Governments must learn from past mistakes to create a successful future for solar.

by Tony Wood

An energy revolution is at hand in Australia, as the arrival of home batteries combines with the falling cost of solar panels to transform the centralised grid, according to a new Grattan Institute report.

But Sundown, sunrise: how Australia can finally get solar power right urges governments to avoid the mistakes of the past by rejecting expensive and unfair subsidies and by setting charges that reflect the true cost of providing electricity.

The report shows how lavish feed-in tariff schemes have induced 1.4 million households to put solar panels on their roofs – the highest proportion of households of any country.

State governments began winding back the schemes in 2012, but by the time the last runs out in 2028 they will have cost the economy $9 billion, the report finds.

Worse, people who chose not to install solar, or could not afford it, have paid for the schemes through a subsidy to solar PV owners worth $14 billion.

“It’s true the schemes have reduced emissions but at a very high price – we could have found much cheaper ways to tackle climate change,” says Grattan Energy Program Director Tony Wood.

The report calls on state governments to introduce new electricity tariffs that encourage consumers to use less power in periods of peak demand.

The tariffs would remove a subsidy to solar PV owners, making their panels less profitable in the short term, but they would also open the door to radically new uses of power that will transform the grid and cut both costs and emissions.

Tony Wood says that as home batteries come on the market from as early as next year, people will be able to store power from their solar panels during the day then use it in the evening when demand on the network is greatest.

“This will reduce the load on the network, cutting power prices not just for solar panel owners but for everyone,” Mr Wood says.

“But network businesses have some difficult decisions ahead to ensure they remain profitable.”

“The journey to a new electricity system has begun. If we manage the transformation poorly, consumers will pay again. If we do it well, everyone can benefit from a more efficient, sustainable and affordable system.”

Read the report

For further enquiries: Tony Wood, Energy Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au