The initiative, to be rolled out over the next five years, will help more than 14,000 families across Australia to access solar power and allow householders to do their bit for the environment.

However, other than the PV initiative the Budget did not do much to address our rising greenhouse emissions. The Budget missed an important opportunity to support activities and technologies that could be implemented immediately to help families and businesses reduce their greenhouse emissions – in particular supporting other renewables and energy efficiency initiatives.

The Federal Government has foreshadowed that it will announce further policy measures as part of its response to the Emissions Trading Task Group report.

What will the measure mean?

Currently about 30,000 families in Australia have solar power on their roof. Of these about 6,000 are in cities and towns and connected to the electricity grid. The remaining 24,000 are in regional and rural Australia, are not connected to the grid and rely on a solar and battery system to provide power.

The Budget solar initiative will provide up to $8,000 (for a 1 kW system). A number of community facilities and schools will also be able to apply for support (up to $12,000 for a larger system).

It will mean that solar power becomes affordable for a typical family. The cost of a system (1 kW) is currently around $13,000. After rebates and RECs a family will need to pay about $4000 for a typical system.

In an energy efficient house, a typical solar power system provides a third to a half of a family’s power needs. The rebate dramatically reduces the time it takes for the system to pay for itself. In South Australia the payback period could be as little as 10 years; in other states about 15 years.

The potential

Solar technology has enormous potential, particularly in a country like Australia where we have lots of sunshine and lots of roof space.

Solar is more expensive at the moment because we have relied on cheap coal for our power needs. We cannot continue to do so as we need to dramatically reduce our greenhouse gas pollution.

With government support to deploy the technology in significant quantities the industry will feel confident in investing to continue reducing costs – so that over the next 15 years costs will be halved. In reports prepared by the European Union and other research, the installed cost of a PV system is expected to fall by 50 per cent by 2020.

The Government’s $150 million program is on top of the Solar Cities initiative and the $123 million extension of the Renewable Remote Power Generation Program (RRPGP) announced last year. These initiatives will provide an important stimulus to the development of the solar PV industry over the next five years and will position the industry to make a significant long-term contribution to meeting our energy needs with no greenhouse pollution.

Further funding for Solar PV

This Budget initiative on solar was an important first step in developing Australia’s solar industry. However it is only in place for five years and there is more we need to do.

To give industry the confidence to continue investing over the longer term to reduce costs it is important that the benefits provided by solar power are recognised in the energy market. This should be done through a feed-in tariff which recognises the benefits that solar power provides to the electricity system by avoiding the costs of expensive transmission and distribution infrastructure. Australia currently spends more than $5 billion a year on electricity transmission and distribution.

Electricity bills will continue to rise as the cost of electricity begins to reflect the cost of greenhouse pollution and the cost of electricity infrastructure to meet our growing appetite for peak power – mid-summer when our air-conditioners are going flat out.

Solar has an important role to play in our energy mix as it produces power in the middle of the day when demand is greatest.

In an interview with Channel Seven’s Sunrise program on 9 May, the Prime Minister committed to an extension of the new $150 million program if customer demand warranted:

“Well we have done something that I know your program is very interested in, and that is to double from $4,000 to $8,000 the solar rebate. And that is a demand driven program. So as many households as want it, can have it. I mean there are estimates made for Budget purposes but if it turns out to be more popular, well, more money will be made available.”

The challenge has now been thrown down to the industry – the Government is prepared to expand the program if consumer demand warrants.