Page 3323 - Week 11 - Wednesday, 14 November 2007
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Some 41 countries, states and provinces have now enacted solar feed-in laws. South Australia has recently introduced a feed-in tariff, albeit one with little incentive. In Germany, which is the current benchmark for feed-in standards, there was a 30-fold increase in the amount of installed photovoltaics between 1999 and 2004. The Germans are now installing over 600 megawatts of solar PV per annum. We here in the ACT currently have approximately 60 connections, amounting to 80 kilowatts. As you can see, we have a battle ahead of us if we are to catch up. The positives of this are that, with detailed studies of these overseas feed-in laws, we can ascertain the key elements that we require to ensure the successful stimulation of renewable energy uptake here in the ACT.
In brief, a feed-in law is a system that encourages the use of renewable energy technology by offering economic incentives to households and to commercial and industrial buildings that generate their own electricity and feed it back into the grid. The power grid distributor is obliged to pay a premium rate for the renewable energy generated while still charging the producer the standard rate for the electricity that they consume. The cost will be passed on proportionately to all electricity consumers in the ACT.
The model that I am proposing for the ACT is based on the conclusions of the December 2005 European best practice report, based on a study of the national policy frameworks for photovoltaics in 11 European countries and Japan. In researching this, I consulted with various community groups, including ACTCOSS, the Conservation Council, industry experts BP Solar and Origin Energy, community groups, sea-change groups and local community councils.
All were supportive of the initiative. I point out that studies have shown that the majority of the population in the ACT is ready to accept an increase in electricity bills if it relates to renewable energy. There is an argument that renewable energy is far too expensive. While it is still expensive in comparison with fossil fuels, renewable energy will become increasingly competitive as the industry grows and new technologies are developed.
One of the main issues facing the accelerated uptake of renewable energy is the initial capital investment required. In effect, the solar premium enables renewable installations to become profitable long-term investments as the pay-back period—for example, 10 years—becomes less than the life of the system—for example, 30 years. It is with this in mind that the proposal put forward today contains a premium rate of 3.88 times the highest retail price of electricity for generation from a unit that has an installation capacity of 10 kilowatt hours and 50 per cent of that rate for larger installations.
It is important that the premium rate of the total amount of electricity generated is paid—unlike the South Australian model, which pays only the net amount. This rate will ensure that the pay-back periods will be met and will thus create a greater financial incentive to invest in renewable energy right here in Canberra. It is estimated that the cost of new installations will decrease over time as new technologies are developed and that the tariff will also decrease over time to reflect that.
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