As discussed in Jonathan Boulanger’s excellent blog post, the Ontario FIT program must learn from Germany’s example set before us and remain vigilant in changing FIT rates. On one hand, FIT rates cannot be too lucrative at the expense of the taxpayer. This was the case for the German market. On the other hand, FIT rates cannot be so stingy as to discourage continual investment in the solar market. This describes the current case in Queensland, Australia as per the recent article in pv magazine: http://www.pv-magazine.com/news/details/beitrag/australia–proposed-gross-fits-slammed_100008527/#axzz26pjjGSbz

Like the story of the German solar market, the Australian solar market has seen rapid growth in the last two years. As such, in the interest of the taxpayers, regulators are proposing to reduce FIT rates, as is necessary for sustainable growth. However, the current proposal reduces FIT rates to a point threatening the growth of the solar industry, thus defeating its very own purpose. Under the new proposal, businesses and households with solar arrays would be forced to sell electricity to utility companies at the wholesale price of 0.08 AUD/kWh, while buying electricity from the utilities companies at a retail price as high as 0.35 AUD/kWh. Russell Marsh from the Clean Energy Council creates an analogy which goes like this:

“What the Queensland Competition Authority has proposed is the equivalent of telling people they can’t just use the lemons growing on the lemon tree in their backyard – they have to sell the produce to a wholesaler for next to nothing, and then buy the lemons back at a premium from the supermarket” (Taken from http://www.pv-magazine.com/news/details/beitrag/australia–proposed-gross-fits-slammed_100008527/#axzz26pjjGSbz)

This proposal, while avoiding the problem that Germany faced, threatens to kill the growth of the solar industry by significantly reducing the incentive for purchasing solar to near nothing. In this proposal, why have a FIT program at all?

If anything, this case study along with the analysis of the Germany story in the previous blog post  highlights one thing:  the PV industry is at the mercy of bureaucracy. Legislation is perhaps the primary factor determining the sustainable growth of the local PV industry.  Grimly, the margin for error is miniscule. There is huge probability of the local PV landscape swinging from the extremes of either quenching the PV industry growth (current Australia proposal) or realizing enormous PV industry growth at significant expense to the taxpayers (German story). Getting FIT programs right is truly a delicate balancing act.

-Andrew Chia ( PhD in Engineering Physics, Year 4, McMaster University)

Advertisements