The scandals over the cost of solar feed-in tariffs reveal the dangers of advocating market solutions to climate change.
The NSW government’s Solar Bonus Scheme, a feed-in tariff for rooftop solar panels, pays households who purchase solar panels a subsidy for the power they produce. But in October, NSW Premier Kristina Keneally was forced to slash the subsidy from 60c to 20c per kilowatt hour (kWh) in order to stop electricity prices spiralling out of control.
She was completely unprepared for the popularity of the scheme, which saw 35,000 homes buy solar panels in nine months. Because increasing electricity prices across the board funds the subsidy, the poorest households are hit hardest. Even despite the drastic decrease in the subsidy, some estimates predict electricity bills will rise by $100 per year.
Feed-in tariffs like this push the cost of climate action onto workers. The subsidy is only accessible to wealthier people who can afford to install solar panels in the first place and yet it is paid for through price rises, felt most keenly by the poorest. Why should workers pay for a solution that powers wealthy homes?
Worse, the schemes are not taking Australia any closer to a renewable energy economy. Rooftop solar panels are the least efficient form of renewable energy. We need base-load concentrated solar thermal which can power industry—a much more significant source of emissions than houses.
Keneally is not prepared to pursue real solutions like public investment in renewable energy because she backs the coal industry. While she talks about “investment…in clean energy jobs”, she is simultaneously overseeing an expansion of coal-fired power in NSW. Two new power stations are planned in the state. This reality reveals the tokenism and hypocrisy behind the NSW scheme.
The federal government’s small-scale renewable energy scheme (SERS), set to begin in January 2011, suffers the same problems. Under the scheme, energy retailers have to buy back certificates worth $40 each, issued to assist houses and businesses install solar panels and solar hot water. Again, this is not the kind of large-scale generation that is needed to replace coal. These costs will be passed down to consumers. Already Energy Australia is predicting a cost blowout of $600 million.
Some sections of the climate movement support feed-in tariffs. But there is no hope of building a mass movement for climate action around higher electricity prices. A recent survey into financial stress, conducted by Wesley Mission, reveals that one in five NSW homes were unable to pay a bill on time in the last year. Seven out of ten households are making sacrifices to meet future bills, and three in ten spend more than they earn. Complaints about electricity bills rose 43 per cent in the year to June. In the meantime, NSW energy agencies saw after tax profits rise from $847 million in 2008-9 to $1.2 billion in 2009-10.
Small scale feed-in tariffs paid for by the poorest are not solutions—they don’t stop the expansion of coal and they don’t help the climate movement.
By Erima Dall