Competition watchdog calls for solar subsidies to be axed

The ACCC has revealed households are paying an average $106-a-year to foot the bill for environmental schemes.

The proportion of households with solar power jumped from 0.2 per cent in 2007-08 to more than 12 per cent in 2017-18.

The competition watchdog called for rooftop solar subsidies to be axed a decade ahead of schedule to help drive down power prices, revealing households are paying an average $106-a-year to foot the bill for government environmental schemes.

The Australian Competition and Consumer Commission report, released today, reveals households are paying huge costs for a range of government environmental schemes in their annual power bills.

Environmental schemes add $170 to household energy bills in South Australia, $155 in Tasmania, $109 in NSW, $93 in Victoria and $76 in Queensland.

The ACCC found households with rooftop solar were making an average $538 a year from feeding energy into the grid, on top of savings from reduced electricity use.

The ACCC said “excessively generous” solar feed-in tariffs had led to a spike in solar installations while “the substantial cost of the schemes continues to be spread across all electricity users”.

The proportion of households with solar power jumped from 0.2 per cent in 2007-08 to more than 12 per cent in 2017-18.

The ACCC said the large-scale renewable energy target (LRET) had incentivised the building of new renewable power plants “without regard to the ability of that generation to supply electricity to the market when demanded”.

However, it said the costs associated with the LRET were expected to fall significantly after 2020, and did not recommend any action to wind up the scheme early.

But it said the small-scale renewable energy scheme (SRES), which funds about 32 per cent of a $5000 solar installation, should be wound down and abolished by 2021, rather than the scheduled 2030.

“In light of the dramatic reduction in solar PV installation costs, the ACCC considers the case for a subsidy for small-scale solar installations is now weak, and is of the view that the SRES should be ended earlier than its currently scheduled end date in 2030,” the report said.

“Removing the SRES would save an average residential customer in the NEM $15–30 per year depending on state.”

The ACCC said the annual cost of the SRES hit $130 million in 2015-17.

The competition watchdog also called for the state governments to shoulder the costs of their own environmental schemes, such as premium feed-in tariffs, - a move announced by the Queensland government in 2017 at a cost of $771m for three years.

If the policy was implemented more broadly, it would save households $19 a year in Victoria, $25 in NSW, $45 in Tasmania and $72 in South Australia.