Australia’s solar industry fights for survival

Following the recent news that the Australian Minister for Climate Change and Energy Efficiency, Greg Combet, was to reduce the Solar Credits support multiplier from July 1, 2011 effectively ending the support program by July 2013, the New South Wales Government has now permanently closed the solar bonus scheme to new applicants. Adding insult to this injury, all existing feed-in tariff beneficiaries will also stand to lose out as the AUD$0.60/kWh rate is cut.

These announcements have caused prevalent dread in the Australian solar industry as neighbouring states begin to worry about the future of feed-in tariff rates countrywide. While some areas seem safe, an understandable amount of uncertainty now exists and it is unclear how this will affect the industry as a whole.

New South Wales
NSW Minister for Resources and Energy, Chris Hartcher, has revealed that customers eligible for the AUD$0.60/kWh tariff will see their tariff rate reduced to AUD$0.40/kWh from July 1, 2011 for the remainder of the scheme. Those on the AUD$0.20/kWh tariff will see no change.

Government says it will be introducing legislation as soon as possible to implement this change, which has, justifiably, caused an amount of uproar in the country.

Australian Solar Energy Society (AuSES) chief executive officer, John Grimes said, “The decision to roll back the feed-in tariff for existing solar customers is completely wrong. The public who invested in solar energy on the basis of a firm and legislated commitment from the NSW Government now stand to be cheated out of those returns.

“The Australian Solar Energy Society is disappointed the NSW Government hasn’t acted immediately to introduce a one for one feed-in tariff ensuring NSW residents get paid at least the same rate for the electricity they produce as they buy from the grid. Under the current rate, clean solar power is subsidising highly polluting coal-fired power and that makes no sense. Big energy has won again,” he explained.

National solar solutions provider Energy Matters’ chief executive officer, Jeremy Rich said, “Solar has to be part of any sensible energy mix for our nation. With zero cost fuel – the Sun – solar provides certainty and protection.

“With solar feed-in-tariffs remaining fixed, the most significant cost in real terms to electricity users is in the first year. The State or regulator could provide leadership by educating the market on the real cost of solar as a 40 year plus electricity generator, whilst also considering financial engineering support to ensure electricity users get the costs from solar electricity generation spread out over the long term and in line with the lifespan of the solar generator – the same way network upgrade costs are spread.

“We need to ensure Australians have access to clear information, enabling easy apples-with-apples comparisons to be made, and consequently good decision making.”

Acceptable abatement?
Furthering the upheaval, activists from Rising Tide have scaled the walls of Climate Change Minister Greg Combet’s electorate office to draw attention to issues related to the looming carbon tax and how resulting revenue will be spent.

The protesters have placed solar panels on Minister Combet’s rooftop and put up a banner that states “Make Polluters Pay, Fund Renewable Energy!”

The activists are refusing to come down from the building until they receive a commitment that a price on pollution will see some of the resulting funds go to renewable energy. The Government is yet to make a public statement on whether this will occur as part of its carbon tax policy.

Alongside this anticipated anger and frustration, the legality of the permanent closure and retrospective tariff cut is also being questioned.

“The Government set a cap, legislated for the scheme, which promoted the scheme heavily. People took up contracts on that basis. The Government is now reneging on a binding contract. It is bad form to tear it up existing commercial contracts, and sets a dangerous precedent for the Government when issuing other contracts,” said John Grimes, chief executive officer of the Australian Solar Energy Society (AuSES), which has organised a rally against the decision.

Victoria
In NSW’s neighbouring state, Victoria, things are looking equally as disruptive.

Victoria currently has two solar feed-in tariff systems: premium and standard. The premium program pays owners of home solar power systems of up to five kilowatts in size a guaranteed minimum credit of at least AUD$0.60/kWh for surplus electricity generated and fed back into the mains grid. The standard feed-in tariff only offers a “one-for-one” payment rate for any excess electricity fed back into the state’s electricity grid.

However, the area’s authorities have imposed a 100MW cap, which, when reached, will be the end of subsidies in the state. According to reports, Victoria has already installed 70MW of solar electricity generation capacity, and it’s expected the 100MW cap will be reached within the next six months.

Information posted on the Victoria Department of Primary Industries web site states:

“New customers will not be able to sign up for the premium rate. However, they will still be eligible for the standard feed-in tariff.”

South Australia
There’s both good news and bad news for solar supporters in South Australia. Legislation has finally been listed that, if passed, will see the feed-in tariff rate increase to a very generous 54c per kilowatt hour, plus an additional amount from electricity retailers. The bad news is the scheme will close to new connections in just four months.

South Australia’s Minister for Energy Michael O’Brien said that the Government has decided to change the previously announced cut-off point, which was a total scheme capacity of 60MW, with a closure date of midnight on September 30, 2011.

ACT
On April 5 we reported that the ACT’s tariff would remain unchanged, despite advice to the contrary. ACT’s gross feed-in tariff scheme remains the most generous in the country. To date, more than 4,100 rooftop solar installations have been completed throughout the state under the scheme, a figure which equates to approximately 7MW.

Yet, although things seem positive here, it won’t be long before the uncertainty running rife in NSW begins to infect its self-governed internal territory.

So what now?
What all of this change means for Australia’s solar industry is still unclear. In some states there will be a rush of installations while residents try to make the most of existing policies, while others take legal action against Government in order to reign in the expected return on investment. As we move into the latter months of the year the future of this country’s solar success will become more apparent. At this point, things are looking predominantly, and disappointingly gloomy.