Million Solar Roofs rebate to be scrapped?

Analysis of the government’s mid-year budget update papers and further inquiries by Climate Spectator have uncovered a major contradiction in the government’s renewable energy policy commitments. These seem to suggest that either:

1. The Million Solar Roofs rebate program will be canned; or
2. The Australian Renewable Energy Agency (ARENA) is a walking dead institution with barely any money left to spend over the next three years.

Repeated inquiries by Climate Spectator have been unable to get a straight answer out of anyone in the government to resolve a clear shortfall in funding for either a Million Solar Roofs or ARENA.

The challenge of nailing down ARENA and Million Solar Roofs funding

In the months leading up to the federal election Climate Spectator had, on a number of occasions, asked the Coalition whether they would maintain ARENA’s funding levels.  Each time the question was answered with reassuring statements along the lines that the Coalition “fully supports ARENA”, but completely vague on funding. 

In the last few days before the federal election the Coalition finally released some budget costings which detailed a range of savings and cuts. At the same time they released these budget costings, the Coalition announced that ARENA would become responsible for implementing its long-held policy of providing rebates for the installation of an additional one million solar systems. Yet it was not clearly spelt out what this meant for ARENA’s own funding.

Relative to the rest of the Coalition’s climate change election promises, the Million Solar Roofs rebate program is incredibly unambiguous – rebates of $500 will be provided to households to install a solar water heater or photovoltaic system up to a maximum of 100,000 households per annum for the next 10 years. This policy commitment is now clearly stated in a federal government’s Environment Department policy document A Plan for a Cleaner Environment.

Yet when the mid-year budget update (MYEFO) was released in December there was not a single mention of the policy. It wasn’t exactly hard to formulate the budget – simply multiply 100,000 by $500 to give an annual budget of $50 million. No need for further policy development because the budget is set out in black and white.

Perplexed about this, Climate Spectator followed it up with Environment Minister Hunt’s office in the new year to attempt to clarify exactly what was going on. A spokesman responded that, “The government indicated prior to the election that the funding would be via ARENA.”

This immediately set-off alarm bells because the Coalition Government, rather than increasing ARENA’s budget by $50 million per annum or $150 million over the forward estimates (years 2014-15 to 2016-17) had instead slashed the ARENA budget from $776.2 million down to $341.3 million in November.  

Now $341.3 million is still a useful kitty of money. But ARENA and its predecessors had already committed to funding 181 projects prior to this budget cut which tied up a substantial amount of this remaining money.

At the time the funding cut was revealed Labor claimed that these cuts had left ARENA with no money to fund any new projects over the next three years. However, an ARENA spokesperson informed Climate Spectator at the time that they still had around $200 million of uncommitted funds. Then in the December MYEFO funding was reduced by a further $40 million leaving ARENA with $160 million of uncommitted funding.

If a Million Solar Roofs is funded from ARENA’s remaining budget it leaves $10 million or just $3.3 million per year over the next three years.

Given this would leave ARENA essentially defunct, Climate Spectator sought to confirm with Minister Hunt and then Minister Macfarlane’s office whether in fact the $150 million for solar roofs would come at the expense of the $301 million allocated to ARENA in MYEFO. Neither have been prepared to answer what would seem an elementary 'yes' or 'no' question. 

Yet ARENA continues to promote programs whose money would seem to be locked up in the Million Solar Roofs

What makes this rather peculiar is that ARENA has been continuing to encourage funding applications from industry to programs that seem impossible to reconcile with funding of $3.3 million per annum. Their website promotes the following programs and associated funding:

– The $400 million Regional Australia's Renewables Program;

– The $215 million Emerging Renewables Program; and

– $20 million for a solar Research and Development Program.

In addition ARENA management have said they are looking at adding another initiative to fund projects that would advance renewable energy grid integration.

Also, just a few days ago on January 22, ARENA released a statement headed, High demand for ARENA initiatives. This stated:

"As 2014 gets underway, ARENA programs and initiatives are continuing to generate a significant amount of interest.

"In addition to a recent influx of applications for the Emerging Renewables Program, ARENA has also received a high number of expressions of interest for the Regional Australia’s Renewables initiative, which closed on 31 December 2013.

"The first round of ARENA’s Research and Development Program opened on 20 January 2014 …. Initial engagement suggests there will be significant interest in this round."

Either ARENA staff are leading a range of organisations up the garden path, or they haven’t received any direction that their funding will be used to fund a Million Solar Roofs. 

Time for the government to come clean

The renewable energy industry appears to remain in the dark about what the government intends to do.  

Some solar PV retailers are planning for next financial year on the basis that there will be a rebate of $500 to support additional sales.

Meanwhile, a range of other renewable energy businesses have been developing lengthy proposals for projects, costing tens of millions of dollars, on the understanding that ARENA is keen and able to fund such projects within the next three years.

The government needs to urgently spell out what election promise they intend to break.