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Debt-ridden home owners can’t justify solar; but SA, and Vic feed-in tariff may change pattern

Posted by gmarkets on 26 September, 2007

At least two state governments planned to adopt “feed-in tariffs”, which increase the rate home owners are paid for producing electricity from solar panels, reported The Sydney Morning Herald, (17/4/2007, p.12).

• South Australia announced a plan to double the rates solar users are paid for generating surplus power;

• the Victorian Government had also introduced legislation Parliament was expected to extend existing feed-in tariffs for wind power to solar from next January.

But NSW no hurry to help home solar: The NSW Minister for Energy, Inn Macdonald, says he prefers to let the market decide which types of renewable fuels to use, “rather than the Government picking winners”. He says that the State Government requires that 15 per cent of electricity used in NSW to come from renewable sources by 2020.In Australia, solar is the renewable power that never grew up. Solar barely registers in figures from the Australian Bureau of Agricultural and Resources Economics figures on how electricity is made. Of the nearly 8 per cent of Australian electricity generated by renewables, 6.5 per cent is hydroelectricity 0.8 per cent is bioenergy , wind accounts for 0.6 per cent and less than 0.1 per cent is generated by solar power. The rest of our power is coal-fired electricity, which, and compares poorly to countries such as New Zealand (mostly hydroelectricity), Norway (where renewables account for a third of electricity generation) and Iceland (three-quarters).

$9,000 – $40,000 to install: The problem is the cost of installing a grid-connected solar system – between $9,000 and $40,000, depending on the size of your house and family. Even when you take into account the maximum $4,000 federal rebate, it’s an investment many ordinary, debtridden home owners can’t justify.

High silicon costs: The price tag is inflated by the cost of producing refined silicon (which is also in demand for semiconductor manufacture in the electronics industry), which accounts for about 40 per cent of the cost. Most estimates show it takes between 20 and 30 years for a grid-connected solar system to “pay for itself” – that is, to recoup the initial outlay through savings made compared with existing bills.

Only 30,000 Australian households: As a result, only 30,000 Australian households – out of 8 million – have installed solar panels. Apart from reducing the up-front cost of the systems one of the best ways to increase uptake would be if governments changed the electricity pricing structure, says Duncan Macgregor, of the solar hot water and solar panel installer Going Solar.

Case for solar feed-in tariffs: At present, electricity retailers such as Origin Energy pay people with solar panels about the same rate for feeding surplus solar-generated power back into the grid as they charge for coalfired electricity. This is despite the fact that they on-sell solar-generated electricity – branded GreenPower – at a premium to environmentally conscious consumers. The economic story of solar hot water, however, is much more attractive to the average home owner.

Free hot water for up to 10 years: A solar hot water system costs up to three times more than a gas or electric set-up but, at about $4000, it is still much more affordable than solar electricity. Because of the money saved, a solar hot water system should pay for itself “within five to 10 years”, says Stephen Kranch, the national manager of Solahart. And because solar hot water tanks usually last 20 years, installing a solar hot water system can mean free hot water for up to 10 years.

Save money, go for solar hot water: “The consumer should look very positively at solar hot water. It makes economic as well as environmental sense,” says Ian Lowe. The Business Council for Sustainable Energy says the number of Australian households buying a solar water heating system more than doubled between 2001 and last year, when it reached 45,700. In total, 348,000 Australian households have solar hot water – but this is still only about 5 per cent of the market. NSW and Victoria are two of the poorest performing states in the uptake of solar hot water, with 2.5 per cent and 1 per cent of households, respectively owning a solar tank.

The Sydney Morning Herald, 17/4/2007, p.12


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