For those of us who work in the solar industry we have become accustomed to a life of ups and downs. With our industry in Australia being tied to government rebates, the majority of our sales strategies focus on speeding the customer through the sales process by focusing on impending rebate reductions.
However this week something unique happened – the solar industry was given news that within 2 weeks, the current Feed-In Tariff of 44c per kilowatt hour (kWh) would be reduced to a meagre 8c – below the retail price of electricity. Queensland’s high FiT was responsible for seeing almost a quarter of all installations occuring in the state between 2011 and 2012.
With less than 6 months into office, the new premier of Queensland, Campbell Newman was quick to axe the FiT, with one minor detail – all applications received before the 10th of July would be given one year to complete the installation. Now Campbell Newman is not known for his good will towards anything green, but he may have inadvertently created one of the biggest booms that the Australian solar industry has ever seen.
Over the past two weeks Energex (who makes up approximately ½ of the Queensland grid network) reportedly received over 75,000 applications for grid connection. According to RenewEconomy this is equivalent to around 12 applications per minute and 150MW of new capacity (at an average system size of 2kW). The graph below demonstrates expected solar installations for Australia. As the graph shows, the boom created in the past 2 weeks has resulted in applications for over two thirds of the expected installations being received in 2 short weeks.
To give you a bit of background: In July 2008, the Queensland Government attempted to boost interest in small scale solar power applications by creating the ill fated ‘Solar Bonus Scheme’. At the time of enactment of the scheme, the cost of solar systems made them prohibitive to anybody but the most ecologically minded.
Cut to 2012, and massive reductions in the wholesale price of solar, combined with an increased interest in energy (and money saving) initiatives has led to an unprecedented uptake in the number of solar installations across the ‘Sunshine State’.
According to RenewEconomy, put in a State context, with the huge number of applications received in the past two weeks, QLD Premier Newman has avoided the need for roughly 3.9TWh of coal fired energy over the next 20 years. At a conservative energy cost of $0.20c kWh, Queensland electricity consumers just started down the road to savings of approximately $39Million dollars per year.
If anything we thought that the State Government would have learnt from the boom / bust cycle created by the National solar rebate scheme, which causes surges around June each year as it winds back progressively. Many in the industry are of the opinion that if the Government had chosen to progressively wind back the FiT then the industry would have a better chance of achieving sustainable growth.
For the next year Australian solar companies will continue to focus on clearing their extensive backlog of installations, with some companies stating that this may take up to 6 months. On the upside, the recently initiated carbon tax is expected to increase energy costs by a further 25%. However, many in the industry are still forecasting massive job losses as the industry recovers from July’s insanity.
The lesson learnt has been simple, boom and bust rebate schemes do not create positive outcomes for industry or government alike. It’s time that our governments focus on creating sustainable renewable energy incentives for the industry to have any chance to compete with fossil fuels.
Image Credit: Martin D. Vonka/Shutterstock