Why installing solar roofs on the roofs of low-income people is “economic evidence”


Rooftop solar subsidies are “no longer necessary” for most Australian homeowner households, according to a new study, and should be redirected to struggling electricity customers, where they would provide a better economic and environmental outcome for them. all.

The study, published in the journal Energy Policy by Tracey Dodd and Tim Nelson of the University of Adelaide, senior economist who currently leads the energy markets team at Iberdrola Australia, compares the net benefits of rooftop photovoltaics in low-income homes versus those standard customers.

Based on energy consumption data from AGL Energy – where Nelson was previously chief economist – the study compares the profiles of 1,000 Victoria-based customers participating in the retailer’s hardship program to those of 1,000 generic customers based in Victoria.

The results reveal that putting more solar power on “distressed homes” – defined for this study as low-income rental properties – promises to reduce annual grid-based electricity use by 40%, reducing costs. greenhouse gas emissions of 1.6 tCO2e per household per year and reduce energy bills by $ 2,908 per low-income household over 15 years.

“We need to install solar power on all low income rental rooftops, this is economically obvious and a critical way to move towards a just transition,” Nelson said on LinkedIn in an article related to the study.

As the study explains, this is largely explained by the fact that customers in difficulty had a consistently higher electricity consumption during the day – and therefore a higher potential solar self-consumption rate – for various reasons, including more people under one roof.

This “materially higher” self-consumption of 36%, compared to only 26% of self-consumption of the “standard” customer profile, resulted in a greater part of the production of the PV system (the study models a system sized at 3 kW) moving the grid -based on electricity, at a price of $ 0.27 per kWh.

The resulting net present value for this cohort of clients was thus $ 2,907.97, almost $ 1,000 more than the cohort of “standard” clients, and the payback period was on average only 4.7. years.

“Simply put, there is a better economic return on investment for society by subsidizing solar PV installations for struggling customers,” the study says.

“The returns are likely to be even greater when broader benefits are factored in, such as reducing overall household hardship and reducing aggregate customer debt. “

But beyond illustrating the many benefits of a more equitable approach to rooftop solar deployment in Australia, the research also claims to “shed new light on the photovoltaic economy in Australia” and, to in turn, on the effectiveness of the current government. discount policies.

According to the authors, in each scenario modeled in the study, the simple payback period for rooftop solar power is less than 10 years (see Table 2), compared to existing Australian grants, which use a 15 years production.

In particular, this raises questions around the federal government’s Small-scale Renewable Energy Scheme (SRES), which the authors describe as “poorly targeted and overly generous” and in need of urgent reconsideration.

“Our results… show that government rebates are theoretically no longer needed as an incentive for homeowners who intend to reside in their property for more than eight years,” the report said.

“Indeed, Australia’s federal and sub-national governments could generate greater economic, environmental and social benefits if current incentives, which have benefited households that no longer seem to need them, were shifted towards other initiatives. “

What the authors would really like to see is a revision of the current approach, which offers a standard discount to all households, towards a structured mechanism that provides photovoltaic subsidies based on need and the net reduction in energy. energy drawn from the grid.

As it stands, low-income households spend around 8% of their total disposable income on electricity each year, compared to 3.5% for middle-income households, and yet are the least likely of all customers to have electricity. ‘have solar home energy, with 7% access, compared to about 20% of other energy customers.

According to the Australian Competition and Consumer Commission, this means struggling customers face electricity bills that are on average 40% more expensive than standard customers.

“Solar PV is now an economically advantageous technology for the ‘standard’ household in Australia, even without subsidies due to the falling cost of solar PV technology and increased tariffs provided by the grid,” concludes The report.

“Our results also reveal higher electricity consumption among households in difficulty, thus increasing the economic, environmental and social return on investment of the deployment of solar photovoltaic energy.

“As such, there is a need to redirect solar photovoltaic policy support to households in difficulty. Additionally, we show a market solution that could unlock the shared value of PV adoption by low-income households, given the superior profitability of this cohort. “


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