Calling for an Effective Feed-in Tariff

June 16, 2008

The Victorian Government has announced a mandated Feed-in Tariff for solar power, which will pay 60c per kWh for net energy produced by small photovoltaic systems.

If designed well, Feed-in Tariffs can be a great mechanism for encouraging the broad scale uptake of decentralised, renewable energy systems, as has been shown by the experience of more than 44 countries. However, MEFL believes that the model proposed by the Victorian Government will be insufficient to generate any meaningful increase in installation of renewable energy systems.

The Government claims that a weak FiT model is necessary to avoid high costs to consumers, stating that the average household would pay an extra $100 per year on their energy bill if a more effective "gross" model were introduced. Analysis undertaken by the Alternative Technology Association (ATA) has found this figure to be grossly inaccurate due to fundamental flaws in the Government's modelling. The ATA's modelling shows that the actual cost to consumers of a tariff of 60c per kWh applied to gross energy production would be an average of 80c per household, per month - just $9.60 per year. Unlike the Victorian Government's modeling, the ATA's calculations exclude low income households from cost recovery, meaning that concession card holders would not be disadvantaged by the scheme.

MEFL calls for a feed-in fariff model with the following characteristics:

It's not too late to save the Feed-in Tariff - until it is put to Parliament later this year the community can lobby politicians to call for a better FiT, and once it gets to Parliament amendments can be introduced.

Further information will be uploaded here soon, or go to the ATA's website.

MEFL encourages you to contact your MP or Premier Brumby and let them know how you feel about this issue. You can use the text below as a guide if you wish.

You can print out and post this letter to the Premier at the address below; or, alternatively, cut and paste the text into an email and send to 'johnDOTbrumbyATparliamentDOTvicDOTgovDOTau'

The Hon. Premier John Brumby
Office of the Premier
1 Treasury Place
Melbourne
Australia 3000

[Insert date]

Dear Mr Brumby,

I welcome the Victorian Government's commitment to introduce a solar Feed-in Tariff; however I am concerned that the proposed model is insufficient to stimulate real growth in demand for small-scale renewable generation. In particular, I believe the feed-in tariff should apply to gross energy produced rather than net, and should not be limited to a system size of 2kW.

The international experience shows that feed-in tariffs have the potential to encourage broad scale uptake of renewable energy when a premium is paid for gross energy production. In Germany, for example, gross feed-in tariffs have been the key factor in establishing 4000MW of installed solar capacity - this is 300 times greater than Australia's total installed capacity, and 1500 times greater than in Victoria. This has not come at a high cost to consumers - in fact, the German environment ministry estimates that the savings achieved through the feed-in tariff outweigh the costs three to one.

I am concerned that the Victorian Government's claim that a gross model feed-in tariff would cost the average household $100 per year is inaccurate - analysis conducted by the Alternative Technology Association has found the likely cost to be an average of 80c per month over the life of the scheme, which translates to a figure of just $9.60 per household, per year. The ATA's analysis factors in the cost of excluding both low income households (whom the Government's proposed model claims to protect) and the largest energy users from cost recovery, and doesn't take into account the potential savings from a feed-in tariff scheme.

I understand that the feed-in tariff legislation is yet to be passed by Parliament and I urge you to intervene to ensure that Victoria sets the national standard for a strong, effective scheme. Specifically, Victoria's feed-in tariff should be:

I believe that the community wants all levels of Government to act courageously on climate change, and I urge you to make Victoria a true leader in this field.

Yours sincerely,

[Insert your name and contact details here]

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