Australia to begin phasing out household solar credits early

Greg Combet said the amendments, which will come into effect next July 1, will ensure households continue to contribute to the cost of installing solar systems, while pressure on electricity prices is eased.

"The cost to install solar panels has reduced substantially since the Solar Credits mechanism was first announced in December 2008, driven by a strong economy, a high dollar and falling technology costs," explained Combet. "In this time, demand for solar installations has also increased rapidly, as the out-of-pocket cost to households has dropped and generous State and Territory feed-in tariffs have provided additional support to households." Consequently, the phase out of the Solar Credits multiplier will be brought forward by one year, from:

  • 5 to 4 on July 1, 2011;
  • 4 to 3 on July 1, 2012;
  • 3 to 2 on July 1, 2013; and,
  • 2 to 1 from July 1, 2014.

"This reflects the original intention to phase out the multiplier at a steady rate, as the cost of installing solar systems is expected to decline further over time,” he added.

As a result of the changes, householders will continue to receive support through Solar Credits, which equates to over half the upfront out-of-pocket costs for a typical 1.5 kW PV system. For systems installed after July 1, 2011 with the multiplier reduced from five to four, support for a 1.5 kilowatt (kW) system in Sydney, Brisbane, Perth or Adelaide, would be reduced from about AUD$6,200 to about AUD$5,000. Systems installed before July 1, 2011 will not be impacted by the changes.

The new amendments mean the Government can reduce the proportion of renewable energy certificates electricity retailers are required to purchase from small-scale systems. The Government has said it intends to set this at 14.8 per cent for 2011: this is reportedly expected to save the average household around AUD$12 in electricity costs next year, compared to not reducing the multiplier.

"The Government has always emphasized the importance of households bearing some of the cost of installing solar systems," continued Mr Combet. "For this reason, the Government moved amendments to the Renewable Energy Target (RET) legislation in June 2010 to enable these changes to the Solar Credits scheme. These amendments were supported by the Coalition and the Greens."

He added: "Taking into account industry feedback, the AUD$40 small-scale certificate price will remain unchanged and the Regulator will not be given the power to further reduce Solar Credits support, providing greater certainty to the solar panel and solar hot water industry.

The Solar Credits scheme provides support to households, businesses and community groups that install solar panels, wind and hydro electricity systems by multiplying the number of Renewable Energy Certificates (RECs) created by these systems. Solar Credits applies to the first 1.5 kilowatts (kW) of capacity installed for systems connected to a main electricity grid, and up to the first 20 kW of capacity for off-grid systems.