Solar scheme shift stuns industry

Solar scheme shift stuns industry

A rebate for rooftop solar panels will be halved six months earlier than planned in a move blasted by an industry group as "diabolical".

Climate Change Minister Greg Combet announced the solar credits scheme would end in January next year "due to continued strong demand for household solar''.

Solar panels are about to get more expensive.

Solar panels are about to get more expensive.

In a statement, Mr Combet said the subsidy cut was expected to save households between $80 million and $100 million on electricity bills next year.

"Phasing out the [scheme] early will strike the appropriate balance between easing upward pressure on electricity prices and supporting households and suppliers who install solar PV," he said.

According to the government's figures, the level of support for a 3-kilowatt solar panel system will fall about $800-$1,000 across most state capitals. The current assistance for such a unit drops from $2,976 in Sydney to $1,984 from January 1, while the fall in Melbourne is from $2,528 to $1,696.


John Grimes, chief executive of the Australian Solar Council, said the surprise move would hit jobs and put solar PV out of reach for many middle-class households seeking relief from soaring power bills.

"People refer to this as the solar-coaster ride," Mr Grimes said. "Our standing joke is that a day is a long time in solar policy."

The acceleration of the rebate reduction comes as the government is under increasing pressure from the power industry to modify its 20 per cent renewable energy target (RET).

Current projections suggest renewable energy supplies will exceed the goal of a 20 per cent share of total supply by 2020.

Renewable energy advocates warn that tinkering with the target would place at risk as much as $18 billion in additional investment in solar, wind and other non-fossil-fuel energy sources by the end of the decade.


Ric Brazzale, president of the REC Agents Association, said solar PV installations were on course to drop from 350,000 in both 2011 and 2012, to 230,000 in 2013 as state feed-in tariffs were wound back. That fall is now likely to accelerate, he said.

‘‘The industry is desperate for some policy stability,’’ Mr Brazzale said.

The renewable energy industry has been building a critical mass in terms of scale and innovation capacity that is now at risk: ‘‘It’s just so wasteful to risk throwing it away.’’

Mr Grimes said solar PV prices had been falling fast because of a flood of low-cost production from China, but the reductions may not continue as the Chinese industry consolidates and loss-making firms go bust. Some 15,000 people are employed in the industry, he said.

But Rheem, Australia's largest producer of solar hot water systems, welcomed the announcement, saying it would ''create a level-playing field for all solar hot water producers''.

The renewable industry's peak lobby group, the Clean Energy Council, said today's decision should "erode all arguments" for further changes to the RET.

‘‘We would have expected the government to have more regard for the sense of investor uncertainty today’s announcement creates, right at the time when both major parties are seeking to demonstrate that Australia is a reliable place in which to invest, with stable and consistent market rules,’’ Russell Marsh, the council’s policy director, said.

“While it is appropriate that governments continue to review the level of incentives, it’s important that this is handled carefully and timed sensibly,” Mr Marsh said.

Odd combination

Greens leader, Senator Christine Milne, said the government's move, combined with a decision to delay taxing methane gas emissions from mines and landfills, "gives the fossil fuel industry a reprieve."

“It seems incredible that the government wants to bring forward harm to renewable energy industries but delay cost impacts to fossil fuel polluters," she said.

“It is gold-plating of energy networks that is driving up power bills – not green schemes – and the government has caved into lobbying by the electricity retailers and fossil fuel generators to do something which will have almost no impact on electricity bills.”

“This move might at the outset cut bills by $11 a year, but it will actually slow down the long-term process of cutting bills that is being driven by the uptake of clean, fuel-free renewable energy. It just doesn’t make sense,” Senator Milne said.

By 2014, the government said the small-scale solar scheme was expected to cost electricity consumers around 70 per cent less than in 2012.

Legally binding contracts to install supported systems, already entered into before today and made on the basis of the current rules, will be preserved.

The same applies to systems installed before 1 January 2013, the government said.

The government said more than 880,000 rooftop solar PV systems and more than 560,000 solar and heat pump water heaters have received support under the renewable energy target in the past five years.

Peter Hannam

Peter Hannam is Environment Editor at The Sydney Morning Herald. He covers broad environmental issues ranging from climate change to renewable energy for Fairfax Media.

Most Viewed in Environment


Morning & Afternoon Newsletter

Delivered Mon–Fri.

By signing up you accept our privacy policy and conditions of use