Solar panel subsidy proves costly for Australia

Garrett pulls plug on solar |

TENS of thousands of households will miss out on an $8000 solar panel rebate after the Rudd Government abruptly ended the program three weeks early.
From today the rebate will be replaced with a far less generous solar credits scheme that retailers say will typically net Victorian households about $4000 for a one-kilowatt system. This will be cut over time to about $800. A one-kilowatt system typically costs about $12,500.
Environment Minister Peter Garrett blamed the sudden move on a cost blow-out, from an original estimate of $150 million to $750 million a year, due to its unexpected popularity. Mr Garrett set aside a further $271 million in the May budget to fund the rebate scheme until June 30, but it is understood that money has been almost entirely consumed by 30,000 applications in the past month.

Subsidies are not a good thing from an economic point of view. The solar panel subsidy which was ending on June 30th was removed earlier due its high cost which clearly shows that there is a demand for solar power at a lower price point.

However, I think the real economies of scale lies not in small solar panels on houses but in the large solar farms especially using concentrated solar power. That is the area where $750 million should have been spent.


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