I didn’t mention golf, sex or beer, but hopefully I got your attention. Although I sit in the big brown land down under, I have been watching the evolution of PV FIT’s around the world for almost two decades.
Recently, it’s become clear to me that part of the problem with bad PV FIT outcomes (eg the NSW G FIT debacle) is that there are too many biased and vested interests involved in FIT policy design – and the PV industry is one of them.
Don’t get me wrong, I applaud what they can achieve when they are designed with a clear society wide goal in mind, intelligent architecture and mechanisms to cope with a dynamic world.
But the reality is, in many cases is they are not.
It’s no surprise; the combinations and permutations of outcomes, metrics and architecture are huge; and all too often over simplified. Our world just isn’t that simple anymore and in my humble opinion, the PV industry runs the risk of designing its own demise unless we face up to some realities.
Never leave the kids in the lolly shop.
My view is that Government, Utilities and the PV industry are like kids in a lolly shop when it comes to PV FIT design. We all deserve a treat from time to time, but can we really be expected to objectively decide how many at what rate and how often? Not my kids, that’s for sure.
Excluding Government for a moment, we are talking about businesses that cannot exist without chasing profits, no matter how idealistic the mission statement is. It’s therefore intrinsic that we will hungrily try to bias FIT’s to help us make profit and sometimes blindly, at the expense of other sectors of society.
Utilities who aren’t in PV, logically want FIT’s that don’t undermine their existing sales, upset their network or destabilise future plans. Typically conservative, it’s no wonder they try to influence PV FIT design to suit their particular needs. Locally, we see utilities arguing against Gross FIT’s because they claim NET FITs encourage more energy efficiency, yet reducing electricity tariffs for those who consume more. We have seen them publically lobbying for 10%+ increases in electricity prices to cover network or peak load requirements, yet blaming the PV industry when FIT costs add 1% and denying that Distributed generation has any tangible benefit.
PV Companies also need profit and with growth exceeding 400% in Australia in 2010, the profits – and stakes – have never been higher. With so much at stake who wouldn’t argue that generous FIT’s designed to build future opportunities made sense.
And then there is Government. Australia has a particularly convoluted political system and seems to have adopted a Gen Y- like short term policy attitude of “give it (votes) to me and give it to me now” and “there’s a new trend, stop everything, focus on that and reverse policy”. NSW’s recent FIT policy debacle is a case in point.
Fearing rumours about an Opposition FIT policy, the incumbent Government quickly announced an FIT proposal in 2009. Stakeholders were invited to comment on potential policy design. Reviews were held and analysis was done.
The Utilities argued on mass that PV was uneconomic, costs were already too high and a PV FIT made no sense. In fairness, they were trying to defend their reliability and cost structure. But did they of could they really predict the willingness of consumers to own generation assets, or massive PV industry growth? No.
The PV industry argued that FIT’s worked everywhere else and industry growth was essential if we weren’t to be left further behind. We all pushed every political hot button we could. In fairness, the PV industry was typically looking for $0.35-45c/kWh which was generous compared to retail electricity prices. But did we or could we really consider the potential network penetration risks if it was highly successful? No.
And the Government? After protracted silence they suddenly and surprisingly announced not only a Gross FIT, but a $0.60c G FIT at that. Utilities were outraged. The PV Industry warned it would overheat. But the Government saw vote potential and ignored everyone’s advice.
The schemes massive growth and subsequent overheating – and collapse – are well documented.
These typical examples demonstrate why I believe it is time for us to all take a step back and push for the development of unbiased and independent bodies to regulate the design and architecture of PV FIT’s.
Yes, it’s essential that we all contribute to the debate. But ultimately I believe it’s time for us to accept that independent and unbiased adjudication on PV FIT design will be to all our benefit.
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