As coronavirus grips the planet, Australia and batters the economy, governments the world over are scrambling to respond. Among Australia’s federal responses is a $17.6 billion stimulus package which it has called ‘Economic Response to the Coronavirus’. And there’s some very good news in there for the solar industry and businesses looking to buy in.
The Treasury says it wants to protect our economy by “maintaining confidence, supporting investment and keeping people in jobs” amid the global pandemic. This is mainly in the form of support for household income and – significantly – for businesses.
What’s in it for solar power?
Before COVID-19 took hold, the uptake of solar photovoltaic (PV) technology – which turns free sunlight into useable energy – was clearly on the rise and in lock-step with our cultural shift. But with businesses and consumers now laser-focused on jobs, investments, profits, business survival and of course health, demand was sure to be hit hard.
Making it even worse is that the solar industry is particularly exposed to the impact of the coronavirus, as China – having completely shut down amid the epidemic’s peak in the country – produces most of Australia’s solar panels.
The Australian government is therefore moving to minimise the subsequent economic downturn with its stimulus package – and a big boost for solar PV technology is in the form of very attractive tax deduction incentives.
“The package is front-loaded in order to instil confidence in businesses and households and help firms keep people employed,” the government’s summary of the package states. “This will ensure that the economy is in the best possible position to recover as the shock subsides.”
One measure, in the package to support “business investment”, will boost the instant asset-write off threshold from $30,000 to a cool $150,000. And not just that, businesses with turnover of up to $500 million a year will even be eligible – up from just $50 million prior to the virus outbreak.
The measure will run until the end of July.
For many businesses looking to slash their long-term energy bills, the temptation to time their switch to solar with the period of the incentives will be strong. In practice, it means any solar system of up to $150,000 can be instantly written off. Prime Minister Scott Morrison confirmed: “They will be able to write it off completely. One hundred percent.”
And the good solar news doesn’t end there. Another new government incentive, entitled Backing Business Investment, will accelerate depreciation deductions on eligible assets that are installed by the end of the financial year.
“Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost,” said the PM. This measure is expected to especially incentivise solar farms.
The global situation may currently appear bleak, but the latest news from China is that solar PV production is now beginning to resume as the country gets its coronavirus crisis under control and eases the lockdown. Even in tough times for the world, solar energy will survive and thrive.