The Federal Government’s plan to reduce subsidies for home solar electricity panels has been welcomed by Australia’s leading locally owned solar company, EcoSmart Solar.
Minister for Climate Change and Energy Efficiency, Mr Greg Combet, announced on Tuesday that the Government will accelerate the reduction of the Solar Credits Multiplier from the Small-Scale Renewable Energy Scheme (SRES), phasing it out a year earlier than scheduled, and reducing it from five to three from July 1 this year.
The Government said it was necessary because soaring demand for solar panels was pushing up prices and reducing demand for other clean energy technologies, including solar hot water systems.
Australia’s largest locally owned solar company EcoSmart Solar welcomed the announcement, saying it is positive news to both homeowners and the solar industry.
General Manager at EcoSmart Solar, Mr Romano Bolzon said, “The Government’s reduction in the Solar Credits Multiplier is a welcome initiative. The Solar Credits Multiplier created a substantial advantage to solar electricity and resulted in booming sales of Solar Power systems at the expense of Solar Hot Water and Heat Pump Water Heaters, which have a lower cost of carbon abatement.
“Mark Dreyfus, the Cabinet Secretary and Parliamentary Secretary on Climate Change, was very clear in his address to the Clean Energy Council’s ATRAA Conference when he said that the Government wanted to modulate policy settings to keep the industry on an even and steady path. This was a strong signal of how the Government sees solar power as a long-term viable industry that contributes to the reduction in greenhouse gases, while assisting the homeowner to insulate themselves from spiralling electricity prices,” he added.
The reduction in the multiplier will help reduce the oversupply of Small-Scale Technology Certificates (STCs), which is currently suppressing the certificate price in the SRES.
Mr Bolzon continued, “Without this Government intervention, the over-supply of STCs from the boom in solar power installations would have driven solar power to an unsustainable level and eventually damage the solar industry. The move should be seen as a positive attempt to keep the scheme relevant to current market conditions and create a more balanced approach to solar power and solar hot water for both consumers and industry.”
Prior to the announcement, homeowners and the wider solar community were starting to face heavy falls in the value of government incentives towards the purchase of solar hot water systems, which was creating heartache for eco-conscious and suppliers to the solar hot water market.
At the end of April, the value of STCs had collapsed from $40 to under $28 in the space of a week, making many solar companies pass on the fluctuations in STC prices onto homeowners, leaving them unsure of the final price of their solar investment until the day of installation, and providing little incentive for homeowners to convert to solar.
Mr Bolzon concluded, “The changes announced by the Government will help stabilise the solar market by providing a sustainable framework for the solar panel and solar hot water heater industry, and will continue to provide support to homeowners with the upfront cost of switching to solar to help insulate them from spiralling electricity prices.”
The Solar Credits mechanism provides support for those installing smallscale solar panels, wind and hydro electricity systems by multiplying the number of certificates that these systems would usually be able to create under the Renewable Energy Target (RET) scheme. Solar Credits applies to the first 1.5 kilowatts (kW) of system capacity installed for systems connected to main electricity grids and up to 20kW of capacity for off-grid systems.
From July 1, 2011, the Solar Credits Multiplier will provide households with upfront support equivalent to around a third of the out-of-pocket costs for a typical 1.5 kilowatt (kW) solar panel system, before taking into account ongoing electricity cost savings and any state or territory based feed-in tariff incentives.
The Solar Credits multiplier from July 1, 2011 will be reduced to three, and to two on July 1, 2012 and then be reduced to one on July 1, 2013.
For further information on the Solar Credits Multiplier Scheme and Solar Rebates please visit www.climatechange.gov.au
