How Turnbull transformed solar PV

New data shows Australia is a world leader in residential solar – and the sector's rapid growth can largely be attributed to Malcolm Turnbull and a shock move in the 2007 budget.

The REC Agents Association released data over the weekend showing that Australia installed more residential rooftop solar systems over 2011 than any other country in the world. There are now 1.5 million solar PV and solar hot water systems installed.

Thinking back to 2002 to 2007 during my time at the Australian government’s Greenhouse Office and the Business Council for Sustainable Energy, I would have never expected such a feat to be achieved. And it can probably be largely attributed to Malcolm Turnbull.

During this time, installations of solar PV were like a tiny pimple on a huge back of coal-fired power. Annual installation rates were measured in kilowatts not hundreds of megawatts. The industry was pretty much dominated by a single player in BP Solar, with everyone else playing around the edges.

The businesses engaged in installation were enthusiasts who did it partly out of love for the technology, rather than large professional organisations focussed on profit and driving down costs. It was a cosy cottage industry pure and simple. Both the power industry and the government bureaucracy largely thought that it would never amount to anything substantial, either in terms of the electricity market or greenhouse gas abatement.

Then something changed. The precise date was May 8, 2007 when the Howard government handed down its final budget. I remember being at the national conference for the Business Council for Sustainable Energy (now the Clean Energy Council), standing around a television with a group of the major players in the Australian solar PV industry.  When Peter Costello announced the rebate for solar PV would be doubled from $4000 to $8000 per kilowatt, I don’t think there was a single person in the room who wasn’t shocked.

But we probably shouldn’t have been so surprised. Malcolm Turnbull was the environment minister at the time and has never done anything by halves. He’s a man who already had fame and fortune and was now in a desperate hurry to leave a positive imprint on the Australian policy landscape. 

All in the solar sector knew the doubling of the rebate would lead to a boom in sales, but it didn’t lead to a boom in profits. Instead it became a catalyst for a swarm of new entrants that shook-up a cosy cottage industry. These businesses were determined to convert solar into a mass-market product with large volumes but low margins. These new entrants strove to squeeze out costs to get the price of systems to a price point that would open-up an untapped, large group of customers that weren’t wealthy and weren’t off the grid.  

Australia used to pay significantly more than other countries for residential solar PV systems, but now our systems are noticeably cheaper than the US and Japan, and not too far off Germany.  We are now a leader in small-scale residential systems.

But this rebate, and the multiplier for renewable energy certificates that replaced it, were heavily biased towards small residential systems of less than 2 kilowatts. This has warped the industry into one almost entirely focussed on the residential sector, when in fact the best place for solar is on commercial business rooftops. It’s a bit like some incredibly distorted body builder that has huge biceps but chicken-legs.

For the industry to be truly useful in the battle to contain Australia’s emissions, it will need to beef-up its under-sized muscles. 

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles