The New South Wales government has just introduced a Solar Bonus Scheme that could have residents earning as much as $10,000 a year to send clean electricity to the grid from solar panels on their own roofs.
The incentive is a Feed-in Tariff like the one that was so popular in Germany that they ran out of solar panels last year, and that shook up the global solar market when Spain introduced theirs a few years ago, because they paid enough so that average homeowners could earn money from adding solar panels on their roofs.
The NSW government expects that most homeowner’s earnings would tend to be more in the range of $1,500 a year, just based on extra roof space estimates. But they could be in for a surprise. German homeowners were very resourceful in finding space somewhere for solar arrays, even over fences, churches, barns and pastures, once offered a way to pay for a renewable energy power plant without going into debt.
A Feed-in Tariff is a cash payment for renewable electricity produced, by anybody. You don’t have to be a utility to make electricity and supply it to the grid. If you have enough space (and sun) on your roof to supply both your own electricity needs and some extra for the grid, that extra going to the grid is paid for by your utility.
Two essentials are needed to make a Feed-in Tariff succeed:
- The payment must be cash. A “credit” on your bill that expires at the end of each year, like California offers, tends to discourage homeowners from installing over-sized systems that send free energy to the utility.
- At least two to one payment ratio. The relationship between the retail cost that you pay for your utility electricity, and the amount that your utility must pay you if you supply it. Germany initially paid three times the retail rate.
NSW electricity costs 19 cents per kwh, and they will pay 60 cents per kwh. That is why this is poised for the same kind of rocketing success that Germany saw with three times retail, and perhaps even more, as Australia is blessed with great insolation.
Both the German and the Spanish programs have contributed to the drop in solar prices that benefit everybody worldwide, by increasing solar adoption so fast. The three to one rates don’t have to remain that high. Germany has now tapered down its incentive to two times the retail rate.
Feed-in Tariffs are a way to push renewable energy onto the grid fast and affordably, both for homeowners, and for utility ratepayers who no longer have to subsidize either the new utility-scale power plants that would otherwise have to be built, or the new transmission costs to bring the power from them.
Image: Flikr user Margil
Source: Energy Matters Australia