Solar News

Rebate Policy Change Undermines Confidence in Solar Industry

22 May 2011
Category: Renewable Energy

by Oliver Hartley

From California to Germany to China, the solar industry is booming. Last year alone, more than 18,200 MW of solar power was installed worldwide. Over the past decade the efficiency of solar panels has increased, while production costs have fallen, and hundreds of thousands of jobs have been created in one of the key industries for the future.

Lagging behind in this development, however, is the country with the best solar resources in the world: Australia. In 2009 and 2010, the solar market finally took off here, too, encouraging a number of multinational solar companies to open offices in Australia and to invest in this market.

I was delighted to return to Sydney last July to start Q-Cells Australia, after 10 years abroad following my solar research days at the University of NSW. Q-Cells Australia is a subsidiary of a leading multinational solar company, Q-Cells SE, which originated in Germany. My mission was clear: contribute to the development and growth of the Australian solar market and provide high-quality solar modules and services to our customers. I recruited people and we built logistics centres, developed our retailer network and provided engineering services.

The mission seemed achievable. However, less than a year later, it is becoming clear that we underestimated the sovereign risk of investing in renewable energy in this country.

NSW has led the world in solar energy research and Australia can be proud of decades of excellent engineering of solar systems. But the benefits of the market’s development in the past couple of years are now seriously jeopardised due to recent policy changes across Australia, particularly in NSW. The fruits of all the hard work could dissipate abroad once again.

Our company operates under a wide variety of renewable energy policies in jurisdictions as diverse as the US, Spain, France, Germany and Japan. We accept that economic policy settings are subject to the influence of politics and are liable to change as the electoral pendulum inevitably swings. But there are ground rules that are accepted in order to ensure that these changes do not create sovereign risk for investors.

Unfortunately, the recent changes to the solar rebate policy in NSW are set to create a level of long-term uncertainty and distrust in government policy that is virtually unprecedented in our experience of working in advanced economies.

The biggest concern is the proposal to make changes that effectively breach investment contracts and negatively affect past investments. A retrospective change to the feed-in-tariff rate would undermine investor confidence and create a level of uncertainty that will have consequences well beyond the borders of NSW. The solar industry would need to come to grips with a commercial environment where government-backed contracts can be reneged on at will. No industry can be expected to flourish under such conditions. In the case of our company, we will postpone the planned extension of our workforce in Australia until we have regained confidence in the politics of solar energy in this country.

Our experience tells us that for an industry to grow, the ground rules need to be clear and predictable. In Germany, a feed-in-tariff was guaranteed for 20 years and, once signed up, investors and customers could rely on it. That enabled the German renewable energy industry to become an economic solar powerhouse that now employs more than 60,000 people.

If this proposed change becomes law it will introduce a level of sovereign risk for renewable-energy investments in Australia – and in NSW in particular – that will undermine the confidence of customers, investors and businesses for many years to come.

(Oliver Hartley is the managing director of Q-Cells Australia. He undertook his doctoral research in photovoltaics at the University of NSW in the late 1990s before working in the solar industry in Britain and Germany).

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We install solar systems in Northern NSW and Southern QLD.


QLD:
Gold Coast (from Coolangatta to Southport), Nerang and Hinterland (Beaudesert) and out West (Warwick, Stanthorpe, Killarney)


NSW:
Northern NSW (Tweed Heads to Yamba, including Evans Head, Byron Bay and Ballina); the Far North Coast Hinterland (Grafton via Lismore to Murwillumbah) and out West (Casino to Tenterfield, including Drake and Tabulam, as well as Woodenbong and Bonalbo)

For larger system we also go up to Brisbane or down to Coffs Harbour and even Glen Innes. Other places by arrangement.