Mountain, Bruce ORCID: 0000-0002-2093-2038 and Burns, Kelly ORCID: 0000-0003-4031-3442 (2021) Is rooftop solar a play-thing of the well-to-do? A critique of the argument and evidence. Other. Victoria Energy Policy Centre, Victoria University, Melbourne, Victoria.

Abstract

The Australian Energy Markets Commission (AEMC) is nearing its Final Determination on rules to allow distribution network service providers (“distributors”) to charge distributed generators (mainly households with rooftop solar photovoltaics) to inject electricity into distribution networks. The “equity” of rooftop solar has been raised by proponents of the rules, and by others. Equity issues include how network expenditure to integrate distributed energy is recovered, how changes in the recovery of sunk costs is affected when solar homes increasingly self-consume, and the claim that solar installation is positively associated with wealth. Our previous objections to the first two arguments remain unanswered. With respect to the claims of wealth effects, we find that across all homes solar uptake is positively associated with wealth. But this headline fails to account for the fact renters do not install solar, because they lack the wealth to do so, but because property rights, transaction costs and building form make it difficult or impossible for them to install solar. The analysis of owned homes reveals that poorer households install solar at a similar or greater rate than richer households. Existing studies have failed to account for the difference between rented and owned homes in their ability to choose solar. When correctly segmented, the positive relationship between wealth and solar evaporates. Analysis of population data also suggests a negative relationship between household income and solar uptake. In Victoria in particular means-tested solar support policies in Victoria are stimulating the uptake of solar in greater number by less well-off households, than in the rest of Australia. ACOSS and St Vincent de Paul’s proposals are not well-founded. If implemented as the AEMC has set out in its Draft Determination, they will be regressive. Since export charges lack a rationale in economics, they are best characterised as a tax. This critique concludes that the tax will disproportionately affect those that are less well-off. The AEMC’s Chair has suggested that equity will be its central concern in its final determination. This must mean reversing the decision in the Draft Determination.

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