Industry opinion mixed over Government cuts to solar rebates

Solar operators are mixed over the Government’s decision to scrap the number of solar credits available to consumers, with some arguing the decision will actually benefit the industry as there is an oversupply of renewable energy certificates, causing a bubble.

However, others argue the issue of solar power has become a type of political football, saying consumers will be turned away from purchasing expensive installation equipment if there is no Government assistance.

“At the moment it is too expensive for some families,” says the general manager of Queensland firm Solar Xpress, Guy Montgomery. “They just can’t afford it, and without that rebate it will make solar out of reach for them.”

The move comes after the New South Wales Government last week announced it would halt the solar bonus scheme. That move also follows another decision by the Government to reduce the solar feed-in tariffs available to consumers.

Climate change minister Greg Combet has announced this morning the Government will make a number of changes to the Solar Credits arrangement, “in light of continued strong growth in the industry” that have significant impacts on electricity prices and demand for other clean technology.

Additional support under the Small-Scale Renewable Energy Scheme will be reduced to a multiple of three, rather than four, on July 1. This is one year earlier than expected.

The multiplier will be reduced to two on July 1, 2012, and to one on July 2, 2013. Existing written contracts to install small-scale solar panels on which a deposit has been paid prior to today will be preserved.

The action comes as the Government cut the number of solar credits available to consumers last year, arguing an oversupply of renewable energy certificates had led to higher electricity prices.

“By taking this action the costs of the SRES on electricity users are likely to be around half of what they otherwise would be in 2012, while at the same time still providing consider support to households taking action on climate change,” Combet said.

“The reduction in the multiplier will help reduce the oversupply of certificates which is currently supressing the certificate price in the SRES,” the minister warned in the release.

Combet also announced a number of other initiatives to help ease electricity prices, including a review of the network regulatory regime, investigation of more demand-side participation, and promising the implementation of a National Energy Customer Framework.

However, reaction to the decision is mixed. Amber Ferguson, co-founder of solar panel wholesale and installer Carbon Management Solutions, says the decision is right due to the over-supply of RECs.

“The oversupply has drastically reduced the value of the recs dropping from $40 each to the current price of $25-26 each. We hope to see the market correct itself in the near future with the demand for recs increasing and provide stability for the solar industry.”

“We also note that every government policy introduced has failed to provide a sustainable industry which us why we continue the boom bust cycle. We hope the balance between incentives and industry stability will eventuate this year.”

But Guy Montgomery says consumers won’t buy solar panels if they don’t have enough Government assistance, as they find the investment too expensive.

While he admits assistance for the industry does tend to come and go depending on which government is in power, he nevertheless points out any reduction in assistance hurts the business.

“Reducing the multiplier down to three is a significant drop, and outside the original guidelines of the multiplier scheme. I believe these will have a direct impact on the industry, and unfortunately this industry relies on intervention and sees busts and booms as a result.”

“We’re strong enough to keep going, and we’re a big enough business to survive. But it will have an impact on demand.”