Australia is in the midst of an escalating energy crisis. Prices are rising rapidly and are expected to rise by another 56% in the next two years.
The federal government is considering short-term solutions such as capping gasoline prices. But amid powerful global challenges, including the war in Ukraine, more needs to be done to protect vulnerable energy consumers now and in the long term.
We all need energy to survive: to raise our families, do our jobs, and stay healthy. So how can we ensure that the Australian energy market leaves no one behind?
A key step is to review the policy so that all households can use rooftop solar and other technologies to reduce energy costs.
Why should the system change?
Earlier this month, the Australian Energy Regulator (AER) launched a new strategy for consumer weakness. He called for "revolutionary" reforms to ensure energy markets are inclusive and fair.
About 2.7% of residential energy customers are more than 90 days late, said Claire Savage, president of AER, which launched the strategy. A quarter of those customers owe more than $2,500, he said, adding:
It's impossible to pay off $2,500 of energy debt when your budget allows for $5 or $10 a week; It is definitely second to none.
The AER strategy consists of 15 activities. These include measures to remove market complexities, remove barriers to participation, increase protection and improve access to energy for all.
One of the recommended actions is to provide financial support to vulnerable energy consumers through rebates. But as I explain below, Australia's experience with rooftop solar shows that designing such policies can be challenging.
The government discount is the main discount
About 30% of single family homes in Australia have rooftop solar. This could reach 65% by 2050.
In recent years, the Australian government has offered rebates to homes that install rooftop solar panels. Research has found that homes with proven technology are less likely to struggle to meet their energy bills.
But my research shows that low-income families are less likely than average to install solar power on their roofs. Homeowners are five times more likely to have their rooftop solar energy than renters.
Policies to fix this do not always work. For example, Victoria's plan to offer a $1,400 rebate to landlords who install solar panels on rental properties has been slow to adopt.
Governments must ensure that the continued growth of rooftop solar energy is fair. The same is true of household batteries that power rooftop solar energy, a technology that will evolve over the coming decades.
A new approach is needed. There are three options for policy reform.
1. Count assets, not income
Government energy deductions and other financial aid are often tested. Eligibility based on income.
But research shows that family wealth is more important than income in deciding which solar panels to own. These resources may include reserves, savings, or physical assets that can be used to help cover the initial costs of installing the technology.
The government should target energy deductions for households where the value of a home or other financial asset, such as a deposit in a bank account, is low.
2. Individual financial assistance
Current power switching schemes often give the same amount to all eligible households, regardless of household wealth. This general political determination is unfair because many poor families cannot afford even low rates and end up with nothing.
Government energy subsidies should be adjusted so that households receive different amounts depending on the value of their assets.
This personal approach is now adopted by the broader welfare system, where the beneficiary's assets are part of the criteria used to determine the payments he receives.
Read more: You may think solar panels are improved, but we can still make them better and cheaper
3. Unite and conquer
Suppose the government offers two types of discounts: one for electric cars and one for solar roofs.
Usually, the family must also contribute financially, perhaps through additional payments or obtaining a loan. However, the poorest families will not be able to afford the subsidized contribution.
Or maybe a family lives in a rental, and therefore cannot get a rooftop solar grant.
What if these two supports were combined to create a larger support? This may allow families to adopt at least one of the technologies.
Governments may also allow incentives to be collected for other technologies such as appliances or batteries.
Think larger
The problem of energy inequality goes beyond lucrative gas and electricity bills. Energy poverty can increase physical and mental health risks and contribute to social isolation, among other risks.
As climate change worsens, extreme weather events will exacerbate the energy capital crisis.
Financial disaster from illness or other hardship can hit us at any moment. Many people are now struggling to pay their electric bills, and may never have thought that they would be in so much trouble.
Improving energy equality is a challenge. But it's time to come face to face with it and think big.
Read more: Disobeying Our Neighbors: The One Factor That Makes Us Less Likely To Mimic Our Neighbors Climate
