Just what you wanted to wake up to - some more stuff on solar power.
I'll start with this point - if you want solar power, good for you. Just don't expect me to subsidise your power bill, either through paying part of the installation of your system, or paying you above market rates for any excess power you produce. And if the power grid needs expensive upgrades to cope with you exporting power into the system, you can pay for that too. If the cost of solar power has in fact reached "gird parity", then you shouldn't need to steal any of my cash in order to install a system on top of your house.
So how much money are we pouring into roof top solar installations?
Well, as Rob has pointed out, the current price for STCs is not $40 - it's $27.35.
That price has moved around a lot over the last few years.
From the link above:
REC/STC brokers take the assignments and then create and sell the REC/STCs for several dollars more.
That's another way to generate "green jobs". If 44 million certificates are created, and the brokers push a few electrons around and charge $2-3 for the service, then they can cream off over $100 million for themselves. In The Bonfire of the Vanities, this was described as picking the crumbs off the cake. That's some crumb! Remember this - a pretty big chunk of the cash being poured into these renewable energy schemes is not actually being spent on installing renewable energy systems - it is being soaked up by brokers and intermediaries who probably used to sell shares in mining companies, tobacco companies and arms manufacturers.
I've read plenty of opinions this morning that the price is heading south due to a large over supply of STCs. When supply greatly exceeds demand, the price can only go one way - down.
The Regulator has issued a target of 44.78 million STCs for 2012. If we multiply the spot price of $27.35 by 44.78 million, we get $1.063 billion.
Where does that $1.063 billion come from?
STCs are bought by the "big polluders" - mainly coal fired generators I suppose. As this increases their costs, they can either reduce their profitability or put up their prices. As many generators are state owned, and they pay dividends to state governments, any reduction in profitability means less revenue for state
governments to spend on health, education, roads, police etc. So they have a big incentive to put up prices. If they can't put up prices, then governments need to raise taxes somewhere else. Either way, residents get it in the neck. Or the hip pocket.
Alternatively, they can pay exorbitant amounts for solar power - up to 52 cents per kWh - and then pass that cost on to consumers.
The over supply in STCs is exacerbated by the deliberate government policy of handing them out with a multiplier (currently 3, although it is 4 for contracts signed before May 2011). That's like me employing you to dig a hole in my backyard, "deeming" that you in fact dug three holes (when you dug one) and paying you for digging three. Yes, it makes about that much sense to me too.
Yes, the cost of solar panels is plummeting - more on that later. If that's the case, and solar is now at "grid parity" (which I view as the wholesale price of power charged by large coal fired generators), then we should be able to do away with this entire panoply of subsidies and certificates. Close down the STC scheme and eliminate the solar tariff - let the market decide.