Why Australia Leads the World in Rooftop Solar


Aussies are hands down the world’s biggest solar fans. An astonishing one in every five Australian homes now has solar power.

This world-leading adoption rate had several causes; Australia’s initially very high solar subsidies and feed in tariff rates — back when the Australian government was a model for the world under its previous much more climate-friendly PMs; Kevin Rudd and then Julia Gillard.

These high solar subsidies and tariffs were coupled with extremely expensive grid power, and all against a backdrop of rapidly dropping solar prices.  In 2008, Aussies paid $12 AUD per watt installed, but by 2013 that had already dropped to $2.5AUD.

Neighborhood effect

According to Stephen King, Professor of Economics at Monash University in Melbourne, Australia, and the author of Unlocking the Infrastructure: The Reform of Public Utilities in Australia, adoption rates have fed on themselves.

“It’s the neighbourhood effect,” said King, who estimates that between 30% and 50% of his own neighbours have gone solar. “Your neighbours get solar power and their electricity bill drops $100, and you say ‘gee, I’ll have have some of that too.’”

Back in 2009 after the financial crisis Australia’s extremely generous subsidies and rebates and feed-in tariffs were designed to allow Australian homeowners to sell excess power from their solar systems to the grid. Like Spain’s and Germany’s, Australia’s feed-in tariffs were designed to be effective incentives, offering very high returns.

Utility death spiral begins

But these incentives led to such a run on solar that utilities were losing so many customers to “grid defection” that they then raised their prices to cover their losses. So in turn, even more people followed their neighbors and went solar.

“People looked at their network power prices and were not very happy about the rate of increase,” he says. “The power price goes up, so more people choose alternative power sources, but that reduces demand even further, so the prices go up again.”

In response to the lower prices now offered for solar exports, local installers say that Australian homeowners are increasingly asking about how to “self-consume” their solar output rather than export it back to the grid.

Battery storage, like the Tesla Powerwall is an obvious option. And by all accounts, this is where Aussie homeowners are likely to be in the lead too, because otherwise their power is just being spilled onto a grid that no longer values it.

But in any case, when we look at the future, Australia shows us what it will look like. Some even say that this coal-exporting nation of 20 million could be 100% solar in a decade and a half.

Image credit: ReNewEconomy

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