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Feed In Tariff Speech to Parliament

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Ellen Sandell
State MP for Melbourne
24 November 2016

Ms SANDELL (Melbourne) — It is my pleasure to contribute to the debate on the Energy Legislation Amendment (Feed-in Tariffs and Improving Safety and Markets) Bill 2016. I have been listening to the debate quite intently. I must say I have been quite confused listening to the shadow minister for energy and resources from the Liberal Party, who in one breath seems to be for solar power and in the next seems to be staunchly against it. I hope that before the election he does clarify his position with the voters, who I am sure will be able to see through his cynical posturing that seems to be trying to be everything to everyone but in fact is just offering nothing.

This bill enacts recommendations from the first stage of the Essential Services Commission's distributed generation inquiry, and the Greens welcome many of these recommendations, especially the recommendation that a fair price for rooftop solar energy should include consideration of its contribution to offsetting climate change. But we do not feel that this bill does it in a way that includes a truly fair mechanism for achieving this. The Greens will be supporting the bill, but, as with a lot of the bills that this government is bringing forward on climate change and renewable energy, we do need to go a lot further than this bill does. Put simply, the current regulations governing rooftop solar do not look after the interests of everyday Victorian households. Instead they protect the big power companies and their monopoly over our energy market.

On 1 January this year people with solar panels were hit by a 20 per cent cut to the amount that they are paid for the energy they feed back into the grid, and it is about to get worse for those households. Next January there will be an even bigger cut. According to a report commissioned by the Total Environment Centre, over 67 000 households will be affected by the closure of the Victorian transitional feed-in tariff at the end of 2016. Currently these households are being paid a minimum of 25 cents per kilowatt hour for the excess solar electricity they feed from their solar panels back into the grid. As of 1 January 2017, this will drop to between 5 cents and 7 cents per kilowatt hour, which does not seem to be very fair. A fair feed-in tariff for solar power would be the same amount that it costs to buy the energy from an electricity company — a one-for-one unit price. Otherwise what happens is power companies can buy a household's excess solar energy for between 5 cents and 7 cents and sell it to their next-door neighbour for the retail price, which might be around 25 cents.

A feed-in tariff should really be set at what a small-scale generator such as a household could make by selling power to a neighbour after allowing for the cost of independent supplier infrastructure or the marginal cost use of the network. The household has done the hard work to stump up the capital to buy the solar panels. It has saved our community money by not needing extra grid infrastructure, as the power just goes straight to the neighbour from the household. It uses very little grid infrastructure and has also made a contribution to mitigating climate change. So why should an energy company be the one to make a huge profit from this household's investment, and why should the household be forced to pay huge amounts for grid infrastructure, which we know has been overinvested in in many places?

Why is the government proposing this approach? Currently the discussion on feed-in tariffs has been held within the context of the existing energy market structure and rules created from the perspective of the existing energy supply industry. This has led to a debate about the appropriate level of a feed-in tariff which reflects its impact on costs within the existing market framework. But the present electricity market is actually distorted in many ways, so this is really not the way that we should be looking at feed-in tariffs.

In the present electricity market the electricity network operators have monopoly power, and this distorts the role of distributed energy systems. Unfortunately this bill does not adequately deal with this distortion. It actually upholds the status quo. This status quo is really only of benefit to the big energy companies; it is not of benefit to consumers and certainly not of benefit to our climate. If we do want to get serious about tackling climate change, we should be striving to reward and incentivise people who install solar power on their roofs as much as we can here in Victoria. This is especially true given that we know that the people who have put solar panels on their homes often live in rural, regional and outer suburban areas. We also know that these households are not in the high income brackets. Typically solar owners earn less than the average Australian household. So the last thing we should be doing to households on limited incomes in regional areas that have taken the initiative to invest in clean energy for their communities is to rip them off. The changes proposed in this bill may provide some modest gains for some solar energy owners, but they also demonstrate the need for a fairer reflection of the benefits that rooftop solar brings to our electricity grid because it will mean that it is not of benefit to a lot of households.

Household rooftop solar provides cheaper, cleaner and more efficient energy, and coupled with battery storage rooftop solar it would also provide a decentralised supplier for Victoria. This is what we should be moving towards because it has broader societal benefits such as energy security, particularly in areas that are prone to bushfires. What we need to do in Victoria is to step back and start thinking about the systemic change that we want to our energy markets. This systemic change must result in people being able to take more control of their energy creation and their energy consumption.

Such a change must mean that people are incentivised to contribute to clean energy, which they want to do.

Thirdly, we need to make changes that mean our grid is robust and smart enough to deal with not only extreme weather events, which are becoming more prevalent with climate change, but also with the coming clean energy transformation, which is inevitable.

Thousands of people have written to the Greens and to my office upset that their feed-in tariffs were cut last January and will be cut again this coming January. I know this government talks a big game on renewables. They are very keen to advertise their modest investment in renewable energy projects, particularly in marginal seats and particularly in Greens marginal seats. There is no doubt that they have done some good things — and I commend the minister on that — such as looking into how to incentivise community-owned energy and partly rolling back the restrictions put in place by the previous coalition government on wind farms, although that did not go as far as we would have liked.

The government has also introduced a Victorian renewable energy target, which is great, but I would note that that was after a strong campaign from the Greens and community groups like Yes2Renewables. These are good steps, and they are good steps in the right direction, but if we truly want to mitigate climate change, small steps are simply not enough. We must take giant leaps. We are fast running out of time. Perhaps we may have already run out of time to avoid the very worst impacts of climate change. After this speech I will be attending a briefing hosted by Environment Victoria and a member of the government, talking about the latest science on climate change. I hope that everyone from the government attends that climate science briefing to learn what we need to do to avoid the worst impacts of climate change.

Here in Victoria we have some of the worst culprits in the entire world when it comes to creating climate change. That is largely due to our huge emissions-intensive brown coal industry. If we have any hope of avoiding dangerous climate change, we need a comprehensive plan to phase out coal, to phase it out quickly and to phase it out in a way that actually supports communities through that transition and does not leave them on the scrap heap at the last minute. We have places like Sunraysia, which is where I grew up, that have more sun than the Sunshine Coast. If Germany can incentivise rooftop solar in their cold, cloudy country, why is it that we cannot?

It is time for us to look at this issue differently instead of just trying to make small changes, such as a couple of cents to the feed-in tariff within the existing energy market rules and regulations, which are outdated. We actually need to look at how to truly reform our energy market at a state level. We need to show leadership and advocacy at a federal level as well. We need to seriously look at how solar is incentivised in this state as part of that. Unfortunately this bill does not go far enough in those directions, but I hope that the government will bring forward more bills before it is too late to look at some of the concerns that I have raised.

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Ellen Sandell
State MP for Melbourne
24 November 2016




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