Solar developers are warning that changes to the small-scale technology certificate (STC) system could result in the ‘perfect storm’ for rooftop solar, stopping the industry in its tracks. Some in the Australian solar industry believe that STCs are under threat if the RET becomes watered down in the review.
While it is far too early to know precisely what the result of the RET review announced this week by the Federal Government will mean for rooftop solar developers, there are concerns that residential rooftop PV arrays and sub-100kW commercial installations will no longer generate STCs. In effect, the move would see rooftop solar being exempted from the STC system and subsidy free.
Under this situation payback times for rooftop solar could be pushed out and commercial solar may become a very difficult sell. Currently commercial solar is already facing a number of challenges adding significantly to the cost of a commercial rooftop installation.
Given this, solar developers are warning that a change to the STC system could be disastrous.
“There is a pretty significant dark cloud hanging over the industry,” said Aidan Jenkins, Managing Director of West Australian solar company Infinite Energy. Jenkins reports that while the industry has handled big reductions in FITs in the past, from $0.47/kWh down to $0.8/kWh in WA, and reductions of the STC multiplier, current PV component pricing and weakening Australian dollar have combined to remove solar developers’ ability to cope with the removal of government support.
“We don’t have those cushions that the industry fell back on when the STC multiplier cuts happened in the past,” explains Jenkins. “What we have now is potentially going back to a situation where solar PV for residential customers could become uneconomic, and where that happens you will find the industry almost wiped out overnight.”
Amplifying concerns is that a removal of STCs from rooftop solar could hit the industry precisely at the market segment showing the most promising growth at present. Currently commercial rooftop customers, for whom a sub-100kW installation would be ideal, are turning to PV as a way to cope with high retail electricity prices. There are fears that if the STC discount is dissolved, this market could stall.
“There is an opportunity for the government to bring the entire PV industry to a screaming halt if they remove the STC discount,” said Ingenero’s National Sales Manager, Patrick Greene. “That’s because it is the sub-100kW market that is really buoyant and where the opportunity is.”
Making things worse, electricity retailers are increasingly introducing electricity contracts with significantly increased fixed costs, set against a reduce kiloWatt-hour rate, to small or middle-sized commercial customers. Ingenero’s Greene said: “That impacts very greatly on the economic viability of a solar system.”
There is little doubt that a subsidy-free landscape for solar would be preferred by solar industry, finally bringing to an end arguments that PV is a subsidy-driven market.
“In a lot of ways I agree with the sentiment,” said Ian Milne, the Business Manager for Avant Solar. “I don’t think that now is the time for that because the general buyer has this mindset that ‘if I’m not getting any help, there’s nothing in it for me, then why do it?’”
Avant’s Milne said that in WA at least, electricity is currently subsidised for households. While cost-reflective pricing would see electricity prices of $0.30 to $0.32/kWh for homeowners, currently they pay around $0.25 to $0.26/kWh.
Infinite Energy’s Aidan Jenkins agreed that public perception of solar may take a hit if STCs no longer apply to PV: “There is a perception in the market that when government support is no longer there, that PV is no longer viable.”
Changing that perception could become a priority for the rooftop solar industry in the coming months and with some expecting the RET review to move forward with some alacrity, the clock may be ticking.
