Solar to add billions to Australian power bills

THE federal scheme to promote the installation of rooftop solar panels and hot-water systems will have a cumulative cost to consumers of $4.7 billion by mid-2020, adding to pressure on household power bills.

The prediction is contained in advice to the nation's energy ministers, which also forecasts rises in residential electricity prices of about 37 per cent in the three years to 2013-14, with an average annual hike of 11 per cent.

The predicted rise shows prices may increase faster than previously expected, with predictions in July suggesting the three-year rise was expected to be in the order of 30 per cent.

The advice also shows that the carbon tax is likely to hit electricity prices hardest in Queensland and NSW, where power prices are tipped to rise by 42 per cent over the next three years - compared with a 32 per cent rise without a carbon price.

This is broadly in line with Treasury modelling, which suggests that the carbon tax will add about 10 per cent to power prices from 2013-17.

Queensland, NSW and the ACT faced the highest predicted price rises over the next three years, at 42 per cent.

They are followed by South Australia, with a predicted rise of 36 per cent; Victoria (33 per cent), Western Australia (30 per cent), Tasmania (25 per cent); and the Northern Territory (16 per cent).

The reports, by the Australian Energy Market Commission, were released by the Ministerial Standing Council on Energy and Resources.

After the meeting, federal Resources Minister Martin Ferguson announced a Productivity Commission inquiry into aspects of electricity network regulation.

Mr Ferguson said that significant investment was required in electricity networks to replace and upgrade ageing assets, to meet growing levels of demand and facilitate a transition towards clean-energy technologies.

"Critical to delivering our energy needs is ensuring that our network regulatory frameworks are delivering efficient and reliable outcomes for consumers," Mr Ferguson said.

But the energy network businesses hit back, saying network prices had to rise to ensure safe electricity supplies to consumers and because the costs of raising funds offshore was increasing.

The AEMC reports found that on top of the $4.7 billion from small-scale renewable projects, energy consumers would also pay for the costs of state-based feed-in tariffs for households for injecting power back into the grid over the life of systems that have already been installed.

The AEMC found if the states adhered to caps on feed-in tariffs - which several states are imposing in an attempt to rein in generous rebates - then the take-up of the small-scale renewable energy scheme should fall from existing levels.

"But forecasts of higher retail electricity prices and reductions in the technology costs for solar PV will still provide incentives for some consumers to take up the SRES," the AEMC found.

As the SRES is a national scheme, decisions by state governments on their feed-in tariffs hit all consumers, as retailers are required to buy certificates that are then "passed through to all consumers in Australia".

By the middle of this year, about 400,000 households had PV solar systems installed.

The number of solar rooftop panel installations could reach more than 1.5 million by 2019-20 - accounting for more than one in every four owner-occupied households - if a carbon price starts next year.

The main beneficiaries of the green policy have been people living in houses and semi-detached homes in suburbs with low population densities, young children and often have three cars to a dwelling. By contrast, young people, those renting, the very affluent and people in higher population density areas were unlikely to tap the scheme.

The majority of the new solar installations were expected in NSW and Queensland, with a significant number in Victoria and Western Australia.


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