Community and industry perspectives of domestic solar policy – Justifying the Research

And so, back to the statement of research: ‘I’m looking at community and industry perspectives of domestic solar policy’.

WHY?

1)      Australia needs to reduce its greenhouse gas emissions if we want to contribute to global efforts to reduce the potential impacts of climate change.

2)      In order for Australia to reduce its greenhouse gas emissions it must change its pattern of energy consumption.  This includes changing both stationary and transport energies.  Stationary energy includes the use of electricity.

3)      Emissions from electricity can be reduced in two key ways: reducing demand and changing the source of supply.  Reducing demand includes increasing energy efficiency and changing consumption patterns (although, ideally, this would not include sending emissions off-shore).  Changing the source of supply includes, in part, transferring our high dependence on coal-fired generation to renewables.

4)      The proportion of renewable electricity within Australia must therefore be increased.

QUESTION ONE: How can this be done? 

Two key mechanisms exist: command-and-control (regulatory based practices) or incentive/educational processes.  Regulatory processes are found to be more successful in producing economy-wide change; however they may also result in economically inefficient outcomes.  Similarly, incentives can introduce incremental change, but may also have inefficient outcomes.

5)      Australia’s central mechanism for increasing renewable energy is via a regulatory mechanism: the Renewable Energy Target.  The Renewable Energy Target mandates that a proportion of all electricity generation must come from renewable energy.  It uses a market-based mechanism to source least-cost renewables.  However, it also includes a sub-scheme that provides incentives for the voluntary adoption of renewable electricity generation by households.

QUESTION TWO: Do we want domestic solar generation in Australia?

6)      Yes, we do.  There are two reasons for this.  Firstly, now that the RET has had its target split into a large-scale and a small-scale scheme, those installing renewable systems will be contributing to our renewable target, without adversely impacting on the large-scale renewable energy industry.  Secondly, private investment in renewable generation is preferable to continued state-subsidisation of generation investment generally.  The cost-effectiveness of large-scale systems far exceeds the cost-effectiveness of domestic solar.  Ideally, then, governments should invest in large-scale technology preferentially to investing in small-scale generation, where government investment occurs at all.

7)      However, there are some definite issues regarding domestic solar policy.  Namely, there is an ideal SIZE and TIME OF USE for domestic solar energy.  Appropriately sized domestic systems, used at the right time, will maximise the consumption of solar electricity at the site it is generated.  This will reduce demand from the grid (which is, in most parts of Australia, emissions intensive) and will also reduce demand on the network.

8)      The converse to this idea is that feeding electricity into the grid, a system originally designed for a one-way flow of electricity, will increase network costs, and therefore electricity tariffs.  Allowing all generated electricity to feed into the grid and then consuming electricity after the sun has gone down, and everyone comes home from work, has the potential to increase peak consumption, and associated network infrastructure and generation infrastructure, and therefore electricity tariffs.  Concurrently, all electricity consumers currently subsidise the installation of domestic solar installations, while only those householders installing systems receive financial benefits through reduced electricity bills.

9)      Knowing that we do want householders to install domestic solar systems (point 6) we therefore want to know how we can maximise householder investment in solar systems.

QUESTION THREE:  How can we increase the proportion of domestic-installed renewable energy in Australia?

10)      Firstly, we must understand WHY some people have chosen to install systems.  Having data on the number of systems installed and the number of rebates accessed is useful as it indicates increasing preference for a technology; however it doesn’t show us the full story.  Rogers’ ‘Diffusion of Innovation’ theory assumes that all innovations will go through a predictable step-wise process towards societal acceptance.  Different types of people adopt innovations at different points in the process, with cascading effects for industry and society.  The most reliable way of discovering where people are at with this diffusion process is through social surveys.  These would be useful in determining the kinds of people installing systems, in particular their motivation, to determine the point in the diffusion process.

11)      This might appear to be a fairly academic pursuit (what’s the point?), but it can be very useful.  Firstly, it will tell you whether a technology type has enough ‘thrust’ to continue being adopted even if conditions change, for instance if rebates and subsidies are removed.  Secondly, the role of ‘trust’ is very important in the diffusion process.  While adoption of solar systems has been high, negative experiences by some households may influence their willingness to recommend an innovation – an important component of moving from an ‘innovative’ technology to an ‘accepted’ technology.  Identification of the position in the ‘diffusion of innovation’ process, and identification of the relevance of subsidies and trust in the purchasing process, then give an indication of how rapidly rebates can be wound down, or whether efforts need to be made to address regulatory issues that may be negatively impacting industry, and therefore adoption rates.

12)      Secondly, we must deal with the negative outcomes (point 7).  The removal of state-based feed-in tariffs would assist this greatly, as this would remove the incentive to load-shift to evening periods.  The prevalence for over-sized systems is more difficult to remove: systems are cheap enough now that industry can coerce consumers into installing larger systems that are still affordable.  This issue can be addressed via two means, and we return again to the idea of command-and-control or incentives/education.  Command-and-control methods could see a maximum capacity for systems within a grid.  This is already being implemented, although the preference for load-shifting has meant that even the 5 kW maximum inverter size in Western Power’s network can prove to be problematic.  Secondly, you can incentivise/educate.  What kind of incentives could you have to prevent over-sized systems?  For instance, you could amend the RET framework so that only smaller systems would receive subsidies.  This would, however, have a political backlash – why shouldn’t people receive more funding if they do their ‘bit’ for the environment a bit more than someone else?  Not to mention the RET has already undergone significant amendment in recent years and industry is now calling for stable-state legislation and policy certainty.  So the only real response is to educate: you could inform people that they should install smaller systems for the good of the community, but, potentially, at the expense of the environment.  This then leads us to our next question,

QUESTION FOUR: What is better, maximising benefits to the environment or minimising costs to the community?  And why is this important?

13)   The idea that there will be intrageneration inequity in the pursuit of intergenerational environmental gains is known within the academic literature and has been referred to as the ‘socio-ecological dilemma’.  There are no hard and fast answers when it comes to tossing up between environmental or social outcomes; indeed, these are increasingly the arenas of political dispute – irrigation for farming and rural communities versus water management, logging and the communities it sustains versus habitat protection, reliance on fisheries versus preserving fisheries for the future.  When it comes to these, largely political, decisions there will always be one group pitted against another; any democratically-elected government must try to find a middle-ground that best represents both groups.  This is done by firstly having scientific evidence to measure likely environmental positives and negatives, and social evidence to measure impacts on society of any policy decision.  Impacts on society will largely revolve around economic affects but also, and importantly for a democratic society, perceptions of equity.  Ensuring that political decisions reflect the consensus of society will be important in order to maintain confidence in political decision-making and to provide a starting point for appropriate incremental policy-change in future.

14)   The extent, then, to which governments can continue supporting the installation of domestic solar systems, through subsidies or through regulatory freedoms, will be informed, at least in part, by social politics.  So how do we determine whether society is willing to pay extra on their electricity bills in order to see increased renewable energy?  Through surveys and consultative research.  Surveys can be used to determine whether sections of the population would prefer social equity (through reduced costs) or environmental benefits, and the extent to which individual experiences inform these preferences.  The results of the survey can be used to determine future government action: would increasing access to installations for low-income housing make up for increased electricity costs?  Would consumers prefer to support other households like themselves or large-scale industry?  Could education play a role in increasing the acceptance of renewable technology?  These are the questions that can assist governments in determining the extent to which they can continue supporting a particular innovation at the expense of financial equity – and the results are not always obvious.  Similar studies regarding water allocation have found that individuals consistently suggest that they will undertake selfless, pro-environmental behaviours but that they maintain that ‘others’ will exhibit selfish behaviours.  The role then for publicity to inform a more egalitarian viewpoint within society may impact on acceptance of renewable energy technologies in future.

Aside:

There are, however, numerous other issues associated with domestic renewable energy.  How much energy goes into a domestic solar system to create it and will this consumption, along with the harvesting of minerals required to build a solar system, outweigh any environmental benefits associated with renewable generation?  How many systems are living up to their expected generation potential, i.e. how many systems are sub-par, or have been inappropriately installed?  The first question is a question for scientists:  there are a number of academic references that consider system-life costs, many with different outcomes.  It has been determined fairly conclusively, however, that any appropriately manufactured and installed system in Australia will generate enough electricity, and therefore abate sufficient emissions, to be worth the environmental ‘costs’ associated with its production.  The question of reliable installation is a question for the government and regulators.  Sadly, a recent finding by the Clean Energy Regulator has determined that approximately 4% of systems assessed as part of a random audit were found to be poorly installed.  This finding has consequences for the perception of the domestic solar industry, and will feed back into the diffusion of innovation through issues of trust.

What are you perspectives on domestic solar energy?  Have you installed it, or would you consider installing it?

Tags: Energy, renewable energy, solar energy