We all need energy to survive. Here are 3 ways to make sure Australia’s crazy electricity prices don’t leave anyone behind | Whuff News

Australia is in the midst of a spiraling energy crisis. Prices have risen rapidly and are predicted to rise another 56% in the next two years.

The federal government is considering short-term solutions such as putting a price on gas. But amid strong global winds including the war in Ukraine, more needs to be done to protect vulnerable energy users – now and in the long term.

We all need energy to survive: to raise our families, do our jobs and stay healthy. So how do we ensure Australia’s energy market leaves no one behind?

A key step is policy reform so that all households have access to rooftop solar and other technologies to reduce energy bills.

the old woman folds her hands
All households need access to schemes that can reduce their electricity bills.

Why the system needs to change

Earlier this month, the Australian Energy Regulator (AER) released a new consumer vulnerability strategy. It called for “game-changing” reforms to ensure that energy markets are inclusive and equitable.

Launching the scheme, AER chairman Clare Savage said around 2.7% of residential energy customers were more than 90 days in arrears. He said a quarter of those customers owed more than $2,500, and added:

When your budget can allow 5 or 10 dollars a week, returning from a 2,500 energy bill worth $ 2,500 will be impossible – it will certainly feel insurmountable.

The AER plan contains 15 actions. They include measures to address market difficulties, remove barriers to participation, increase security and improve access to energy for all.

One suggested step involves extending financial support to vulnerable energy users through rebates. But as I explain below, such a policy can be difficult to design – such as Australia’s experience with rooftop solar panels.

Government rebates are key

About 30% of Australian homes have rooftop solar systems. This could reach 65% by 2050.

In recent years, Australian governments have offered rebates to households that install rooftop solar. Studies have found that households with installed technology are much less likely to struggle to pay their energy bills.

But as my research shows, low-income households are less likely than average to install rooftop solar. And homeowners are five times more likely than renters to have rooftop solar.

Policies to address this are not always successful. For example, a Victorian scheme offering a $1,400 rebate to landlords who install solar panels on a rental property has taken a bit of a hit.

Governments must ensure that the continued growth in rooftop solar is balanced. The same goes for home batteries that power solar roofs – the technology is also set to expand in the coming decades.

New methods are needed. Here are three options for policy updates.

homes with solar panels on the roof
Australia’s solar roof pattern offers lessons for policy makers.

1. Count assets, not income

Government energy rebates and other financial support are often evaluated in ways. Eligibility is usually based on income.

But research shows that home assets are more important than income in determining which solar panels to buy. These assets may include shares, savings or tangible assets that can be used to help with the upfront costs of installing the technology.

Governments should target energy rebates to households where the value of the house or other financial assets, such as savings in bank accounts, is low.

2. Adjust financial aid

Current energy rebate schemes usually provide the same amount to all eligible households, regardless of the properties of the house. This generic policy design is disproportionate because many poor households cannot afford the reduced costs, so they end up with nothing.

Government energy rebates should be adjusted so that households receive different amounts, depending on the value of their property.

This standardized approach has been adopted by the broader welfare system, where the recipient’s assets are part of the criteria used to determine what payments they receive.

Read more: You might think solar panels are perfected – but we can still make them better and cheaper

large new homes with an electric tower
Methods of evaluating energy discounts should be based on assets.
Dan Himbrechts/AAP

3. Combine and conquer

Suppose the government offers two types of rebates: one for electric vehicles and one for rooftop solar.

Usually, households must also contribute money, either through a joint payment or a loan. However, a poor household may not be able to afford the same financing.

Or maybe the home lives in a rental property, and so can’t take advantage of rooftop solar support.

But what if the two grants could be combined into one big grant? That may make the family use at least this technology.

Governments may allow incentives for other technologies to be integrated, such as those for household appliances or home batteries.

Great thinking

The problems of energy inequality go beyond bills for irrigation gas and electricity. Energy poverty can increase mental and emotional health risks and contribute to social isolation, among other risks.

As climate change worsens, extreme weather will exacerbate the energy balance problem.

A financial crisis caused by illness or other challenges can strike us at any time. Many people who are currently struggling to pay their electricity bills may not have imagined that they would face such difficulties.

Improving energy balance is a challenge. But it’s time to face it head on – and think hard.

Read more: Not keeping up with the Joneses: what’s keeping us from catching up with our neighbors on climate action.

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