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What solar rebates are worth and who’s offering what

What solar rebates are worth and who’s offering what

SOLAR ENERGY REBATES REPORT: Politicians are latching on to the vote-winning potential of incentives for solar energy. So what’s on offer now in NSW and federally, and what’s the state of play in the solar market? We talk to Adelaide based solar expert and founder of SolarQuotes, Finn Peacock.

Right before the Victorian election in November last year, the state government brought in rebates for solar panels, solar hot water and solar batteries.

Eligible Victorian households can now apply for a rebate to cover half the cost of solar installations, up to a maximum of $2225, or get a $1000 rebate for a solar hot water system. The government claims the suite of rebates will cut electricity bills for 720,000 homes over the next 10 years.

Finn Peacock, former CSIRO electrical engineer and founder of solar comparison website SolarQuotes based in Adelaide, says that solar installations in Victoria have been “going off like crazy” since the additional rebates were announced.

In NSW, where there is a state election next week (23 March), Peacock says the Labor party has “pretty much copied” the Victorian government’s scheme. Just like its southern neighbour, he expects a “huge rush” in solar and renewable technology installations in NSW if Labor is voted in.

The NSW Coalition government has taken a different approach and is offering interest free loans to purchase solar batteries and solar power + battery systems.

The Berejiklian government’s 10-year Empowering Homes program will be available for up to 300,000 households with loans of up to $9000 for a solar battery system and up to $14,000 for a solar + storage system.

Peacock says the wording of the policy is a bit odd because if the goal is to get bills down, as is specified, then he’s not sure why people wouldn’t just buy solar systems in isolation rather than packaged with battery storage, which is still relatively expensive and the payback period can be as long as 15 years.

He suspects this is because “pollies are obsessed with batteries” as they consider them futuristic. 

Indeed, when announcing the scheme, Premier Gladys Berejiklian said that “embracing new technology is a good way for many people to access cheaper energy – putting more money back into the pockets of hard working households.”

Although batteries are coming down in price and will likely continue to do so, Peacock says the typical battery won’t pay for itself [over even the longer term] at the moment, and the financial case for household solar is currently much stronger and more capable of bringing bills down quickly.

Currently, the cost of electricity in NSW is around 29 cents a kWh and some energy retailers will give solar owners a price of 20 cents for exported solar energy leaving just 9 cents to be offset by batteries, making it a very long term proposition for batteries to pay themselves off.

Peacock is not the only one unconvinced by efforts to incentivise household batteries. Last year, Paul Higgins from Emergent Futures wrote in The Age that he couldn’t make financial sense of the Victorian government’s battery subsidy plan and even suggests that “it looks like the state is subsidising people to lose money.”

The NSW Greens have also announced a PV policy in the lead up to the election. 

The $1.25 billion plan would make rooftop solar and battery storage mandatory for all new dwellings in the state and introduce a $2000 rebate for as many as 500,000 existing households with a weekly income of up to $3000 a week. 

The party also is also pushing for a community solar offset scheme to make it easier for apartment dwellers and renters to reap the benefits of renewables.

The plan also includes a guaranteed minimum price for self-generated power fed back into the electricity grid. Peacock is concerned that this will result in customer solar energy being sold back for the full retail value, which could send smaller retailers broke.

These policy announcements, and the Victorian equivalents of last year, have been criticised by some as vote-grabbing attempts.

Critics of the subsidies say the industry hardly needs a boost, with intense demand leading to a dearth of installers and skyrocketing labour costs in the sector.

The federal government’s rebate/small scale certificate scheme

Many don’t even know it, but the federal government’s small scale certificate (STC) scheme takes thousands of dollars off the upfront price of solar.

Essentially a rebate for solar systems and other renewable technologies for households and small businesses, Peacock says it’s a “very generous” incentive. 

“And because it’s at the point of sale many people just think that’s what solar systems cost.”

The rebate varies across four zones in Australia according to the amount of sun in that region, with Tasmania receiving the lowest rebates and the sunny north west regions the largest.

Peacock recently crunched the numbers on his blog and found that to buy a new solar system today, it’s subsidised by the federal government scheme to about $630 per kW installed. This amounts to around $3150 off a typical 5kW system.

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He says this “well-designed scheme” has been so successful that Australia now has the cheapest residential solar in the world. In the US, by contrast, customers are still paying tens of thousands of dollars to get rooftop residential solar installed. 

The scheme is ramping down over the next 12 to 13 years and because “it’s not going to be politically favourable to scrap it” is unlikely to disappear overnight.

Introduced by former Liberal prime minister John Howard, Peacock says the scheme has been a “blazing success” and thinks the federal government should be doing more to publicise its success.

In the lead up to the election, opposition leader Bill Shorten has thrown his support behind battery storage. He announced a policy late last year offering a rebate of up to $2000 for households earning less than $180,000 to install a residential battery system.

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