AGL’s chief economist calls solar subsidies a ‘hidden scam’ in conversation with Financial Review

One of Australia’s biggest energy utilities – and the nation’s biggest generator of coal-fired power – has described rooftop solar tariffs as a billion-dollar “scam” being paid for by non-solar households.

In an extraordinary attack on rooftop solar, AGL Energy said solar households were being cross-subsidised to the tune of billions of dollars and suggested there was already too much solar on household rooftops.

In an in-house research paper first presented in October, but released to the Australian Financial Review on Monday before a wider public release (it can be found here on the AGL blog), AGL economist Paul Simshauser said solar subsidies such as feed-in tariffs and small-scale certificates were a “synthetic tax”, and a scam.

“This is a scam but it’s hidden,” Simshauser told the AFR. “If you don’t fix the problem, the rot will only get worse.”

The attack comes less than a week after AGL claimed it wanted to transform its business to help solar and storage, although its forecasts for solar and storage technology showed a much slower deployment than most people expect.

This new attack, however, is just one of many on the solar industry by incumbent generators, retailers and networks, concerned that the proliferation of rooftop solar – and the impending impact of battery storage – will upset their business models.

AGL Energy, and others, have argued that the small-scale renewable target should be cut; networks have prevented solar from being installed, forced homes and business to reduce their size on their systems, imposed limits or prevented them from feeding solar power back into the grid, and paid a desultory tariff for exports, which in some states is now voluntary.

The existence of cross subsidies has long been noted, but were never much of an issue when it involved air-conditioning, because that added to demand from the grid and coal-fired generators.

As the AGL paper notes: “Unlike the air-conditioner, the flow of kWh through Solar PV units reverses rather than adds to total flows, and so tariff instability has become a serious problem.”

Top image via Griffith University

© 2014 Solar Choice Pty Ltd

Giles Parkinson


  1. Black humour from AGL …. and the current energy grid and dirty power generators weren’t subsidized (and continue to be subsidized) by the rest of the community?

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