IEEE Power & Energy Magazine - July/August 2015 - 54

reflects the dominance of household rooftop PV installation.
The design of PV subsidies has also affected system size. In
addition, the very high level of private home ownership in Australia is likely to have affected the propensity of households to
invest in PV systems (88% of all detached or semidetached
dwellings with rooftop PV systems are privately owned).

contestable market, however, have been able to achieve price
reductions of around 10-15% from regulated reference tariff prices. Rising electricity prices has stimulated consumer
awareness and, obviously, improved the relative economics of
distributed generation.

Subsidies

Explanatory Factors
The rapid expansion of rooftop PVs can be explained by
three factors: rising electricity prices, capital subsidies (certificate schemes) and production subsidies [feed-in tariffs
(FiTs)], and declining PV system costs.

From 2010 to 2012, significant capital and production subsidies were available to promote the uptake of PV systems.
Capital subsidies were paid through a mandatory renewable
energy certificate scheme. Production subsidies were paid
through jurisdictional governWment-determined FiTs.

Rising Household Electricity Prices

Capital Subsidies

Australian household electricity prices rose 90%, adjusted
for changes in the consumer price index, between 2007 and
2013, as shown in Figure 2. Rising network costs have been
the main contributor to these increases [see Productivity
Commission (2013) in "For Further Reading" for a full discussion of this].
Household electricity prices in Australia, at purchasing
parity rates of exchange, are higher than the average in the
European Union and Japan and much higher than average
prices in Canada or the United States, according to Mountain, (2012a). In 2015, the average household electricity prices
on regulated reference tariffs in the different jurisdictions of
Australia range between AU$280/MWh and AU$380/MWh,
with a national average of AU$320/MWh (see Figure 3).
Some households that have chosen tariffs offered in the

A nationwide mandatory renewable certificate scheme (the
Renewable Energy Target) funded capital subsidies. Under
this scheme, a number of certificates can be created once a PV
system has been commissioned. The number of certificates
per installed system is based on the expected, "deemed,"
production for 15 years. Over the period from 2009 to
2013, a multiplier for the deemed production affected the
certificate entitlement per installation for the first 1.5 kW
of installed capacity. The multiplier reduced from five in
July 2009 to one from the start of 2013.
Electricity retailers have an obligation to surrender a
number of certificates to the clean energy regulator each
year, which calculates the obligation as a proportion of
retailers' sales volumes. Through this, the cost of certificates incurred by the retailers is recovered from energy

1.4

Qld

NSW

Vic

ACT

Tas

1.36

NT
1.19

1.2
0.99

(Millions)

1.0
0.8
0.64
0.6
0.4

0.28

0.2
0.0

0.01

0.02

2007

2008

0.09

2009

2010

2011

2012

2013

2014

figure 1. Australian cumulative solar PV installations, from the end of 2007 to January 2015. (Sources: Carbon and
Energy Markets and Clean Energy Regulator 2015).
54

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2015