The scheme would cost the federal Government $16.2 billion over the next 20 years if it were available to businesses and residents. It would cost less than half of that – $6.5 billion – if only householders were included.
The feed-in tariff would allow people to recoup the costs of their investment in solar panels within 10 years.
The report says an emissions trading scheme and mandatory renewable energy target were expected to be insufficient on their own to drive significant growth in the industry.
Feed-in tariffs have sparked rapid growth in solar industries overseas. In Germany, which implemented a gross feed-in tariff in 2000, solar installations have grown on average by 72 per cent over the past five years, and the industry has generated about 42,600 jobs.
The report predicts that some of the costs would be offset by a saving of $610 million by deferring new investments in electricity generation capacity.
The take-up of solar energy would help to reduce electricity demanded from the grid during peak periods.
Access Economics director Steve Brown said the research revealed there was potential for a strong solar photovoltaic industry in Australia, especially given Australia had the highest solar radiation levels in the world.
“We’ve seen overseas that the uptake of solar does respond to policy settings,” Mr Brown said.
He said it was up to policy-makers and the industry to balance the costs and benefits of the scheme.
The solar industry and environmental groups have pushed strongly for a national feed-in tariff scheme, saying it would encourage the take-up of renewable energy and reduce greenhouse emissions.
Earlier this month, a federal parliamentary committee recommended that a national scheme be developed in consultation with the states.
It followed an agreement between Kevin Rudd and the states to consider options for a harmonised approach.
Many jurisdictions have already pushed ahead with their own schemes.
The ACT recently became the first Australian jurisdiction to announce the introduction of a gross feed-in tariff scheme. Householders and businesses that installed renewable energy systems, including solar panels or micro-wind turbines, would be paid for all the energy they produced at nearly four times the current cost of electricity.
Victoria, Queensland and South Australia have also introduced feed-in tariff schemes, but people are paid only for the excess energy they feed back into the system.
In South Australia and Queensland, the scheme is open to residents and small businesses, while Victoria’s scheme is open only to householders.