Australia: Federal government cuts solar support16. November 2012 | Markets & Trends, Global PV markets, Top News | By: Jonathan Gifford
In a surprise move, the Australian federal government announced today that it would bring forward, by six months, the conclusion of a "multiplier" Renewable Energy Credit scheme for photovoltaics. While difficult to generalize over the vast continent, the move is anticipated to increase the cost of the average residential solar array by AUD$700 - $800 (US$723 - $826).
A government support mechanism in Australia will be wound up on January 1, 2013, in a move announced today by Climate Change Minister Greg Combet. The program provided a solar multiplier, which increased the number of tradable Renewable Energy Certificates (REC) generated by a solar installation. The REC multiplier was cut in 2011 from three to two, and as of January 1, it will be reduced to one. The REC multiplier, which applied right across Australia, was scheduled to be reduced to one on July 1, 2013.
Combet justified the move by saying that it will reduce pressure on electricity prices, "Phasing out the multiplier early will strike the appropriate balance between easing the upward pressure on electricity prices and providing continued support for householders and suppliers who participate in the installation of solar PV."
However, parts of the renewable energy industry have condemned the move, saying that it adds further instability to the solar market. The Sustainable Energy Association said that the REC multiplier was not a primary driver of energy price increases, which it said are due to network costs, as long-overdue upgrades are carried out on the aging electricity grid.
It is also worth noting that the REC multiplier only applies to the first 1.5kW of an installation.
"This is the second time the government has abruptly intervened in this program, and it has created further uncertainty in the solar PV industry, which has been unfairly subjected to decisions that have created dramatic boom/bust cycles," said Kirsten Rose, Chief Executive Officer of the Sustainable Energy Association.
"It is the wrong decision at the wrong time," said Solar Energy Council CEO John Grimes, adding his organization’s voice to the opposition. "All of the data shows there has been a slowing in the uptake of rooftop solar." Grimes pointed the abrupt winding up of state-based solar support schemes in Queensland in driving a cooling in Australia’s solar market.
The Solar Energy Council’s Grimes added that the timing of the move is curious, given that the Climate Change Authority is currently reviewing Australia’s Renewable Energy Target, in light of falling electricity demand. As a part of the review, there is a proposal on the table that the RECs for rooftop solar actually be discounted, to less than those generated by other forms of renewable energy.
Australian based renewable energy website Reneweconomy has pointed the finger of blame at incumbent electricity utilities for the government taking acting against residential photovoltaics. Utility Origin Energy this week blamed costs from the rooftop solar scheme as being behind a downgrade in its earnings. The site also reports that utilities in the state of Queensland have threatened to impose restrictions on the amount of rooftop photovoltaics can be installed in a given area.
Murial Watt, the Chair the Australian Photovoltaic Association agrees that most utilities are working hard to limit the spread of photovoltaics. "There’s a lot of push back from utilities, but Australians like PV," Watt told pv magazine, "certainly they are getting the fact that it’s cheaper than buying from the retailers, so there’s a lot of potential demand." Watt added that utilities might put impediments in place for households looking to install photovoltaics.
In terms of installers, some of the reactions to the latest federal government cut in solar support have been mixed. While solar lobby groups, such as 100% Renewables, has said that the solar support rollercoaster is destructive, some installers say that being free from the stigma of subsidies is helpful.
On the Reneweconomy website, one installer has posed that the change is a good thing: "This change eliminates a line of attack used by the anti-solar crowd and will improve our ability to argue for an even playing field – i.e. no subsidies for fossil fuels."
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