Regulatory potential for increasing small scale grid connected photovoltaic (PV) deployment in Australia

The last decade has seen significant innovation and change in regulatory incentives to support photovoltaic deployment globally. With high fossil fuel dependency and abundant solar resource availability in Australia, grid connected photovoltaics are a viable low carbon technology option in existing electricity grids. Drawing on international examples, the potential to increase grid PV deployment through government response and regulation is explored. For each renewable energy certificate (REC) earned by small scale photovoltaics until 2012, the market provides four additional certificates under the current banded renewable targets. Our analysis indicates that REC eligibility is not accurately estimated currently, and an energy model is developed to calculate the variance. The energy model estimates as much as 26% additional REC’s to be obtained by a 3 kWp PV system, when compared to the currently used regulatory method. Moreover, the provision of REC’s increases benefits to PV technologies, in the process distorting CO₂ abatement (0.21 tonne/REC) by 68%, when PV displaces peaking natural gas plants. Consideration of the secondary effects of a banded structure on emissions trading market is important in the context of designing a range of initiatives intended to support a transition to a low carbon electricity sector.