How rooftop solar energy became a political issue
Where newly appointed Minister for the Environment and Energy Josh Frydenberg comes from, people aren’t all that keen on renewable energy, it would seem.
According to figures compiled by the environment group Solar Citizens before the recent election, just 2352 of the 90,000-odd voters in Frydenberg’s affluent inner Melbourne electorate of Kooyong had solar panels on their roofs.
That placed Kooyong 132nd of 150 federal electorates for rooftop solar. Kooyong is typical of what Solar Citizens found in their study of rooftop solar. More affluent electorates tend to have lower take-up rates.
The richest of all seats, Wentworth, held by Prime Minister Malcolm Turnbull, ranks second-last in the country, although Solar Citizens consumer campaigner Reece Turner acknowledges some mitigating circumstances there: Wentworth is extremely densely settled, with lots of units and lots of rented accommodation.
The same caveats about density and rentals apply to the worst seat of all, Sydney. Still, it seems passing strange that the electorate held by deputy Labor leader Tanya Plibersek, and deemed so progressive that the Greens targeted it during the election, should produce so little solar energy.
Meanwhile, out in the ’burbs, and in the rural and regional areas, rooftop solar is big. The seat of Dawson, for example, based on Mackay in North Queensland, has more than 10 times as many houses with rooftop solar as Frydenberg’s electorate. Yet voters there just returned George Christensen, a climate change denier who sits on the extreme right wing of the Nationals. Ipswich, home town of Pauline Hanson, has even more solar panels up.
Dickson in Brisbane, held by another arch-conservative, Peter Dutton, has more than 35,000 solar roofs, and the eighth-highest penetration of solar in the country. And the number one electorate for rooftop solar is the huge rural South Australian seat of Grey. There, according to Solar Citizens, some 41,000 constituents have invested $140 million to install more than 80,000 kilowatts of solar, resulting in an annual abatement of 54,000 tonnes of the main greenhouse gas, carbon dioxide. The seat is held by Rowan Ramsey for the Liberals, although he was given a nasty scare from the Nick Xenophon Team at the election.
The reality of rooftop solar is counterintuitive. Climate change is so often portrayed as being principally a concern of young, educated, wealthy, urban lefties. Yet those doing the most about it at a personal level are the demographic opposite. They are older, less educated, poorer, non-urban and often otherwise conservative.
And that makes them problematic in a political sense – a potentially very powerful, unclaimed political constituency.
“This is an issue that cuts across all voting persuasions,” says Claire O’Rourke, the national director of Solar Citizens. “Solar uptake is higher in low/medium-income suburbs. Most of our supporters are on $60,000 or less, and often older.”
According to O’Rourke, in 121 of Australia’s 150 federal electorates there are more people of voting age living under solar roofs than are needed to swing the seat.
“There are 1.5 million rooftop solar systems already, and another 3000 every week,” she says. “They are a constituency that cannot be denied. And it will be bigger at every successive election.”
The group campaigned actively in a handful of seats at the election, holding community forums, distributing “DIY action kits” and petitions, erecting placards, and “bird-dogging” (read: stalking) candidates at campaign events.
They worked mostly in areas with high levels of solar ownership, such as the abovementioned Dickson and Grey, and also some, such as Bass in Tasmania, where energy security was an issue. (The failure of the Basslink cable connecting Tasmania to the mainland power grid, coupled with record low water levels in Tasmania’s hydro-electric dams, had caused an energy crisis on the Apple Isle.)
They didn’t tell people who to vote for – that would have risked the group’s tax deductibility for donations – but they certainly worked hard to elevate the issues of renewable energy in general and rooftop solar in particular among electors.
Unlike many environmental causes, the campaign for more solar photovoltaic generation does not rely entirely on altruism. It is also a significant hip-pocket issue. A major reason that Australia is the world leader in the installation of small-scale solar power is that governments have offered financial incentives for doing it. People who generate their own power also avoid – at least to some extent – the inflated prices charged by power companies. In the case of Grey, for example, Solar Citizens calculated that rooftop panels saved a total of $27.9 million a year on energy bills.
This probably best explains why solar is more popular in the suburbs and regions. People on Struggle Street appreciate the savings more than the rich folk in Kooyong or Wentworth.
Financial self-interest also encourages environmental altruism, says O’Rourke: “Once people take up the technology, they become more engaged with the way it helps the environment as well. So they might come to it for a hip-pocket reason, but our surveys show it also drives environmental engagement.”
But money is still the most powerful driver. Perhaps the best illustration of this comes from Western Australia where, in its 2013 budget, the Liberal government of Colin Barnett moved to cut the state’s solar feed-in tariff.
The state had been paying people 40 cents a kilowatt hour for the electricity they generated with their solar panels. The government estimated halving the rate would save it $51 million. There was a huge backlash, in part organised by Solar Citizens. Government backbenchers panicked, cabinet met and the budget decision was quickly reversed. Barnett apologised profusely for having “got this decision wrong”. He called it “unfair”.
Whether fair or not – and arguably the WA feed-in tariff was excessively generous – the point is that politicians mess with solar incentives at their peril.
Like just about everything to do with energy policy in this country, the solar incentives regime is a mess. People are paid different amounts in different states and even within states. Early adopters are paid a higher rate in some states than those who came later to the party.
The tariffs certainly worked, though.
“The feed-in tariffs kicked off in Queensland and replicated all around the country,” Reece Turner says. “We now have the cheapest installation anywhere in the world and we lead the word in terms of rooftop.”
But it has come at a big cost to state governments, which were very generous when they started their schemes.
The average cost of electricity across Australia – it varies a bit by state and the extent to which things such as off-peak rates are factored in – is about 25 cents per kilowatt hour, Turner says.
Even he acknowledges the 60 cent gross feed-in tariff received by some people in New South Wales was “particularly generous”, although he notes early adopters paid about three times as much for their solar systems as people pay now.
But as of the end of this year, that tariff will cease. There will be no mandated feed-in tariff in NSW. Instead, the Independent Pricing and Regulatory Tribunal has determined a “benchmark range” that energy retailers might pay people for solar power export from their roofs to the grid, ranging from 5.5 to 7.2 cents a kilowatt. And the emphasis there is on the word “might”. It’s entirely up to the power companies what they offer, and up to people with solar panels to shop around for the best deal among the myriad plans being offered by the big companies.
In Victoria, feed-in tariffs for some – but not all – will also be sharply cut, to a “minimum retailer payment” of five cents from the start of next year. Similarly, in South Australia, there will be a new, much lower retailer payment of 6.8 cents, but only to some.
In total, 275,000 people will lose out from the end of this year in those states.
In Queensland and South Australia, another 500,000 will be affected when two legacy feed-in tariffs close in 2028. Further regimes apply in other states and territories, but the point is surely made.
“It’s a dog’s breakfast,” Turner says. “We need a consistent policy on the feed-in price for solar owners around the country. One of the things that should be on the table on August 19, when [the relevant state, territory and federal] ministers get together, is how we set a fair price for solar owners right around the country that reflects their investment and ensures they’re not gouged.”
What is a fair price, though? In reaching its recommended price, the NSW pricing tribunal factored in the costs to electricity retailers of the energy inputs, mostly coal for generators; the costs of building and maintaining the networks of poles and wires, which accounts for about half your power bill; and “retail and marketing” costs.
But why should people be slugged the full network cost of selling power to their neighbours? Why should their tariffs be reduced to account for marketing by the networks? And what about the costs of fossil fuel power to the environment and to human health that the tribunal does not consider?
Suffice to say, there will be a lot of cranky people come year’s end, and Solar Citizens is already campaigning on their behalf for a better deal.
It’s not just the cost to government that is driving the retreat from generous incentives. It’s also the cost to the power companies and the fossil fuel industry. Renewable energy has seriously messed with their business model.
The proliferation of solar has changed a model based on pricing power around usage spikes. It has lowered those peaks, because the time of day when the need for power is greatest coincides with the times when rooftop solar is generating the most power.
Large-scale wind power also has pulled down prices, as will large-scale solar, when we get more of it built.
Regardless of what the industry’s lobbyists and media barrackers say, renewables are cutting the cost of power and making it more reliable. Still, there can be problems, as in South Australia earlier this month, when a series of factors conspired to cause prices to spike.
The next big threat to the old business model, however, is storage. Once power can be generated when the sun shines and the wind blows, there will be no justification for price spikes. Increases in demand won’t require high-cost ancillary generation to be sporadically brought online. Domestic battery storage is one option. It’s still expensive, but prices are coming down fast
Such a “distributed” system of storage, says Hugh Saddler, honorary associate professor at the Crawford School at the Australian National University, would bring “huge savings on network capacity”.
Distributed storage allows for more even power flow, so the network does not have to be built to accommodate spikes.
On a larger scale, there are options such as pumped hydro power, where water is moved uphill when solar and wind power is plentiful, and allowed to run back down through turbines when there’s no sun or wind. There are other possibilities, too: storing heat in liquid salt for later use; hydrolysing water to make hydrogen, which can be stored or put into fuel cells for vehicles.
“There will be many solutions,” says Tony Wood, energy policy director for the Grattan Institute. “The system was fundamentally designed around large, centralised, non-intermittent, reasonably high marginal cost generation. And we have a situation now where it has to cope with distributed, intermittent, zero if not negative marginal cost generation.”
The reform is way overdue, as the example of the fractured nature of feed-in tariffs clearly shows.
“In the vacuum created by the lack of leadership by the Commonwealth, the states have all jumped in with their separate targets and plans,” Saddler says. “That won’t do.”
Next month the man from Kooyong, Josh Frydenberg, will meet his state and territory counterparts for the first time.
And boy, has he got a big job in front of him.
This article was first published in the print edition of The Saturday Paper on Jul 30, 2016 as "Solar searching". Subscribe here.