ACIL Allen report on Renewable Energy Target bodes ill for Australian solar industry

The Australian solar industry is in grave fear about its future, following the release of various scenarios from ACIL Allen, the company doing the modeling for the Abbott government’s review of the Renewable Energy Target.

The scenarios encompass four options – the instant repeal of the target, the capping at current levels, a “real 20 per cent” scenario” in which the SRES scheme (which supports small-scale solar installations) is gutted, and a 30 per cent by 2030 target.

ACIL Allen has flagged the likely reduction of incentives for rooftop solar, with “deeming” – or upfront payments – reduced from 15 years to 10 years and the SRES component ending in 2020.

According to solar industry executives that attended the meeting in Sydney, the characterisation of solar was confusing and contradictory. On one hand it was described as “expensive abatement” in the order of $150/tonne, and on the other it was described as so cheap that it didn’t need subsidies.

The solar industry was confused as to how the modeling could show the abatement cost of solar to be three times that of wind. Solar is seen as more of a threat to the traditional utility model because of its ability to reduce demand – and revenue to generators – at the most profitable times of the day.

Still, ACIL Allen said that the solar installation rate in Australia was likely to fall 30 per cent slump if the solar support was removed, but it claimed that this would be “tolerable” because in the long term the market would rebound.

John Grimes, from the Australian Solar Council, said even with prejudiced assumptions – including only a modest rise in gas and coal prices – the modeling still disproved the government’s original assumptions.

Still, there now appeared to be a clear intent to remove the solar support mechanisms as a minimum. “Now about 15,000 solar workers don’t know whether they will have a job at Christmas,” he said.

© 2014 Solar Choice Pty Ltd

Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson