Energy groups call for solar water heaters to be removed from renewable energy scheme

A group of large energy companies have lobbied the Federal Government to remove solar hot water heaters from the renewable energy target scheme, which requires 20% of Australian power to be renewable by 2020.

Companies including AGL, Pacific Hydro, Vestos and Suzlan have requested solar hot water heaters be removed from the scheme, after last year’s $1,600 subsidy flooded the market and halved the value of renewable energy target (RET) certificates.

It is understood the companies are targeting the RET scheme after the international climate change summit in Copenhagen failed to produce a binding resolution to combat global warming.

But Gareth Jennings, corporate affairs manager for Rheem, maintains the drop in certificate prices was only temporary and values are now increasing. As a result, he says any decision to remove solar hot water heaters from the scheme would be a mistake and disastrous for the Australian manufacturing industry.

“When this campaign began to rid the scheme of solar hot water heaters, the number of solar and heat pumps being installed was at an all time high, but since that time there has been a drop in the value of rebates given out. There has been a drop to just $1,000 for the Federal scheme, with New South Wales reducing its rebate to $300 just last week.”

“The market is now 50% off its highs, which is when all this noise started. But now we’re seeing a recovery in the price of RECs, since the issue first raised its head, and the forward prices are now in the 50s. This is the market correcting itself, and it’s why you use a market mechanism.”

Jennings says the companies involved in the campaign against solar hot water rebates are “looking for higher REC prices”, which would result in energy users paying a surcharge on their bills.

“Our view is that there have been so many changes referred to other incentives for households, and a corresponding drop in the number of RECs being created, so if there was any change in eligibility it would be a disaster for the industry.”

He says the solar hat water industry is the last major appliance industry in the country dominated by locally manufactured products, and says a drop in demand for these products would spell death for local companies.

“RECs aren’t just about helping consumers modify behaviour, it’s also about helping an Australian industry. They want to take solar hot water heats out, and put them in a scheme with gas heaters. But those are imported, and sell at lower prices, and if there is a big discount between the two then it’ll be a disaster, and the end, for solar manufacturing.”

But Tony Thornton, chief executive of the Solar Shop, says he agrees with the lobby and wants heat pumps removed from the scheme.

“The REC was used to incentivise companies to create energy solutions. It charges people in polluting industries, and turns around and directly hands that money to people creating new energy solutions. But the heat pump industry is really an abatement scheme that does reduce electricity, but doesn’t create renewable energy.”

Thornton says because the government has enforced a scheme whereby electric systems are replaced with solar systems, the massive installation of heat pumps has resulted in users becoming eligible for rebates and benefits.

However, he says these heat pumps do not produce renewable energy and as a result, they should be excluded from the scheme.

“They’ve already reduced the scheme from $1,600 to $1,000, but clearly the heat pumps need to be entirely excluded and really anything that’s not renewable energy should be excluded as well.”