As more homes and businesses harness energy from the sun, the government will have a critical role to play in expanding solar power generation. Indeed, current legislation that allows for tax deductions (for solar investment) has made alternative energy sources more appealing. Such government involvement can incentivise more homes and businesses to join the sustainability movement and move dependability away from fossil fuels.
However, more government involvement within this space is desired. Even with the current incentives in place, more can be done to boost Australia's solar energy production. Specifically, additional investment in solar farms, equipment, research would increase productivity, applications, and efficiency down the road. Here are several ways through which government investment can push solar energy generation forward.
1. Rebates for solar investment
Currently, the best incentive for investing in solar is receiving a tax deduction from the ATO. While such deductions can be significant for high income earners, they make less of an impact if your taxable income is lower. Therefore, individual homes or small businesses that invest in solar panels may not feel the full benefit of such deductions. Furthermore, the lower utility bills as a result of using solar may have a variable impact across homes.
A better approach the government should use is giving rebates to those who invest in solar power. The rebate need not cover the entire cost of investment, but it could be used to help homes and businesses recover some of the upfront costs they incurred (especially for purchase and installation). Rebates are also a welcome source of cashflow that reminds the investor why solar is the way to go.
2. Tax deductions on solar equipment
Currently, there are no direct tax deductions for investing in solar equipment. While income received from the sale of power (generated from solar panels installed in residential homes) is exempt from taxation, more deductions are necessary to incentivise additional solar power investments.
Tax deductions for equipment purchases (especially in commercial premises) would make a significant difference towards this end. Furthermore, homes/businesses that borrow funds to invest in solar power would benefit from deductions of such amounts spent.
3. Investing in solar farms
The benefits of solar farms are well known. They make it easier for more people to switch to solar without a high upfront investment. Furthermore, solar farms have the potential of making entire neighbourhoods switch to clean and renewable energy. The government can become more involved in solar farm projects by investing, monitoring performance, and providing expertise as necessary.