Australia: Victoria cuts FIT

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While photovoltaics in Australia continues to grow, conservative state governments have been winding back or cancelling FIT programs. The country’s cumulative installed capacity is expected to grow to 2 GW by the end of the year, with some figures showing that the increase in solar is already bringing down the price of wholesale electricity in parts of the country noticeably.

Despite this apparent "merit order effect," and in a move that has been criticized by some environmental groups, the conservative state government in Victoria will dramatically reduce its FITs for photovoltaics at the end of this month. Energy Minister Michael O’Brien has said the move will not affect the rate of photovoltaic installation in the state.

The Australian Broadcasting Corporation has reported that O’Brien has indicated that FITs themselves have not been driving the uptake of rooftop photovoltaics in the state. "What’s driving the take-up of solar is people want to be more energy self-sufficient, the cost of solar systems has plummeted, the price of electricity is rising," he said.

The cut to the Victorian photovoltaic FITs was announced as a part of an initiative to broaden qualification for the FIT to all low-emission and renewable technologies, for installations smaller than 100 kW.

The group Environment Victoria has slammed the move, saying the government, led by Premier Ted Ballieu, has something against renewable energy. "Ted Baillieu has dumped his promise to support the Mallee solar farm, he’s made it harder to build a wind farm than a new coal-fired power station, and now he’s slashed household and business solar support. At the same time he’s handing out tens of millions in cash to the big coal companies," said Victoria McKenzie-McHarg, Safe Climate Campaigner at Environment Victoria.

The environmental group has also claimed that by cutting the FIT, the government is breaking a pre-election commitment to provide "fair reward" for households with photovoltaic installations. The government aims to produce 5% of the state’s electricity requirements by solar power by 2020.

Small-scale rooftop photovoltaics dominate the Australian market at present, however thin film manufacturer and integrator First Solar has begun supplying over 150 MW of projects in states such as New South Wales and Western Australia.

Electricity supply is emerging as a major topic of debate in Australia in recent months, with the source of increasing retail prices being contested by Federal and State leaders. Prime Minister Julia Gillard recently weighed into the debate arguing that utilities are to blame for dramatic electricity price rises, as they attempt to pay for upgrading of the aging electricity infrastructure. A carbon tax came into effect on August 1 and is also responsible for a part of the increase.