid a major upgrade of the Port Augusta power station? Do they account for the fact that solar owners are responsible for the maintenance of their solar generator and not the power companies or government? Do they place any value on the fact that since the introduction of the solar scheme we have suffered no blackouts? Sounds like a load of right wing BS to me….

    • "Do they account for the fact that solar owners are responsible for the maintenance of their solar generator…" Excuse me??? Do solar owners maintain the "poles and wires" that they feed into? I must have missed something!

    • "Do they account for the fact that solar owners have helped the government avoid a major upgrade of the Port Augusta power station?" How is this possible when peak demand occurs after 5pm and solar output is effectively zero? See demand graphs available on AEMO site. Add to that the cost of upgrading networks to handle voltage instability caused by solar feed into the network. Add to that the standby fossil fuel generators to support the solar when the clouds move in. All real costs passed on to the consumers.

  • Haven't read the report but I would like to know if a full life cycle assessment was done or just the six years of benefits from 2009 to now.

    They are probably right in that the same amount of money invested in large scale solar would have been a much better investment as it would ahve required a co-odinated approach to network infrastructre to bring the power from remote sites to the grid.

    I suspect that there is a tipping point out there somewhere where homes are charged network costs based on there demand capacity rather than the actual consumption. With increasing use of smart meters, already installed in solar PV homes, this shouldn't be too hard, this billing arrangement shouldn't be too hard. The grid has nothing to do with GHG's so greenies can't complain if the price goes up for solar homes who are just as dependent ont eh grid as anyone else.

Perfect Hire (expire April 30 2018)