Sep 14, 2006

Building A World Beating Solar Energy Industry

Building A World Beating Solar Energy Industry

Solar 2006: The Australian and New Zealand Solar Energy Society Conference

Australian National University, Canberra

14 September 2006

It’s good to be back here again after last night’s conference debate.

On Sunday night, Kim Beazley and I were privileged to attend the Australian premiere of Al Gore’s powerful climate change documentary, An Inconvenient Truth.

Australia is particularly vulnerable to water shortages, changed rainfall patterns and an increase in fires and cyclones.

Australia must avoid dangerous climate change. We must build a strong clean energy industry in Australia.

Solar power will play an important role in achieving this vision.

Nation Building for the Sake of Our Children

In An Inconvenient Truth, Al Gore describes climate change as a moral challenge.

As Al Gore says:

“At stake is the survival of our civilisation and the habitability of the Earth.”

Climate change isn’t just an environment issue. It is a health issue, a social justice issue, a moral issue. It is the future that we will bequeath our children and grandchildren.

Labor’s Climate Change Blueprint, released in March 2006, makes it clear the only environmentally sustainable energy policy for Australia is one which makes the tough decisions to invest in two great transformations:

• Transforming the coal industry into a cleaner coal industry; and

• Transforming our specialist solar industry into a world beating solar industry as big as coal is today.

Today, of course, I want to talk about the latter transformation.

Before going into further detail, I want to make it clear that market based incentives through emissions trading are an essential component for Australia to advance in a carbon constrained world.

The notion that there is a choice between new technology and targets with economic mechanisms is false. Everyone supports new technology.

We need the push of new technology as well as the pull of the market, to ensure it is deployed.

That is why the Business Roundtable on Climate Change, which includes BP, Westpac, the Insurance Australia Group, Visy, Swiss Re and Origin Energy, has called for a national market-based carbon pricing mechanism.

Those who argue in abstract for new technology in the absence of economic incentives exhibit a triumph of hope over experience.

Building A World Beating Solar Energy Industry

I strongly believe we can build a world beating solar industry.

The global picture is clear – the sun is shining on solar energy.

Solar photovoltaics have grown by 40% globally over the past five years. In 2005, solar cell usage increased 57% in one year.

Mark Twidell of BP Solar has stated that sales of solar cells within Asia could grow by 50% within the next decade.

BP expects global solar manufacturing revenue to double by 2008 from almost $500 million in 2005.

According to the International Herald Tribune, Asia is poised to overtake Germany as the solar industry’s main source of growth.

We could, and should, be a part of that massive growth, but the reality in Australia is very different. Compared to a global growth rate of 40%, solar PV has only grown by 16% in Australia over the past five years.

In June 2007, the sun will set on the popular Photovoltaic Rebate Program (PVRP), which is responsible for more than a quarter of the 25 000 solar panels on rooftops across Australia.

PVRP provides Australians with a direct rebate of up to $4000 for a solar system. Why on earth would you abolish a program that makes it easy for people to do the right thing by the environment?

The Howard Government seems hell bent on abolishing PVRP and replacing it with their Solar Cities program. In the process, they continue to re-announce Adelaide as one of the few solar cities.

The Solar Cities program is welcomed. It provides a small boost to a long-suffering industry, but we don’t need more trials to know that solar power works. We need a national plan to roll out solar energy and other renewables.

Instead of a world-beating solar energy industry, we have a beaten solar energy industry.

Australia is witnessing a solar industry eclipse.

Silicon Valley of Solar

We could have been the Silicon Valley of solar, but when we needed national leadership we didn’t get it.

Australia once led the world in solar water heater technology but we faltered and failed to commercialise our technologies.

Now we lag behind manufacturers in both China and Europe and account for only a tiny proportion of world production and installations.

Over the last decade, our best technology and our brightest ideas have gone overseas.

Take the solar hot water systems developed at the University of Sydney.

The Chinese saw its commercial potential and grabbed it. It’s now a huge part of China’s solar market. Invented in Australia, made in China. That’s a disgrace.

You see it again with the story of my fellow panellist Dr Zhengrong Shi, a dual Chinese-Australian citizen.

Dr Shi completed his PhD in solar energy at the University of New South Wales, but his wealth – which Business Review Weekly estimates at $3 billion – comes from commercialising solar energy technology in China.

His company, Suntech, is hot property in China and on the New York stock exchange, but solar power continues to get the cold shoulder in Canberra.

Dr Shi told The Sunday Telegraph on 27 August that “if Australia had a similar type of incentive program (to China’s), we definitely would have set up a manufacturing facility in Sydney or Australia”.

In last night’s conference debate, Dr Shi showed us all with his personal skills and humour what a tragedy it is that he is not manufacturing here.

Australia needs the economic mechanisms and the incentives to encourage innovation and investment. We need to ensure we don’t lose these sorts of opportunities.

A Bright Future?

If the last ten years have been a lost opportunity for Australia, what does the next ten years hold?

The solar technologies currently being developed around the world, and particularly in Australia, have the capacity to drive real cuts in greenhouse pollution.

Solar thermal technology being developed by CSIRO and solar sliver technology being developed at ANU’s Centre for Sustainable Energy Systems, are both showing significant potential for addressing base load capacity.

In fact, an unpublished report by the Cooperative Research Centre for Coal in Sustainable Development, obtained by The Canberra Times, suggests solar thermal technology “is poised to play a significant role in baseload generation for Australia” and will be cost competitive with coal within seven years.

The report suggests a 35 square kilometre area with high levels of sunlight and low cloud cover “could produce Australia’s entire current power demand” using solar thermal technology.

Australia should be strongly supporting solar thermal technology, but I fear the train may have already left the station.

Already, Spain has begun construction of the first large-scale commercial solar thermal plant in Europe. The power plant is designed to generate electricity continuously to the grid when in operation.

We are already falling behind.

Sharp Corporation, the world’s biggest maker of solar cells, expects the cost of generating solar power to halve by 2010 and to be comparable with nuclear power by 2030.

The President of Sharp, Katsuhiko Machida, told Reuters on 1 September:

“By the year 2010 we’ll be able to halve generation costs. By 2020 we expect a further reduction – half of 2010 – and by 2030 we expect half the 2020 level.”

The fact is, the more solar energy products you produce, the cheaper it gets.

As Bill Clinton observed when he addressed the UN climate change conference in Montreal, every time the capacity doubles, the price drops 20%.

It seems the money markets get this too.

According to Bloomberg Markets magazine, the 40 stocks that make up the WilderHill Clean Energy Index in the US have jumped 53% over the past 12 months. At the same time, the S&P 500 rose 5.7% and the Nasdaq 4.5%.

As Bloomberg Markets put it, venture capitalists “who can find a Google or Amazon or EBay of green power will make a fortune”.

John Howard’s nuclear fantasy is holding our nation back. Instead of a world beating solar industry, we have a beaten solar industry.

We need to turn this around. We must build a world beating solar industry.

Labor rejects John Howard’s nuclear fantasies. Nuclear power will not be a part of the energy mix under a Beazley Labor Government. We stand for renewables, not reactors.

Labor’s Plan

Labor’s Climate Change Blueprint provides the foundations for a world beating solar industry.

• Ratifying the Kyoto Protocol;

• Cutting Australia’s greenhouse pollution by 60% by 2050;

• Establishing a national greenhouse emissions trading scheme;

• Substantially increasing the Mandatory Renewable Energy Target; and

• Establishing a climate change trigger under the Environment Protection and Biodiversity Conservation Act.

Labor believes that the renewable energy sector needs the incentives MRET delivers to lock in future growth. We support substantially increasing MRET and will be announcing details of that increase closer to the next election.

We will be working closely with industry, scientists and other stakeholders to develop a new MRET target which is real, achievable and provides a genuine boost to the renewable energy industry.

In addition to the major policy initiatives announced in our Climate Change Blueprint, we have announced a number of important practical measures that will provide a real boost to the solar industry.

We will ensure all of Australia’s 10 000 schools are solar schools.

With the right policies in place Australia should have at least 1.5 million solar powered homes by 2015 and 2.25 million homes by 2020.

We’ll help move towards that. We’ll work with State and Territory and local governments to make 5 star energy efficiency provisions mandatory for new homes.

We will consider expanding the First Home Owners’ Grant with top-up grants for home buyers related to the energy rating of their homes.

We will examine ways to reconfigure the incentives and disincentives in our tax system to encourage investment in cleaner and renewable energy technologies.

In addition, Kim Beazley’s Innovation Blueprint outlined a series of initiative to:

• kick start the next generation of private sector innovation;

• Reform research and development investment arrangements;

• Develop the capacity and diversity of our universities; and

• Rebuild Australia’s great research institutions, including the CSIRO.

These initiatives will provide a real boost for the development and commercialisation of solar technology.

Labor has the vision, the ideas and the energy to build a brighter future for Australia’s solar energy industry.

Conclusion

I would like to thank the Australian and New Zealand Solar Energy Society for organising this conference.

This is certainly a pivotal time for the solar energy industry in this country. Your industry is at the crossroads.

The Labor Party is committed to working with you to ensure that the sun does indeed shine on your industry.