How solar in Australia compares to Germany, Japan and USA

If one were to conduct an examination of the history of solar power across the world, a couple of countries would emerge as those that have set the standard of growth. Over the last two decades Germany, the United States and Japan’s solar – or Photovoltaic (PV) – industries have distanced themselves from the international solar energy community in leaps and bounds with an unprecedented rate of development. Their success can be broken down into several common factors.

Approximately two thirds of Japan’s PV growth can be attributable to its residential buy-down program, supplemented with the promotion of low-interest loans. Essentially this has seen the New Energy Foundation (NEF), part of the Ministry of Economy, Trade, and Industry (METI), subsidising residential solar installations at a steadily decreasing rate. Since 1994, their budget has increased from ¥2 billion to ¥23.5 billion, whilst the percentage of subsidy has reduced from up to 50% of the average installation to 33%. Simply put, the amount of money the average installation is granted has decreased, but the industry itself has grown at such a rate that Japan is now the world leader in PV capacity at 300MW.

In many ways the German solar industry stands as a shining example to the Australian industry, with various common factors now emerging as tickets to success. Alternatively to Japan, Germany has taken a multilateral approach towards its PV growth. This has included generous rebates, premium feed-in tariffs and low-interest loans, contributing towards a high incentive level and a mandatory purchase requirement by utilities (Energy companies). The total level of subsidy this has created is estimated at €2.4 billion ($4.1 billion), providing an industry turnover of around €8.7 billion and a 52 million tonne reduction in carbon dioxide production by 2010. Similarly to Japan, the tariffs are being lowered every year to encourage more efficient production of renewable energy. The ‘1,000 Roofs’ program was the catalyst for this development, resulting in the recent and unparralleled success of the ‘100,000 Roofs’ scheme. Germany is now third in the world of PV capacity, and the industry continues to grow at a stable rate. (http://www.solarelectricpower.org/)

Now if these tactics sound familiar to you then it’s not a coincidence. The Australian PV industry is presently going through an adaptation period from the generous, yet recently expired $8,000 Solar Energy Rebate to the new Solar Credits Discount Scheme. Official reports from the Department of the Environment, Water, Heritage and the Arts state that 32,000 solar systems were installed as at 5 June, with a further 63,000 installations still to be completed by February 2010 (95,000 total). This has involved a five-fold increase in budget to approximately $750 million, as well as a massive influx of new jobs and installers across the country. Add to this the fact that Australia receives more solar energy than both Japan and Germany and the equation becomes clear. Simply put, PV in Australia is mere steps behind the world leaders in intention, and so long as the support that is needed from industry and government is provided, there is no reason why it can’t reach and surpass their example. (http://www.environment.gov.au/settlements/renewable/pv/index.html)

There are two major factors that are tantamount to the continued growth of the PV industry in Australia. The first is the establishment of the Gross feed-in reward system to as many states as possible. Currently only in operation in the ACT, the Gross feed-in reward scheme reimburses every kW of energy that is produced by a grid-connected solar installation, effectively earning money for the entirety of the solar energy installations lifetime. In addition, the energy is reimbursed at a rate four times the market value for energy (approx 60c per kW), making the ACT’s solar reimbursement scheme one of the world’s best. In the rest of the country, a net feed-in system is used, which only rewards surplus energy. This adaptation of a feed-in reward program is primarily redundant for the vast majority of 1kW and 1.5kW systems that residential homes can afford, as a surplus generation of energy is not a common occurence. The remaining states and territories need to catch up to the ACT if the industry is to continue flourishing. Looking at the examples from Germany and Japan, the feed-in rewards should start out strong and steadily decrease, not vice-versa, in order for the industry is to advance strongly enough to remain stable.

Now this brings us to the second major factor critical to the Australian PV industries positive outlook; the stability involved with the establishment of a statutory minimum value of Renewable Energy Certificates (REC’s). The new Solar Credits Discount Scheme is now the primary energy rebate in operation. This rebate hinges on the inflation of value of REC’s that people obtain when they install a renewable energy souce. At the moment, these REC’s are market valued, and the major assessment of marketry value is the frequency of the commodity in market circulation. Simple put, if the market if flooded with these REC’s now that they are the sole bearer of government subsidy towards PV installations, their value will drop, and the rebate amounts will become too small a financial incentive to incite interest. If the government were to establish a mimumum value however, they would instate confidence into the market, and a minimum rebate amount could be guaranteed. Without that safety, the new Solar Credits Discount Scheme could become a proverbial toothless tiger, and the industry would languish from it.

These two matters need to be addressed by the Australian federal government if the solar industry is to continue thriving in Australia. Without their address all of the hard work of the industry and its customers over the last few years and in the months to come stands for little. In a world that is continuing to establish demands upon its environmental and sustainable awareness, such an overlook could prove crippling.

Jarrah Harburn
Solar Broker
Solar Choice Pty Ltd

© 2009 Solar Choice Pty Ltd

Jarrah Harburn

Jarrah is the Director of Solar Choice’s UK subsidiary, Solar Selections. He has 3 years' experience in the UK solar industry following 2 years' experience with Solar Choice in Australia.
Jarrah Harburn