Australian Solar Power Feed In Tariff Update

It was with great anticipation that many overseas investors, home owners and local stakeholders in Australia’s renewable energy industry awaited the results of the Council Of Australian Governments (COAG) meeting last weekend on the issue of feed in tariffs.

It was expected that the Government would announce the rollout of a feed in tariff program similar to the one used by Germany for many years which has been a runaway success and has made Germany one of the world leaders in solar power uptake. 

Most Australian states already offer feed in tariff programs, but they vary widely in their terms and amount of payment made to owners of grid connected solar power systems for the electricity they produce.

Emerging from the COAG meeting was a set of  what some described as vague principles and a seemingly very much watered down scheme. COAG’s approach for a national, uniform feed in tariff scheme would be to provide payment for electricity produced by owners of grid connected solar power systems "which is at least equal to the value of that energy in the relevant electricity market". 

Additionally, any payment over and above the market value for electricity produced would "be a transitional measure (noting that a national emissions trading system will provide increasing support for low emissions technologies)". 

A key to the success of the program in Germany was a uniform rate per kilowatt produced much higher than  market value and guaranteed for 20 years. It was this guarantee that provided strong incentive to home owners and industry to make the necessary investments into renewable energy systems.

Another  important element missing from the guiding principles set down at the COAG meeting was the distinction of whether a national feed in tariff scheme would be based on a gross or net model. Under a gross feed in tariff program, such as the successful German program, payments would be made on all electricity generated. The net model only pays on surplus electricity produced. Net feed in tariff programs have been shown to provide little incentive for the uptake of solar power installations.

The results of the COAG meeting have done little to stir up interest from overseas investors. According to an article in the Sydney Morning Herald, China’s second largest manufacturer of solar panels said it was poised to invest more in Australia but the COAG meeting had given it "pause for thought".

Senator Christine Milne of the Australian Greens, who introduced a Private Member’s Bill earlier this year for a national feed-in tariff that would pay a premium price for gross energy generation from all renewable energy technologies, has called the COAG outcome a "failure" and a "roadblock" for the renewable energy industry in Australia. 

Senator Milne has called upon the Rudd government  to "embrace the range of policy settings and investments that will back up the ETS and help reduce emissions as effectively and efficiently as possible. A feed-in tariff is top of the list."