Adoption behaviour and the optimal feed-in-tariff for residential solar energy production in Darwin (Australia)

Abstract

Small-scale solar energy production on rooftops can contribute to renewable energy targets and reduce domestic energy costs. However, installation rates are low in some cities despite abundant sunshine and generous financial incentives. In this study a drop-off survey was carried out to investigate the intentions and barriers to adopting rooftop solar panels in the remote tropical city of Darwin, in the Northern Territory (NT), and to quantify the minimum feed-in-tariff (FiT) needed to install residential solar panels. More than half of the 652 respondents intended to install solar panels. Age and renting were negatively, and high energy needs and an estimated short payback period positively, associated with installation intentions. Each additional year that potential adopters expect to take paying off panels reduces their likelihood to install them by 10%. Results of a contingent valuation assessing the minimum FiT needed for people to newly adopt solar panels showed that the median amount needed was 14.40 c/kWh (95% confidence interval: 10.74–25.83 cents). This was almost half that offered at the time of the survey (a premium FiT of around 26 c/kWh, GST inclusive) but more than the new FiT that has been introduced since (9 c/kWh, GST inclusive). There is the option that the new FiT could be augmented by a subsidised part to provide enough incentives for potential adopters. Under the new FiT, the likelihood of installing solar panels is highly dependent on the self-consumption rate of the solar energy and affordability of batteries for storage. An ex-ante evaluation showed that, if everything else remains the same, the adoption rate can be expected to decline by about 40% or 17% for people consuming 30% or 60%, respectively, of the solar energy themselves.