The ACT government has taken the lead in framing a mechanism to encourage large-scale renewable energy developments by ditching a direct subsidy for a 22MW solar plant and replacing it with a large-scale feed-in tariff (FiT)
The territory will become the first jurisdiction in Australia to implement a feed-in tariff for both medium and large-scale solar (although Victoria has promised a large-scale FiT) and will make a further innovation by setting the large-scale FiT by tender, as is practised in other countries.
The ACT announced last year that it would spend up to $30 million to support the creation of a 22MW solar plant in the capital, but it now believes that a broader-based mechanism such as a FiT would possibly encourage more large-scale facilities to be built.
Indeed, under the revised plan unveiled on Monday, the government will support FiTs for up to 210MW of large-scale solar installation (more than 200kW) – seven times its original target. It will cap medium-sized installations (between 30kW and 200kW) at 15MW, and will apply the same cap on small-scale solar (up to 30kW).
The federal government has been criticised for choosing to channel its support for emerging renewables through a series of direct subsidies such as the Renewable Energy Demonstration Fund and the Solar Flagships program. While these initiatives have been welcomed by the industry, they would much prefer a broader mechanism such as FiTs, or loan guarantees, to achieve the very effect being sought by the ACT – a much broader and more rapid roll-out.
The advantages of this are numerous. It spreads the risk among competing technologies, switches the investment decision away from bureaucrats to bankers and investors, and creates a more competitive tender.
The solar industry will also welcome the initiative for medium-sized installations that will likely be placed on the roofs of shopping centres, warehouses and large office buildings. The industry has argued that it makes little sense providing generous incentives for household solar when more economic installations could be encouraged on commercial premises.
The territory’s energy minister Simon Corbell says he hopes the initiative will put Canberra at the forefront of renewable energy generation in Australia, and create a new “solar capital”.
“This approach has been taken following feedback received from industry during the solar facility process which indicated a strong preference for access to a feed-in tariff as an alternative to a one-off capital payment,” he says.
The medium-sized installations will benefit from the same FiTs as exist now in the territory for small-scale solar, while the premium rate set for large-scale generation will be set by an initial auction of 40MW.
“This auction will allow the government to test the market and analyse the effectiveness of the large-scale scheme,” Corbell says. “The government will then make decisions about any future auctions under the large-scale category. “
“The government anticipates this auction will occur in the first half of 2011 and it will ensure that Canberrans get the highest possible level of renewable energy at the lowest possible price.”
Corbell says the government will also amend the legislation to allow community-owned renewable energy generators access to the feed-in tariff scheme, which he says will benefit those who could not access the scheme due to issues such as shared property ownership.
