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Canberra brings early end to rooftop Solar Credits scheme

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The Federal Government has announced the early closure of its Solar Credits scheme, meaning that rooftop solar PV installations will receive only one renewable energy certificate for every megawatt hour of electricity produced from January 1.

The closure of the scheme, six months early, is the second time the government has intervened in the program, which was originally intended to end in 2015. Last year, it announced that the closure was being brought forward by 12 months.

Climate Change Minister Greg Combet again cited the costs of the scheme, saying that the decision would lower the impact on electricity costs for homes and businesses. He estimated the saving at $80-$100 million in 2013 – or around $11 a year for each household in the country – or 20c a week.

His decision means that for most Australians from January 1, there will be virtually no additional subsidies for rooftop solar PV installations. In some states, homeowners adding solar to their rooftops receive just 6c-8c per kilowatt hour.

The solar industry was stunned by the move and still had not figured out its implications. One suggested that the removal of the multiplier would add $700-$800 to the upfront cost of rooftop solar systems. The multiplier only applied to the first  1.5kW of any installed system.

The timing was also surprising, given that it comes in the middle of a review of the Renewable Energy Target currently being undertaken by the Climate Change Authority. That report suggests some changes to the small scale section of the RET, including a controversial proposal to discount the value of the credits to rooftop solar systems, ascribing a value of less than one certificate to each MWh produced. That prompted swift criticism from the solar industry.

“It is the wrong decision at the wrong time,” the Solar Energy Council CEO John Grimes said. All of the data shows there has been a slowing in the uptake of rooftop solar.” He pointed to the closure of feed in tariffs in Queensland and elsewhere, and to the CCA’s own data which shows that the impact of solar multiplier will decline in coming years. He also questioned the timing of the decision in light of the CCA review. “To cut across that process and announce this today is really poor form by the government, and calls into question how serious they are about getting that review process right.”

But the decision also comes after intense public lobbying from utilities and generators, particularly Origin Energy, which blamed the blowout in costs from the rooftop solar scheme for a downgrade in its earnings this week.

Other utilities, particularly in Queensland, are also pushing back against solar PV, threatening in some instances to impose restrictions on the amount of rooftop solar that can be deployed in an area.

Combet said the decision now meant that rooftop solar PV would now be on the same footing as solar hot water systems. He said that 880,000 rooftop solar PV systems had been added since Labor was elected and the renewable energy target came into effect.

“The multiplier was always designed to reduce over time,” he said in a statement. “Bringing forward the phase-out of the multiplier to 1 January 2013 will help place the industry on a sustainable path and ease pressure on electricity prices. By 2014 the small-scale scheme is expected to cost electricity consumers around 70 per cent less than in 2012.”

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  • Beat Odermatt

    This is unbelievable! Here we have a Government which pretends to care about the environment and then kills off a promising affordable and democratic way to move towards a low carbon economy. The Government knows that rooftop solar installations actually keep electricity prices down, because they help to avoid or delay the need more massive new generation infrastructure. It is proof that the current Government has no intention to enhance our environment.
    With the multi-Billion Dollar carbon tax, a wise move would have been to increase the support of renewable energy options. The Government has but GREED before GREEN!

    • Chris

      That is incorrect actually. Ill give you an example. What drives large investments in electricity infrastructure is peak electricity demand. Peak demand on a summer day in Melbourne occurs during a time where solar is generating at 20-60% of its capacitiy, and during the 6pm peak demand in winter, solar pv is generating at 0%. So investment will still need to be made in the infrastructure because solar isnt reducing the peak affect. Solar is reducing average demand slightly though, which isnt all a good thing because power companies will be making less money to fund their projects meaning they will need to rise electricity rates.

      • Beat Odermatt

        The power companies will find heaps of excuses to increase prices. I do remember how in South Australia massive reductions in rail freight and coal costs the prices of electricity still managed to increase. Power companies charge what they can and nothing less. The Government id desperate for more income. High power prices provide a massive GST income. If Governments and power companies would have the slightest interest in keeping costs down, then they would have mandated for and introduced smart meters a long time ago. Power load management has occurred in many countries in Europe for well over 40 years. Cheap and plentiful power in Australia was a disincentive for good load management. It seems we are going to get more ugly high voltage power lines, new sub-stations and massive price increases. GREED before GREEN!
        Solar power remains one of the best and cleanest energy sources. Coal, oil and gas will remain important energy sources for future generations. We are the stupid generation which burns these resources in a most inefficient and wasteful manner.

  • june

    it’s only been “killed off” 6 months before it was due to expire anyway … and it might ease pressure on the electricity companies that actually pay the price for the generation of renewable energy under the RET, which might cause them to drop electricity prices.

    well, ok, they won’t, but they’ve got fewer excuses for keeping the prices high … !!

  • http://www.in-syncminerals.com Terry Wall

    This needs to be sent to GetUp urgently. Most of us suspected that the fossil fuel lobbyists would be active but this is absolutely ott.

  • Mike Reeves

    Is it just possible that the cut is just an attempt to preserve the surplus? And maybe quite clever to sound like they are sorry for companies with stranded assets at the same time too.
    It does seem odd that Origin and other gentailers are also busy selling PV systems while trying to discourage their uptake.
    Fellas, the best way to slow the uptake of solar would be to pass on the wholesale price decreases to the consumers, cancel the gold-plating exercises and get prices back to something that is in line with the CPI.
    This should be quite doable with more renewables coming online all the time. Leave the coal in the ground for the day when carbon capture and storage is an economic reality and pigs take to the sky!

    • june

      no effect on the surplus – the payment for STCs doesn’t come from the Gov’t. Fascinating how many people are saying that around the traps – shows up those who don’t really understand how the system works. STCs are paid for by electricity retailers, who have to buy the amount set by an annual percentage, and the percentage is set by the number of stcs in the market. (partly). So fewer certificates created (due to no more multiplier) equals a lower percentage equals fewer certificates the retailers have to buy equals less money they have to pay to the RET equals – IN THEORY – lower electricity prices.

      And to Terry Wall – I’m really not sure how bringing something that was already happening forward by a mere 6 months has all that much to do with the fossil fuel industry … quite a lot to do with the electricity retailers, yes …

  • SolarIndustry

    This change is OK. I work in the solar PV installation industry. This change eliminates a line of attack used by the anti-solar crowd and will improve our ability to argue for an even playing field – i.e. no subsidies for fossil fuels.

    • Photomofo

      Agreed. Solar still has a solid economic argument even with the lower multiplier. Solar prices have changed fast. It is no surprise to see incentive programs adjusting.

    • Beat Odermatt

      I am sure we won’t see the days when charities to fossil fuel companies will end. When will coal companies pay a fair price for water used, land destroyed and the visual vandalism caused by huge overland power lines?

  • bluecrowAG

    The increasing amount of solar PV in the electricity market is pushing down wholesale prices, meaning those big retailers like Origin with generation assets are losing out – the closing of the RET scheme will just reduce their costs in purchasing STCs, if their quota is reduced as well. Otherwise it may result in an undersupply of STCs and hence a firming up of STC prices. The solar industry will survive, and with costs of PV decreasing, it may pick up install rates again. However, the timing of this announcement is atrocious – it only gives companies a few weeks to ramp up marketing of solar PV before the year ends! Well and truly a ‘knee-jerk’ action. No care for investor confidence.

    • june

      the whole RET isn’t closing – just one small aspect of the small-scale part of the scheme.

      • bluecrowAG

        Sorry I meant ‘the closing of the Solar Credits scheme’ instead of RET scheme.

  • Vic

    What does it say about our society, when for eleven dollars, we help to lock in six degrees warming for our very own children?

  • Jamie Clark

    Here’s a google search for origin Energy, mentioned as blaming solar for their woes.
    ‘Origin is Australia’s largest energy and solar retailer, we’ll help you find and connect a solar panel system so you can start reducing your electricity costs’

  • http://www.100percent.org.au Lindsay

    Hi folks,

    If you support solar and want to see the government start standing up to the big retailers please sign the petition opposing today’s announcement here.

    http://100percent.org.au/content/time-stop-solar-coaster

    Cheers,
    Lindsay
    100% Renewable

  • Simon

    So a pillar in the argument against subsidising solar pv is being removed. Should this fail to halt the uptake of solar pv, the next thing the incumbents will argue for will be a tax of some sort on electricity generated by solar pv. Watch this space…

  • Paul

    Seriously, how can ANYONE plan a business when Government Incentives are routinely pulled at a moments notice? How long did the NSW $0.60 feed-in-tarrif last?? barely 6 months!

    Governments waste millions on feasibility studies, then either ignore the recommendations or kill schemes when-ever they discover their maths skills were insufficient in the first place!

    The place is run by idiots!

    • Rob

      You can’t. But the best thing about this announcement is that it is the end of the multiplier altogether. That means that there are no more multiplier drops that can be done unexpectedly. The only thing that can be done now is to scrap the RET altogether and that is incredibly unlikely. What we should see ow is at least several years of stable regulatory environment rather then the annual boom bust cycle that a yearly multiplier reduction saw. Companies can now plan work forces and predict demand growth without the vagaries of subsidy reduction with their huge cyclical swings in demand.
      What I wish the media wold do is some basic maths. They have been so quick to parrot the “save households and industry 100 million dollars annually” but few have actually examined what that means. Residential electricity consumption is 28% of the total generation so this will save residential users about 28 million dollars or about $1.20 per person per year, or about $5 per household.