Solar production in our capital cities surpasses Germany's by 42 per cent.

Solar production in our capital cities surpasses Germany's by 42 per cent. Photo: Justin McManus

Australians are supposed to be among the fastest consumers to take up new gadgetry but when it comes to adopting solar energy the country remains very much in the shade.

World leader Germany has installed 436 watts of solar photovoltaic capacity per person, or triple sixth-placed Australia's 144 watts, according to international figures.

That gap is despite Australia's abundant sunshine. Average solar power production in capital cities eclipses Germany's by 42 per cent, the Australian Solar Council estimates.

Even Hobart in the far south easily generates more per roof-top, with an average daily panel output of 3.7 kiloWatt-hour per kilowatt of capacity versus 3 kWh in the relatively gloomy Germany. By the same measure, Darwin leads Australia, with 4.7 kiloWatt-hours, with Sydney at 4.1 and Melbourne with 3.9.

This is despite the fact that many advances in solar energy technology have been home-grown, particularly in the labs of the University of NSW. Leading international solar firms typically have UNSW alumni among their top scientists.

Australia's standing in renewable energy is about to take a few leaps backward.

This week, the Abbott government released the report of its handpicked panel reviewing the national Renewable Energy Target. All the recommendations call for cuts. While the government is yet to declare its hand, few expect current goals to be retained.

Even prior to the review, Prime Minister Tony Abbott claimed the target – now set at 41 terawatt-hours of renewable energy annually by 2020 – was driving up costs for consumers. The panel's own modelling found prices are higher until 2020 but drop afterwards.

The report says the last thing Australia needs now is more electricity capacity as demand continues to wilt rather than grow as had been predicted. Clean energy proponents say that most coal-fired power plants are inefficient and old by global standards, and the dirtiest could be retired with benefits for emissions reduction efforts. 

For the small-scale component of the renewable energy target, the panel said there was "a strong case for.... either closing the scheme immediately or accelerating the phase-out", and predicted a hit to the solar industry.

"Modelling indicates that repeal of the [scheme] would have an immediate effect of reducing the install rates of rooftop PV by at least 30 per cent and the number of solar water heaters by around 16 per cent," the panel's report said.

"However, by the early 2020s, the rate of small-scale solar PV systems installed each year would recover to a rate similar to that if the [scheme] was left in place."

Australia currently gets about 14 per cent of its electricity from renewables, less than the 22 per cent average reported by members of the International Energy Agency. By 2020, $1.7 trillion will be invested in clean energy, raising the share to 26 per cent, the IEA said this week – while Australia's share looks likely to stall.

"Australia should be a global leader in renewable energy delivery," says Mark Butler, Labor's climate change spokesman. "We have an abundance of sun and waves resources and the expertise and innovation to develop the technologies."

"Under Labor, Australia was ranked in the top four most attractive places in the world to invest in renewable energy," says Butler. "Since Tony Abbott began his scare campaign against renewable energy after the election, Australia has fallen to ninth."

That ranking is likely to sink further, with companies such wind-farm operator Infigen Energy saying any change to the current goal – such as a lower 2020 target to reflect weaker power demand – will not only freeze investment but risk bankrupting generators as the price of renewable energy certificates crashes.

The price of those certificates – the industry's currency – is running at about $26 per megawatt-hour because of uncertainty in the industry.

"The government's own modelling has shown that existing renewable energy generation plants are receiving one-third less revenue today than they would be if the legislated 41TWh target were rock solid," says Jonathan Upson, Infigen's government affairs manager.

"If the target were to be substantially reduced, this situation would continue, or even get worse, which would have a devastating effect on these investments made in good faith, and required by the legislated Renewable Energy Target scheme."

Speculation the government would seek to "grandfather" existing investments and limit the damage to Australia's standing as a reliable investment location aren't convincing, Upson says: "There's likely no way to intervene in the [certificate] market to protect existing investments that's fair, foolproof and simple."

The expected target cut is the latest in a series of government moves to curb renewable energy. These include the scrapping of the Coalition election promise of a Million Solar Roofs policy, and its attempts – so far blocked in the Senate – to abolish the $2.5 billion Australian Renewable Energy Agency and the $10 billion Clean Energy Finance Corporation.

Voter interest in renewables may get tested in the next nine months at state elections in Victoria, NSW and Queensland.

Environment Minister Rob Stokes told Budget Estimates this month NSW remains committed to a 20 per cent target for renewable energy by 2020 but conceded there is no on-going tracking nor back-up plan if the federal government drops the national goal.

The ACT, meanwhile, will press ahead with its ambitious goal of sourcing 90 per cent of its electricity from renewables by decade's end.

On Wednesday it will open the 20 megawatt Royalla Solar Farm – the largest solar plant on the national grid – and take bids for 200 megawatts of wind energy.

"It's a fairly bleak prospect for the renewable energy industry without supportive governments," says ACT Environment Minister Simon Corbell. 

Corbell dismissed critics who say ACT consumers will be heavily out of pocket. The weekly cost to achieve the 90 per cent goal will be $4 per household by 2020 which will be offset by equivalent savings from mandated energy efficiency measures.

"We are very confident that you can achieve large-scale renewable energy generation at a very affordable price for consumers," Corbell says. "It requires leadership and it requires demonstration of what can be done."

Australian homes continue to add about 70 megawatts of PV per month, close to 2013 levels, despite a roll-back of most state government support.

Should the small-scale element of the Renewable Energy Target be scrapped, the price of solar for a typical 3-kilowatt system would rise by about half to $7500 from $5000 now, according to industry estimates. 

Darren Gladman, policy manager of the Clean Energy Council, said any cut is likely to be swiftly implemented: "People who are thinking about it should really be putting in orders now."

According to Danny Kennedy, founder of US-based solar retailer Sungevity, the end of support would lengthen the five-year payback period for a typical system to about eight years.

Kennedy, a former Sydney-based Greenpeace activist, despairs at the clustering of climate sceptics around the Prime Minister – not least Dick Warburton, head of the renewable energy review.

"My sense is there is an ideological agenda at work, not a rational one," Kennedy says.

Australia poured $10 billion into solar panels over the past five years – almost all of it in residential systems. A report out this week by the Australian Energy Market Commission bolstered the case for solar.

Its long-awaited networks report found that north-facing solar panels cost the equivalent of $120 a year to networks – a fraction of the $1000 impost a typical consumer using a 5kW air-conditioner inflicts on the system.

Interestingly, if the household points the solar panels to the west, maximising the benefits to the grid of reduced demand during summer peaks, then solar's implied subsidy disappears entirely.

"It's great," says Gladman. "The fact they've actually quantified this means that we're not boxing at shadows anymore with people making accusations that solar is being cross-subsidised."