Growing subsidy

In 2017 the subsidy cost of rooftop solar was nearly $500 million. At the current rate of increase, the expected cost in 2018 will be at least $1.2 billion. Any chance of reducing electricity bills through the introduction of the National Energy Guarantee (whatever that is) will be swamped by the impact this growing subsidy has on household bills.

This impact is avoidable. When the subsidy was introduced by the Gillard government it included a provision to allow the minister to reduce the value of Small Technology Certificates if the cost of subsidies topped $240 million in a year. No minister has used this provision to date.

This is now a matter of priority. Of the three in four households that do not have solar roof panels, large numbers are renters, apartment owners, pensioners and low-income households who do not own the property in which they live or cannot afford the upfront capital cost despite the subsidy.

Lower income people are copping a double whammy. Not only do they pay for solar panels for higher income households through the cost of the subsidies included in their electricity bills, they are also part of a diminishing pool of electricity consumers, wholly reliant on the grid, who are paying higher prices to pay for the generous feed-in tariffs enjoyed by wealthier households with solar panels. They are trapped in a scheme that transfers wealth from lower to higher income households.

Middle class welfare

A report by the Grattan Institute concluded that by the time subsidies run out in 2030, households and businesses that have not gone solar will have spent more than $14 billion subsidising those that were able to afford solar installation. This is middle class welfare of the first order.

The history of governments regarding the cost of solar is devious. There has never been a requirement for electricity bills to show the subsidies that add to the total. Ministers never talk about the cost of solar and, when they talk about expected bill reductions from the National Energy Guarantee, they never mention the additional cost attributable to greater uptake of solar.

Even if there was once some justification for subsidising the cost of solar panels, that is certainly no longer the case. The cost of solar panels has fallen dramatically and uptake has gone through the roof. It's time the subsidy was removed.

David Leyonhjelm is a senator for the Liberal Democrats