The economic stimulus package includes solar PV in its remit.
The spread of coronavirus has affected economies around the world. The Australian economy is also feeling the effects of this global outbreak. To deal with the significant challenges posed by this outbreak, the Australian Government has announced $17.6 billion economic plan with the focus on keeping the Australians employed and helping small and medium-sized businesses to stay in business.
It is quite thoughtful and appreciable as there are many small and medium businesses which if kept alive can keep their employees employed.
Package Details for Businesses
Instant asset write-off
In a way to support the businesses, the government has included commercial and industrial solar PV in its remit. One of the major expenses of the businesses is energy bills and now they can get the advantage of installing solar systems at a far cheaper price. The stimulus package increases the cap of ‘instant asset write-off” which means now they are entitled to get more incentive to install solar panels. It is of great advantage for businesses to get the commercial solar installation done availing the benefit.
According to the federal authorities “The government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with an aggregated annual turnover of less than $500 million, until 30 June 2020,”.
In an interview with Nine News Australia, Prime Minister Scott Morrison said this would give businesses the “confidence” to go ahead and purchase and install equipment “because they will be able to write-off completely, 100%.”
The stimulus package has also accelerated depreciation deductions to support business investment and economic growth over the short term. Businesses with a turnover of less than $500 million will be able to deduct an additional 50 percent of the asset cost in the year of purchase.
It is of great advantage to ‘Large scale solar farms’ with a turnover of no more than $500 million.
As we know, the pandemic started in China, which is the manufacturing center of most solar panels. According to the analysis published by the Wood Mackenzie, if [COVID-19 travel and public gathering] restrictions remain in place for longer, then the impact on supply in China will be significant.
Effects of concentrating manufacturing in a single region
The current situation has also shown the effects of having a single region for manufacturing solar modules. According to BNEF, it should be regionally diversified, there is a need for establishing solar manufacturing units in Asia, Europe, and the United States – especially for batteries.