Australian PV industry demands answers

Companies that install rooftop solar panels in Australia have called for the Federal Government to step in and provide more financial certainty as they deal with the dropping price of Renewable Energy Certificates (RECs), which has sparked a flurry of comment over the past few days.

Providers want to be able to offer panels at a set cost and not be dependent on the price of the small-scale technology certificates, which dictate the rebates that keep consumer costs low and drive growth. The RECs are available when you buy qualifying solar hot water, solar/wind power systems or solar panels. Customers can receive cash back on purchases by selling the RECs or use them as a point of sale discount.

The price for RECs in January this year was AUD$37 (€27.20), but this has fallen sharply to AUD$31 (€22.80) this month, according to Green Energy Markets Australia. They were allegedly being produced this month at a rate of more than a million per week, effectively saturating the market. Four extra certificates also known as "phantom credits" were issued for every megawatt hour of renewable energy generated, despite warnings that this would deflate the certificate price.

Photovoltaics installer West Coast Solar was reported to have turned away customers who had already paid deposits after a flood of cheap certificates entered the market. Jay Funnell, in a statement as spokesperson for the company, said that the drop in certificate price made the whole industry look bad and would eventually lead to a massive fall.

"If the industry cannot effectively promote and sell their products at a reasonable price, the industry will be decimated," Funnel said.

This has added to concerns about the potential of a tight federal budget, which is due to be handed down on the second Tuesday of May. An expected cut in funding for solar projects will mean further uncertainty for researchers and solar panel companies.

The Australian Solar Energy Society is worried complimentary measures funding will be abandoned in the Budget, which will also provide major issues for the industry in providing competitive pricing.

Boom-bust scenario

All involved in the photovoltaic industry in Australia are watching the government’s every move carefully as these issues play out. Of most concern is that the generous certificate prices and sizable feed-in tariffs could lead to a boom-bust scenario.

As the federal and former New South Wales Government tries to wind back its lucrative incentives, the independent pricing and regulatory tribunal in New South Wales, IPART, has come out and warned that they are not doing it fast enough.

The situation has led to an Easter Weekend of commentary and concern in the Australian Press as the situation reaches a crescendo. Some media commentators were calling for a reassessment of the scheme, particularly in the wake of similar environmental schemes that ended up costing the government billions of dollars and left them red-faced.

One commentator with the Sydney Morning Herald, Lenore Taylor, said that the waste of government funds on small-scale projects had been damaging for the pursuit of larger projects, which the scheme had rendered "unviable".

Sydney-based Green Energy Blog ‘Sydney Green Ring’ says that the problem with the scheme is allowing the market to dictate the price of solar panels, which inevitably leads to unrealistic pricing.

The federal opposition said the government needed to move urgently to steady the certificate price. "There is looming evidence of a potential solar crisis but the federal government has ignored this evidence, just as it did with the problems in the home insulation program," the opposition spokesman on climate action, Greg Hunt, told the Sydney Morning Herald over the weekend.

"The government’s generous ‘phantom credits’ scheme for solar has cooked the market, and the solar quota is likely to be filled within months, causing the industry to go from bubble to bust."

The government has said that it will attempt to contain the issue by drastically reducing the issue of new certificates. It is also considering limiting rebates to larger and more efficient projects that generate in excess of two kilowatts, rather than the present standard of 1.5.