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Solar Panel subsidies: A billion dollars to provide cheap electricity to wealthy households

A billion dollars that could have been used for housing, schools, hospitals and health programs was drawn into solar subsidies to provide electricity that could have been produced in far cheaper ways.

There is no sunnier first world country than Australia. If solar was going to be a raging success anywhere, surely it would be in the land of the Sunburnt Country. Instead the Australian government has poured in more than a billion dollars to install solar panels on the roof tops of private homes.  It’s a text book case of misdirected spending.

In the end the government drew money from the population-at-large to help Chinese solar panel manufacturers, and to provide “cheap” electricity to 107,000 households in mostly medium-high wealth areas. It reduced Australia’s emissions by a piddling 0.015 per cent, at an exorbitant carbon price of $300/ton.

Solar power is clearly not viable yet. So that billion dollars could have been spent on research to make solar power economic (in which case no subsidies would be needed). It could have made us world leaders with a product to patent and sell (or it might not). Instead governments of both major parties chose to pour a billion dollars into a program that never had any chance of helping the environment, or our export industry. Mere feel-good window dressing.
The program gifted up to $8,000 dollars as a rebate to encourage people to install solar panels on their roofs, but it had to be canceled suddenly last year because the bill for the overly generous scheme was blowing out. Another different rebate for solar generated electricity promised to pay 60c a kwhr (compared to the usual 20 c/kwhr) and met the same fate. It too was suddenly canceled. In both cases the local solar industry had to deal with rapidly changing rules and rewards, leading to bubbles and overnight busts. It makes a mockery out of the “free market” driving small businesses to the wall, and discouraging long term planning and employment.

Renewable energy makes up only 6% of Australia’s energy needs, and fossil fuels, 94%. Solar PV panels provide 0.1% of all our electricity. There is no nuclear energy industry here, despite Australia having one third of the worlds uranium. Roger Pielke, Jr. has looked closely at Australia’s emission targets and calculated that it would need 35 nuclear plants, or 8,000 “Cloncurry plants”, finished and operating in nine years time in order to meet the targets. Ponder that the single Cloncurry “plant” those numbers are based on, has been beset with set-backs. After three years in development, when I last looked, the project had only 4 mirrors of the 8,000 it was supposed to have. It was due to be finished in early 2010. Possibly not the raging success it was hoped to be.

Having a solar panel on the roof used to be a badge of pride for the green-minded. But as people realize the panels took money from the poor to give cheap electricity to the wealthy and achieved almost nothing for the Australian environment or economy, surely they will become seen as the mark of the parasitic, the selfish or at best, the silly…

Even progressive activists know that this doesn’t make sense. D. Brady Nelson explains that a left-leaning group at the ANU, which accepts all the assumptions of the man-made global warming (government funded) “science”, just can’t justify the exorbitant waste for so little gain.

Solar power subsidies are under attack from an unexpected source, as the Australian National University’s Centre for Climate Law and Policy (CCLP) released a November 15 report criticizing the government’s efforts to subsidize solar energy.

In its report prepared for the activist Australia Institute, titled The Australian Government’s solar PV rebate program: An evaluation of its cost-effectiveness and fairness, the likewise left-leaning CCLP documents more than a billion dollars wasted on costly power systems that economically benefit wealthy consumers while producing few if any environmental benefits.

Out-of-Control Subsidies
The report notes the Australian government between January 2000 and June 2009 administered a program that provided rebates to households and owners of community-use buildings who acquired solar photovoltaic (PV) energy systems. Originally called the Photovoltaic Rebate Program (PVRP), it was rebranded to the Solar Homes and Communities Program (SHCP) after a change in government in November 2007. It was discontinued in June 2009.

Little Return on Investment
Even though CCLP did not question the asserted scientific justification for reducing carbon dioxide emissions, CCLP criticized the fairness of the distribution of the rebates; the limited extent to which the program increased the use of renewable energy; the modest emissions reductions achieved by the program; the high cost accrued per unit of emissions reduced; and the extent to which the program assisted the development of Australia’s renewable power industry.

CCLP’s report directed its sharpest criticism at the program’s high costs and limited emissions reductions. According to the report, the program by 2008 had reduced the nation’s carbon dioxide emissions by only 0.015 percent, at an average social abatement cost of $257 Australian to $301 Australian per ton of reduced carbon dioxide emissions. CCLP noted if a primary object of PVRP-SHCP was to increase public awareness and acceptance of renewable energy, it could have been obtained at a fraction of the cost through other strategies.

Dr Alan Moran, director of the Deregulation Unit at Australia’s leading free-market think tank, the Institute of Public Affairs (IPA), explained how money was wasted in the program.

“Victorian energy retailers have to pay households … tenfold its worth. Other state governments require even greater payments. In New South Wales that price must be paid even for the electricity the consumer uses in their own house,” Moran said. “The costs of this are paid for in the electricity bills of consumers without solar panels.”

Source: Heartland Institute

D. Brady Nelson’s blog

The Australia Institute (ANU)

Image adapted from A solar panel in Marla, Cirque de Mafate, Réunion, David Monniaux

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