In big green push, Australia thinks too small on solar

By Leonora Walet and Bruce Hextall - Analysis

HONG KONG/SYDNEY (Reuters) - At first glance, a new day seems to be dawning for the overshadowed solar sector in Australia, the world's sunniest continent.

The government is pushing through a carbon trading scheme that will penalize big greenhouse gas emitters; a major piece of renewables legislation is due for approval within months, setting a target of 20 percent green energy by 2020.

But supporters say these shiny targets may be undermined by policymakers who think too small -- limiting the most generous rebates for renewables to the first 1,500 watts of capacity, or about half the minimum of the 3,000-5,000 watts used by the average Australian home.

"The limit of something like 5 KW would have been a really useful driver," said Muriel Watt, chair of the Australian Photovoltaic Association. "But the limit being 1.5 KW, it's not going to drive the large systems we'd like to see."

Australia draws just about 5 percent of its electricity from renewable sources, mostly hydropower and wind. Solar power comprises less than one percent.

The Clean Energy Council, Australia's main clean-tech body, has urged the government to raise to 200 KW the limit for renewable energy installations eligible for generous rebates.

Instead, say campaigners, Australia needs to adopt a nationwide feed-in tariff structure that would allow users to generate revenue by selling excess power back to the grid.

Such "feed-in" tariffs in Germany, for example, led to the country's solar power installations increasing 11-fold since it introduced a generous gross feed-in tariff eight years ago.

China and Japan are also ramping up solar investment, with China last month announcing a subsidy of 20 yuan ($2.93) per watt peak for large solar projects. Japan offers a further $200 million subsidy to boost home solar panel usage for the year from April 1 after a $90 million outlay from January to March.

Australia's policies have not proved as enticing. BP Plc's solar unit in Sydney, which operated the only panel-making plant in the country, closed down last month to cut costs.

That leaves the Australian market open to Japan's Kaneka Corp Sanyo Electric Co Ltd and Sharp Corp, and China's Suntech Power and JA Solar.

Australian firms that have persevered despite the obstacles include electricity and gas supplier Origin Energy Australia, Dyesol and Silex, which are working on individual solar cell technologies.

"GREENHOUSE MAFIA"

Solar, though, remains costly compared with wind power, and particularly with coal, which generates 80 percent of Australia's energy, making it one of the most coal-reliant nations in the world.

"That's one of the hardest things for us to compete against. There's a real inadequacy of government programs and inconsistencies but whatever they do it's still competing against cheap brown coal," said Simon Troman, vice-president of the Australian and New Zealand Solar Energy Society.