Solar for low income households

Fast read

Rooftop solar energy is gaining momentum globally, offering eco-friendly power and reduced electricity bills. While solar users benefit directly, non-users also enjoy potentially lower grid electricity.

Additionally, solar energy combats climate change and reduces pollution. However, high feed-in tariffs and Small-scale Technology Certificates (STCs) have temporarily raised grid electricity costs for all. Government initiatives and community solar farms provide solutions for those unable to afford or install panels, ensuring everyone benefits.

In essence, solar's rise promises a green, equitable future for all. If considering solar products, seek advice from a trusted, qualified local supplier or use Your Energy Answer's vetted partners for reliable expertise.

How does rooftop solar affect the public?

The global focus on sustainable energy intensifies. Solar energy, once an emerging industry, now stands at the forefront of local household solutions. Australia, being blessed with ample sunshine, has gravitated towards solar. With its promise of reducing carbon footprints and slashing electricity bills, residential solar installations have grown a lot.

Yet, for all its success, solar has it’s provoked a dilemma. It’s a technology primarily accessible to homeowners. Consequently, it leaves a segment of the population unsupported. This applies especially to those who rent or cannot afford the upfront installation costs.

While some champion solar’s benefits, others worry about its potential repercussions on households without solar. This applies especially to those who can not afford it or reside in rental accommodation.

residential solar system
Solar power significantly lowers the carbon footprint compared to conventional fossil fuel-based energy sources

The solar upsurge – does it benefit everyone?

The broad reach of solar has a notable effect. It is potentially decreasing the costs of conventional grid electricity, benefiting everyone. Interestingly, solar energy impacts not just those who adopt it, but the larger energy economy as well. This comes from the steady feed from solar systems across Australia during the day into the grid, reducing the load on non-renewable energy sources.

For example, during extreme summer days, electricity consumption traditionally peaked, and wholesale electricity prices often spiked as demand sometimes surpassed supply. Now, prices stay relatively stable due to the solar generation influx, especially when air-conditioning use soars. This stability during peak times showcases how solar energy can foster broader economic stability.

Remarkably, this reduction in price spikes benefits not only solar panel owners. All households, regardless of their solar status, enjoy these stabilised daytime prices. This financial relief during often financially taxing summer months is a clear advantage of solar energy grid integration.

A common fight against global warming

Climate change and pollution, the pressing issues of our age, find a formidable opponent in solar energy. Solar diminishes our dependence on pollutant-heavy fossil fuels> It combats the effects of global warming. Additionally, by trimming coal consumption, solar plays a pivotal role in decreasing airborne pollutants.

This dual environmental benefit serves the broader community. The collective gains, in terms of a healthier environment and improved air quality, are universal. Moreover, the reduced reliance on fossil fuels fosters a culture of sustainability and self-sufficiency, which is crucial in navigating the climate crises at hand.

The flip side – potential hiccups in the rooftop solar transition

The legacy of high feed-in tariffs

Feed-in tariffs represent the price solar households receive for sending their electricity back to the grid. Although contemporary tariffs are more modest, remnants of previously lucrative tariffs still exist. This relic of a bygone era in solar energy policy still resonates in today’s energy economy. For example, Queensland’s once-generous tariff for solar, set at 44 cents, now has residual implications.

Older solar systems generate substantial revenue from these tariffs, and this cost trickles down to the average electricity user. Therefore, we all pay for this early generosity via higher electricity prices. Non-solar owners, using electricity, cross-subsidise households with solar. This cross-subsidisation can, unfortunately, exacerbate the financial strain on those already struggling to keep up with energy costs.

However, there’s a positive catch. This situation is temporary; as these tariffs decrease and are expected to end by 2028, the related costs will also decrease for all. Moreover, as many of the old systems were relatively small, the overall financial implications are not that significant in the scheme of things. Over time, as these tariffs phase out, the playing field will level, and solar energy’s benefits will become more universally accessible.

residential solar system
Residential solar systems are getting bigger and bigger in size, meaning the rebate going to larger systems is also bigger than in the past

STCs & the unintended consequences

Small-scale Technology Certificates (STCs), colloquially termed ‘the solar rebate’, are a testament to Australia’s commitment to renewable energy. Yet, they have an inadvertent negative major side effect, affecting poor people. The STC rebate funds are generated via an additional cost to the electricity price. Just like generous feed-in-tariffs, we all via our purchased electricity and the supply fee pay for the solar rebate. Unfortunately, the rebate only benefits those who can afford solar.

It’s a complex system of subsidies, one that calls for a careful review to ensure equitable benefits across the socio-economic spectrum. Studies show that STCs, especially for rooftop solar, added about 2 to 3 cents per kWh to regular electricity prices.

So that’s as much as 10% of the average electricity bill is paid as a solar subsidy. This increase in electricity bills, although aimed at promoting renewable energy adoption, unfortunately, falls heavily on the shoulders of the less fortunate. Even very poor people in rental accommodation who never have a chance to get solar via their landlord are forced to pay for the solar subsidy to their more wealthy home-owning neighbours.

Yet like the high feed-in tariffs, this isn’t an indefinite predicament. With the phasing out of STCs rebate slated for 2030, this additional cost will evaporate, and solar system purchasers will have to pay for the whole system directly – without Federal Government support.

Governmental Initiatives to support the  less well off

Recognising the disparities, governments globally, and especially in regions like Australia, are stepping in, with electricity bill support for less well-off households. These interventions aim to bridge the solar divide. They are designed to ensure that the transition to renewable energy is inclusive and equitable. By rolling out these subsidies, they’re ensuring that even those who can’t afford solar panels, or those living in less sun-exposed areas of Australia, like Tasmania for example, aren’t punished financially by the “green revolution”. It’s a desire to democratise solar energy, making it a collective leap towards sustainability rather than a privilege of the few.

It would have been smart for the Federal Government to introduce an incentive for landlords to allow for solar on rental properties, which then would  create a more balanced playing field when it comes to allowing ALL Australians to take up the benefits of solar power.

There are now also more and more community batteries installed, where the whole region can benefit from a centrally installed battery to support the grid during periods of high demand and be available to absorb excess solar generation during the day. These community batteries are a glimpse into a future where energy resources are shared, and the benefits of solar energy are communally harnessed.

Harnessing the power of the community

Beyond individual households, communities are converging to ensure solar benefits can go to everyone. Community solar farms exemplify this. For those who can’t install their own solar panels due to certain issues, these farms are another option. By investing in them, they can get electricity or make a good profit. It’s a robust step towards decentralising energy generation and promoting inclusivity in the green energy transition.

In conclusion, while the big move to solar may bring short-term differences, it points to a sustainable energy future. Balancing personal gains with community benefits, the main message is – our future must be sustainable. Whether you have solar panels or not, the rise of renewable energy is a must if we do not want the world to become a permanent hot house.

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