Faking the feed-in - Brumby’s extreme greenwash
May 7, 2008 by Tim Hollo
It’s great that feed-in laws, regarded globally as one of the most effective mechanisms for boosting renewable energy and long-time Greens policy, are finally getting somewhere in Australia.
But it is deeply troubling that, in Victoria, they are being perverted in such a way as to make them greenwash rather than real, effective emissions reduction policies.
Feed-in laws as originally designed in Germany, and responsible in no small part for the boom in renewables that country has delivered, are about guaranteeing market access at a given price for new technologies so as to provide investors with certainty. They ensure that householders or businesses that produce renewable energy receive a fair price for that energy, a price determined by an independent authority and locked in for a period of time. The level of support for each technology is set by regulation on independent advice about the status of the particular technology and is intended to help the technology leap over financing barriers by giving investors certainty of retail price for the energy created. The support scales down over time as the technology matures and there is less need for artificially creating investor certainty.
Feed-in tariffs are fundamentally about providing support for emerging industries and we see them as complementary to mandatory renewable energy targets. Complementary because while the MRET supports the cheaper, most established renewable energy options, feed-ins give the next generation of technologies a leg-up. They are needed to ensure that our renewable energy portfolio can be diversified.
The policy has been extremely effective at bringing down the price of a range of renewable energy technologies (most notably solar PV) through boosting manufacture and driving market penetration. It gives new, sunrise industries the chance to compete against entrenched coal, and, by diversifying and decentralising generation, it actually stabilises the electricty grid, reducing the strain at peak times by generating more energy close to where it is used. All round a very sensible policy.
Now, what we are seeing in Australia is the distortion of true feed-ins, firstly to limit them to solar PV and secondly to provide support for only net solar generation, not gross.
Last year, South Australia’s Mike Rann announced that he would introduce a feed-in law restricted to solar PV and to the net energy generated by the solar panels, not to gross generation.
Now, most people who install rooftop solar do not install enough to completely meet their demand. Quite reasonably, they feel they are making a strong contribution by installing enough to meet a sizable chunk. You would have thought they should be rewarded for doing so. But, no. Under this scheme, you only get the reward if you generate enough to be a net generator. If you work at home, or are elderly or a young stay-at-home parent, you have no chance of being a net generator unless you install a pretty large system, which is still out of most people’s price range. This will barely do anything to bring forward payback for the panels. The real benefit comes when you get a higher tariff for the total energy generated by your panels and pay the lower, standard rate tariff for the energy you use.
Net generation should be irrelevant to the feed-in, since the benefits to the grid and to our emissions profile exist regardless of whether the particular house the panels are installed on is a net generator or user. While we encourage people to save energy and be as efficient as they possibly can, of course, this is hardly the way to do it!
Greens SA MP, Mark Parnell, successfully improved the legislation by extending the timeframe of the support offered, out from ten to 20 years. This, at least, means that the mechanism should help the panels get paid off slightly faster. Parnell decided, reasonably, that, since Rann wouldn’t change his mind on net vs gross, he was better off improving the legislation as best as he could.
This issue has hit the bigtime now, with Victoria’s John Brumby announcing a net feed-in in yesterday’s Budget.
As if the net issue wasn’t bad enough, Brumby’s feed-in also limits the feed-in’s application to systems of no more than 2kW! So, if you thought that the scheme might effectively encourage larger-scale uptake such as happened in Germany, where entire factory and warehouse roofs have been solarised, you’ve got another think coming. Not only do you not get the benefits of the feed-in unless you generate large amounts, you also don’t get the benefits if you do generate large amounts.
Effectively, Brumby’s feed-in is a sham. It is good for a few press releases but will benefit almost nobody.
Environment Victoria’s strongly-worded press release is worth a read, as is this article from the Age.
On the brighter side, the ACT has legislation currently before the Assembly to introduce a gross metred feed-in law. Greens MLA, Deb Foskey, is putting amendments forward to broaden the application of the scheme to other renewables, but, since the government has a majority in the single chamber, the legislation will pass as it stands. This is disappointing, but at least the feed-in will be effective. Moves are, apparently, also afoot in Queensland, although I don’t know if the details are publicly available.
And, do watch this space, as Christine will be introducing a Private Member’s Bill for a comprehensive national feed-in law into the Senate next week. Will post the draft bill as soon as I can.
There has also been some interesting discussion of the issue over at Larvatus Prodeo in the last week.
Good post Tim!? Technically efficient is the Labor Party,if they had a ATM in the walls of the Victorian Parliament, you could guess with a high degree of accuracy,they would run it on Solar Power !
Phillip, a Victorian Labor Party ATM would be a poker machine. You put in and you get less out; the ALP keeping the balance.
I know I can’t swear on this blog, but of all the low down, dirty underhanded, cheap, b/s policy tricks, this one really pees me off. Yeah, yeah I know, they are politicians. But one lives in hope that environmental causes will transcend such smoke and mirrors b/s.
Thanks for the link.
Just to summarize very quickly, while I don’t support feed-in tariffs, I have to agree with Tim’s summary; it’s bad policy.
Just to expand a little on the maximum size issue, economies of scale (particularly relating to the inverter) make big solar installations on factories and warehouses much cheaper per unit of energy delivered than house-sized installations.
Therefore, if you want to see as much solar energy installed for a given amount of subsidy, it makes more sense to encourage big solar installations rather than small ones, at least at the moment.
Given that doing big installations helps in the development of solar cell technology just as much as doing small installations, you can only reach the conclusion that the Victorian government isn’t serious about solar cells and, is, indeed, trying greenwash.
A final quick question - solar cells aren’t new technology, they’ve been around in quantity for 30 years. At what point do you give up and say “sorry, but they’re never going to make sense, even compared to other renewable alternatives?”
Robert, I hear bikes are old technology, too, and that people are willing to dismiss them in favour of the car (which is again, another old technology). Solar may not be the best we can get but roof-top wind turbines for the home are probably still some way away. If we can get renewable adopted by feed-in tariffs then there may be a bigger push to get home and business scale wind turbines.
Homes generally can’t be on the cutting edge of technology because it’s too expensive but they can certainly do their bit reducing pressure on the coal-fired grid by installing solar PV at home.
Robert, there has been a silicon shortage over the past few years. The market has predictably responded by ramping up production and the outlook arising from that anticipated supply increase is that solar panels will halve in price over the next 2 years.
If we include on top of that the efforts of the thin film guys (who use much less silicon) like Nanosolar who are in production and targeting making panels for $1/W.
Its pretty clear that it would be foolish to call time on PV just yet
The longevity of a technology is no guide to when it will reach it use by date. Fuel cells are a perfect example. The technology is early 19th century, and yet it was sufficiently high tech to earn a place in the space race.
Increased PV production will of course create a new set of problems (some easy to see, some we will be surprised by) meaning other bottlenecks will emerge.
A serious flaw with your efficiency arguments generally is you miss that it is not feasible to pool the discretionary funds of those who might wish to put their own funds to PV. Funds arising from the pooling system we have (i.e. the tax system) should of course go to the large scale highly efficient projects. However you cannot draw any sensible conclusion from your argument that the $/W on a home PV system is higher than the $/W on a large scale system. The home owners discretionary funds are simply not effectively available to be pooled to contribute to the large scale system. There is at present no efficient collection mechanism that has earned the required level of general public confidence. So it would make more sense if you were to promote an appropriate pooling system, than carry on about efficiency differentials for two things that bear no sensible direct comparison.
I don’t believe that PV is the necessarily the best solution, however I find the particular reasons you offer to justify your views quite unconvincing.
Robert, sure PV panels have been around for 30 years, but during that time, they have barely been given a chance. In the 70’s, they got support because of the oil crises, and that got them off the drawing board and into reality, but since then they have been struggling against hugely entrenched industries on a seriously skewed playing field.
Look, for instance, at how Shi Zhengrong worked for years in Australia to try to get someone interested in commercialising UNSW solar work. Once he got to China it took off, but no-one here could be bothered. Same for sliver cells at ANU - if investors aren’t interested, because they aren’t being given the right incentives by government to overcome the hypnotic pull of the status quo, the technology simply won’t break through.
But, in some ways, the technology is breaking through. In recent years, the cost has dropped dramatically, particularly in places like Japan, California and Germany where the support policies are effective. Real strides are being made in increasing efficiency and reducing silicon use. And their penetration has increased hugely, coming off a virtually zero base to more than a gigawatt in Germany now.
The thing that gets me is that so many renewable energy technologies have been sitting around with huge potential for so long, but have found that they can’t break in to the virtual monopoly of big coal, gas and nukes. The only reason is the lack of imagination and guts on the part of investors and governments.
If we really gave them support, they would take off in no time.
Actually Robert is right and wrong about solar cells, they don’t make sense in isolation. They don’t make sense from a mechanical efficiency point of view, or per $/W/24hour single bottom line.
Some things simply don’t make sense when viewed from a single perspective, and solar cells are still being assessed using an outdated economic/financial system (single bottom line) where the costs to the environment are predominantly externalized. When only one of these externalized costs is valued (carbon tax/trading) the balance will change in PV’s favour. Even then there will be places PV’s are not suited.
So a better question should revolve around how effective the technology is in dealing with the complex problem we face, rather than the simplistic one of efficiency.
Economies of scale are also not a simplistic as they first appear - the bigger the better. This only applies until decentralization and distance come into play, remote area power needs are best scaled to suit the application. Horses for courses.
Consider the case of a mythical homeowner who has $6000 spare and has narrowed down to two possible uses of the funds:
1) A home PV system (appeasing their conscience)
2) A big plasma screen (meeting their need for gratification)
The environmentally desirable choice for the environment is clearly option 1, even if that system (viewed narrowly in isolation) has lower efficiency than a utility scale system.
With option 1, the homeowner reduces net power use, thereby emitting less CO2. With option 2 the homeowner increases net power use emitting more CO2.
It therefore makes perfect sense to provide encouragement for homeowners to make choices to use their own money in a way that reduces emissions (i.e. option 1). Almost every other spending choice they make will increase emissions.
I read a criticism on LP that a person who bought a PV system would then go on a “guilt free” high emissions eco trip. That is a vacuous claim. The more likely scenario is they will either buy a PV system OR go on a trip. By using up funds on the PV system they reduce their capacity for the offending trip.
There are genuine and worthy criticisms of what Brumby has done, however in the cross fire this issue has also encouraged the spouting of a surprising amount of nonsense.
Tim, I’m not claiming that we have reached that point with solar cells yet…but I’m still waiting for the dramatic price cuts we keep getting promised. I go back to a favourite graph of mine, the this price graph of solar systems cost per peak watt. What if it’s still way, way uncompetitive with solar thermal, wind, geothermal etc. etc. in 2015? Can we pull the plug on the subsidies then? Or 2020? At what point can we just say “we tried solar cells, and the tech is just too dear?”
As to the claims that it’s not feasible to pool the funds of those who wish to buy solar electricity by putting up large-scale units , we do it right now on coal and gas fired electricity - and renewables by the way. The organizations that provide this service have names like Origin Energy and AGL.
As to the arguments on things like the triple bottom line, sure, but we should be comparing the triple bottom line on solar PV with other environmentally desirable uses of funds. Right now, it doesn’t stack up against wind. It doesn’t stack up against solar hot water (or gas hot water, for that matter). It doesn’t stack up against insulation. It doesn’t stack up against investments in switching freight from road to rail. It probably doesn’t stack up against rail electrification in a lot of places, either.
The comment on the metaphorical Peruvian eco-tourist deserves a more detailed response than I should take the space to give here.
Robert, triple bottom is but one part of the equation, and in your ’stacking up’ you forgot one of the three - the social. There are parts of the world where PV’s wins hands down over wind generators, and in many cases it’s t’other way round. Point being it’s horses for courses.
There is no magic silver bullet to tackle climate change, but rather silver shot gun pellets, one of which is PV’s. Which is why the Greens support for subsidies/feed in tariff’s for all renewable / sustainable fuels makes sense.
If a universal and equitable subsidy/feed in tariff for all forms of renewables were in place, then the beloved market forces would determine where the money would go. I guarantee the market will fund PV’s to some extent, but who knows by how much and where this will take place.
Some simple examples of potential ‘distortions’, a local council aesthetic ban on roof turbines would skew the results dramatically (the forgotten social), wind shadow areas would see more PV’s (environmental), locations with few daylight hours for much of the year would not chose PV’s (environmental), regions with both wind and sunlight may select wind (financial).
Robert it is obvious that neither Origin or AGL provide what is required. Repeating from above (with *’s for emphasis):
“There is at present no efficient collection mechanism that has earned the required level of general public *confidence*”
But it goes much deeper than this.
You need to consider all the factors behind the decision of a homeowner to commit funds. Any half competent marketer will immediately recognise the intangible factors. Once you properly appreciate this you will understand that there will be a considerable pool of unutilised funds (for climate response purposes) if home PV is excluded from the equation and an AGL scheme stands in its place.
As already suggested you would do better to promote the creation of a suitable pooling mechanism.
To be sufficiently successful to justify the end of home PV encouragement, such a pooling mechanism must address the perceived shortcomings to the homeowner of an existing AGL scheme as compared with having their own PV system.
Otherwise the money will simply be lost to the cause of climate response. That means our progress is held back, and the only justification for the delay would seem to be a peculiar kind of closed mindedness.
The point we can pull the plug on PV as a possible major element of the solution is also obvious. It is when the *implementation* of another suitable solution (or mix) is sufficiently far along. To be far enough along that other solution (or mix) would need to be cleanly providing around 50% of our electricity and also clearly on track to provide the bulk of our electricity within a decade. This would not be planned capacity. This would be actual measured supply to the grid. That is the point where you could reliably call time on subsidies for PV. In a crisis you don’t abandon options until the winning strategy emerges.
I for one would be fascinated to read your arguments regarding the Peruvian tourist. Please be sure to carefully include the proportion of potential home PV owners who would realistically undertake such tourism.
As said above I (really and truly) don’t believe PV is the best solution. Mcfarm most likely gets it right when he suggests all the various solutions will be called upon as the problem context demands in each case.
This article completely ignores domestic conservation of energy. The typical Australian household of 2.6 people in a 220m2 home uses 14kWh/day.
Such a home could reduce electricity consumption - use cool drinks and fans not airconditioning, jumpers and hot drinks not heating, turn hot water heater to highest temperature bearable without adding cold, hang washing out to dry, change to CFLs and pull plugs out on appliances not in use - and by this means reduce from 14kWh/day to 5-6kWh/day.
I know because we’ve done it.
Given that, if the home generated 14kWh/day, they’d have 8kWh/day to export. One website [no endorsement implied, they were just first up in a google search] gives a quote for my area of
3,400W system, 20 panels, generates 13.63kWh/day on average in my area.
Cost $36,900, less $8,000 rebate $28,900 cost.
If you’re grid-connected you still have to pay the account fee, currently $160 annually.
The government proposes to have people paid 4 times the retail rate; the articles don’t mention if GST is included. The current Victorian GST-inclusive retail rate for electricity is $0.16962/kWh, so that the export from homes would be $0.67848/kWh.
13.63kWh/day generated, less 5-6kWh used, leaves 8kWh/day.
$0.67848/kWh x 8kWh/day = $5.43/day, or $1,981.16 earned.
Subtracting the $160 account fee leaves $1,821 earned each year.
At this rate, it would take $28,900/$1,821= 15 years 10 months to equal the cost of the solar panels. Alternately, you could view it as like a term deposit; the $28,900 invested earns you $1,821 annually, or 6.3%, not bad.
Any household investor would also have to consider that in future years electricity is likely to become more expensive, not cheaper, so that with a grid-connected system they’re insuring against future rises. And of course, having the system there would increase the value of the property. If giving it a $1,000 lick of paint adds $5,000, how much would a grid-connected solar system add?
If a household is unable to conserve electricity, then the effective cost of this system - $28,900 over 20 years before the things conk out - is about the same as simply buying their electricity. But excepting the elderly and infirm, only laziness prevents conservation of electricity.
Of course, a household must have $28,900 to invest in the first place. Given that people pay twice that for SUVs, a substantial number of Australians obviously do have the money to spend. Nonetheless, it’s a substantial capital investment for most. I think the big upfront cost is a bigger obstacle than whatever the feed-in tariff is.
A better scheme would be to pay the standard retail rate for the household’s exported generation, but to make the upfront cost of the generation system an interest-free loan paid off on electricity bills. This would encourage taking the systems on, and conserving electricity.
So on balance I support paying them only for net exports, since we want to encourage conservation. However, I would also support interest-free loans, or perhaps power companies keeping ownership of the systems and installing them everywhere, that sort of thing. The biggest obstacle is the upfront cost.
With respect, Kiashu, the article does not ignore domestic energy conservation. I said:
Of course we can all save energy, and the more you save, the more you’d make on this scheme. But it’s confused and confusing policy to achieve that through a scheme like this. You’d achieve energy conservation through a specifically targetted policy such as EASI. And use this policy as effectively as you can, through gross metring, to support renewables.
You do indeed make a passing mention of conservation, but you also say,
“most people who install rooftop solar do not install enough to completely meet their demand”
which negates the conservation comment; it treats “demand” as a fixed invariable thing.
Now, you may argue that making sure they have enough left over for export is not the most effective method of encouraging conservation, but you cannot argue that it’d be ineffective - it’s something we’d have to try and see. Unfortunately no other country seems to have tried it.
Domestic PV + conservation will be more effective in reducing greenhouse gas emissions and general environmental impact than domestic PV alone. With this in mind, a scheme which encourages installation of PV and conservation is better than one which encourages only one of those things. And I think there’s a fair argument that paying people for their net generation rather than gross encourages conservation.
We could look for comparison on the effects of rebates on water tanks. There, we encouraged domestic harvesting of water while at the same time encouraging water conservation. And hasn’t that proven to be effective in reducing domestic water use from mains?
That of course does not mean that it should be the only generation or conservation scheme. Wind turbines are notably absent from this, as are local councils. Why not have local councils able to generate and export electricity, and be paid a feed-in tariff for it? Many of them already do it using landfill gas.
I still think that the major obstacle is the upfront cost of the system. Most of us don’t have a spare twenty or thirty grand sitting around, and those of us who do are more likely to have granite benchtop kitchens and SUVs instead. Perhaps we need a renewables, water tank and insulation version of HECS - we could call it the Renewable Energy Contribution Scheme, RECS. Logically it’d go through the power and water bills.
Kiashu:
This is exactly my point. The measures encouraging water conservation and those encouraging water harvesting are separate measures. That is appropriate and the best way to do it. As far as I am aware, no rebates for water tanks are linked in any way to water conservation measures. The same should apply to feed-ins. They are not designed to encourage energy conservation and they should not be weakened so tremendously in order to do so.
I’ve had this discussion with you before, I think. Just because we post on the blog, or appear in the media, supporting one particular measure does not by any stretch of the imagination mean that we do not support others. We have argued loudly and consistently for the strongest possible measures to encourage energy conservation, from the EASI policy, to commercial building efficiency, to industrial efficiency measures, to minimum energy performance standards, etc, etc, etc. Energy efficiency is the absolute key to swift and economically beneficial greenhouse emissions reductions.
But to try to encourage efficiency using a policy specifically designed to boost renewables is an inefficient policy setting that can only end up damaging its original goal.
I stand by my original point - a feed-in, even if only targeted at PV, should support anybody at all who wants to install PV, whether a 20kW system on a factory roof or 240w on a shed. You point out the high up-front cost. It may well be that, even with efficiency measures, they simply cannot afford to install enough PV to become a net generator. Well, they should be supported for their decision to solarise anyway, shouldn’t they?
Yes, because PV will have peak production at time of peak demand - on hut summer afternoons.
But a few wealthy people putting it in will have very little effect.
We have to consider, what is the major obstacle to people taking on some new measure? Sometimes, as with public transport vs car, it’s cultural. Other times, as with PV grid-connected vs coal from the grid, it’s financial.
People can support an extra ongoing cost. This is shown by the fact that we have in Australia about 750,000 GreenPower customers - even though it costs a third more per kWh. And that’s 250,000 extra in 2007 alone. Obviously people have this on their minds, and are willing to spend to achieve their goals.
By comparison, how many people have grid-connected PV?
What’s the difference? It’s small extra ongoing cost rather than large upfront cost. So if we want people to install these things in significant numbers, then we need to deal with the large upfront cost and turn it into a small extra ongoing cost. Hire purchase or something.
Otherwise, whether you have a feed-in tariff of 100%, 400%, on net, gross, or whatever - doesn’t matter. Relatively few people will have twenty or thirty grand spare, and if they do they’ll probably put it on their mortgages instead, pay it off before interest rates go totally mad.