Feed-in tariffs have been used in a number of countries overseas to recognise the benefits of renewables. A solar PV feed-in tariff gives a financial incentive to people who install clean solar power on their roofs.

Under a solar PV feed-in tariff, electricity retailers pay householders and businesses a premium price for ‘feeding’ surplus solar electricity back into the grid from the solar PV panels on their roofs. The higher price they receive reflects the benefits of renewable solar technology, in particular its ability to supply zero-emission, peak-load power.

South Australia was the first state in Australia to commit to a feed-in tariff. In September last year Premier Mike Rann announced that his government was going to legislate for a new feed-in rebate for solar PV:

“Under the proposed new system, households with solar panels will be rewarded for giving back unused energy because we are going to offer up to double the amount they get paid for putting power back into the grid.

“Feed-in measures have been introduced in 16 of the 25 European states and another seven countries outside Europe including Canada, China and Israel.”

The South Australian government has been consulting with industry on how it will implement the measure and the BCSE is expecting details of the legislation shortly.

In November 2006 the Victorian Labor Party announced measures to help Victorians play their part in addressing climate change, including the introduction of a feed-in tariff law to support households and small businesses in producing renewable energy, including solar PV. The price that is to be paid for the electricity fed back into the grid is to be a “fair market price set by the Essential Services Commission”.

Premier Peter Beattie released the Queensland Government’s Climate Change Strategy, ClimateSmart 2050, in June 2007 and as part of a suite of policy measures announced a Queensland feed-in tariff for solar power.

The importance of implementing feed-in tariff schemes cannot be understated. In a recent communiqué all state and territory governments in Australia committed themselves to addressing climate change through a range of measures, including to:

“Explore incentives for the take-up of decentralised renewables (including residential solar panels).”

Three states have now moved on this commitment and the BCSE is advocating that other states quickly follow.

Solar PV in urban environments is perfect for supplying electricity when we need it the most – at peak times on summer afternoons. On a hot day when air-conditioners and commercial loads are going flat out, solar PV systems are at their best. And because grid connected systems are located in our suburbs where the power is needed – on homes and commercial and community buildings – solar power reduces the stress on infrastructure and helps avoid blackouts.

Solar PV is decentralised energy – that is, in many locations on homes and offices where the power is actually consumed, (not centralised in one spot as coal stations are) – thus reducing the need for expensive substations, transformers, poles and wires, and reducing energy losses.

Decentralised generation provides significant network and transmission benefits that are not fully recognised or rewarded in the current energy market.

A ‘fair price’ for solar PV therefore needs to recognise the value it provides to meeting peak power needs. In context, more than $5 billion of regulated network investment is undertaken every year in Australia. Over the same period maximum demand is expected to increase by 1,100 MW.

Our peak power needs continue to grow, driven by soaring demand for energy guzzling appliances such as air-conditioners, plasma televisions and DVD players. This is placing our electricity infrastructure under stress, requiring $25 billion in infrastructure investment over the next five years. To illustrate, the Queensland Government estimates that for every air-conditioner installed the electricity industry has to spend an extra $13,000 on more poles and wires to manage the load.

Ultimately, to meet the needs of a few, all consumers pay the price. This has been illustrated in the announcement by the Independent Pricing and Regulatory Tribunal of NSW (IPART) that it has approved electricity price increases of 7 to 8 per cent per year.