Bungled solar bonus scheme to cost $1 billion

A scheme to encourage New South Wales residents to buy solar panels was too popular, and will cost the state hundreds of millions of dollars more than expected. The state's auditor-general, Peter Achterstraat, says there was no market research ahttp://www.blogger.com/img/blank.gifnd no analysis of whether the Solar Bonus Scheme was worth the money.

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Changes To PV Incentives In Australia Prompt "Solar's Last Chance" Rally

The global governmental trend of revisions to solar incentive programs continues, as Australia has become the latest country to roll back its financial support for solar energy. Earlier this month, Minister for Climate Change and Energy Efficiency Greg Combet announced changes to the country's popular Solar Credits offering.

In the announcement, Combet attributed the revisions to "continued strong growth in the industry, the impact of this on electricity prices and the impact of the Solar Credits' support on demand for other clean energy technologies such as solar hot water heaters."

Australia's Solar Credits, which provide support under the Small-Scale Renewable Energy Scheme (SRES) by multiplying the number of certificates that these systems would generally be able to create under the Large-Scale Renewable Energy Target scheme, will be reduced to a multiple of three (from four) on July 1. The new multiplier is expected to provide residential PV system owners with an up-front credit equal to approximately one-third of out-of-pocket costs, based on a standard 1.5 kW installation.

The multiplier will be further reduced over the next few years, declining to two in July 2012 and to one in July 2013.

According to the minister, these changes will "help reduce the oversupply of certificates, which is currently suppressing the certificate price in the SRES." A statutory review of the SRES is scheduled for mid-2012 and every two years thereafter.

The government has also announced plans to partner with state and territory governments to evaluate feed-in tariffs (FITs), which are still provided in addition to the Solar Credits mechanism.

The officials will verify that the existing FIT levels are consistent with certain previously agreed-upon principles and do not create an "unjustifiable burden on electricity consumers, either through cross-subsidy mechanisms or their impact on the SRES," the minister explained.

However, in New South Wales (NSW) - Australia's most populous state - FIT changes announced by Premier Barry O'Farrell have already led to backlash from the state's solar sector.

Last week, the NSW government closed its Solar Bonus Scheme and reduced FIT levels for existing participants from $0.60 AUD per kWh to $0.40 AUD per kWh. (The FIT for customers at the $0.20 AUD FIT tier remained unchanged.)

Government officials blamed the closure and changes on excessive taxpayer burden and program mismanagement; program costs are projected to reach up to $1.9 billion.

"We acknowledge customers who joined the original 60 cent Scheme had certain expectations of financial returns; however, the scheme was never intended to provide windfall profits to a few at the expense of many," NSW Minister for Resources and Energy Chris Hartcher stated in the announcement.

John Grimes, chief executive of the Australian Solar Energy Society (AuSES), criticized the decision, noting that the NSW government had promised it would not enact FIT cuts affecting residents who had already installed PV.

"Barry O'Farrell must keep his promise to the NSW electorate and immediately reverse his decision to retrospectively slash the solar feed-in tariff," Grimes wrote in AuSES' blog.

In response, AuSES and its supporters are holding a "Solar's Last Chance Rally" this week to call attention to the NSW's FIT freeze and payment reductions. According to AuSES, these actions could result in extensive job losses in the solar sector and monetary losses for residential PV system owners.

Region in a Solar Eclipse

AS POWER prices continue to scale new heights, renewable energy such as solar power is becoming an increasingly popular alternative in our town.
The Clean Energy Council (CEC) counted 759 installations of solar panels in Port Macquarie last year – equating to 5.08 per cent of households using solar energy, a mid-range percentage in NSW.

The state is leading the way in renewable energy, with the biggest growth in solar-power system use in Australia.

Some 32,196 solar power systems were installed in NSW last year, compared to 13,875 in 2009.

Queensland came in second, with 25,594 systems installed last year.

After June 30, the federal government’s solar rebate – which now is about $7000 for installing a residential system – will be reduced by $1200.

Port Macquarie solar panel installers have enjoyed increased orders from homeowners rushing to beat the deadline.

Queensland Nationals Senator Ron Boswell believes the increase in solar panel installations is contributing to rising electricity prices, because the government has to find money to pay out its “generous” rebate.

CEC argues – citing an independent energy market analyst ROAM Consulting report – that power prices are being driven by rising network costs and retailer margins, not renewable energy.

Installation company G & A Martin Electrical Contractors owner Scott Martin said he did not know exactly how the rebate money was generated.

But he hoped it would not be through rising power prices.

“By installing solar panels on someone’s home, while the government is offering the rebate, essentially the infrastructure is bought by the homeowner, so the onus is on them to maintain it, allowing the government to save money on infrastructure installation and maintenance. That’s where I hope the rebate money is coming from,” he said.

Mr Martin decided to transform his electrical business to focus on solar panels three years ago.

“My business started with three employees and has grown to 15 in three years,” he said.

Mr Martin said households could install a solar-power system for about $2500.

The government footed the rest of the $9000 bill.