The k2p blog

The evidence that subsidies are inherently unhealthy and can be counter-productive continues to grow :

Now the Sydney Morning Herald reports that in NSW

HOUSEHOLDS will pay an extra $600 on their electricity bill over six years to cover the $2 billion cost of the failure of the state government’s overly generous solar power scheme. If elected in March, the opposition will have the scheme, which runs to the end of 2016, reviewed by the auditor-general so that it can decide on its future.

From midnight last Wednesday, the government slashed from 60¢ to 20¢ per kilowatt hour the tariff paid to households installing solar panel systems because the surging number of applications has blown out the scheme’s cost.

In reports tabled in Parliament last week, the government disclosed that it had been advised that even after slashing the tariff for solar panels, it anticipated 777 megawatts of solar panels would be installed by the time the scheme closed. Already, 200 megawatts of capacity has either been installed or ordered. The reports detailed the total cost to households is forecast to reach $1975 million by 2017, placing a burden on homes at a time when power prices are rising sharply already.

The government refused to indicate when it first became aware that the initial 50-megawatt target had been breached, which triggered an automatic review of the scheme. The government began that review in August. However, Country Energy, one of the largest distributors in NSW, was informing solar industry officials as early as May that the target had already been reached. Even so, the government ”dithered until August” before holding its review, with the report only completed last week, opposition climate change spokeswoman Catherine Cusack said yesterday.

‘Labor’s billion-dollar blowout will be passed on to families who will pay at least an extra $100 per year on their electricity bills every year until 2017,” she said. The total cost to families in some regional areas could be $1000.

The NSW scheme paid existing solar clients 60¢ per kilowatt hour for all energy produced; other states have ”net” schemes that pay for surplus power after domestic use is taken off. NSW had the most generous scheme – now the least. Victoria’s net scheme pays 60¢ per kilowatt hour, Queensland pays 44¢ and Western Australia pays 40¢.

Tags: New South Wales, Solar power, subsidies

This entry was posted on October 31, 2010 at 8:03 am and is filed under Australia, Economy, Energy, Environment. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.