Solar energy sector lashes out after Victoria reduces feed-in tariff support

Energy suppliers and the solar power industry have attacked the Victorian Government over its decision to reduce the feed-in tariff paid out to operators of solar power panels.

The move comes after the New South Wales Government has drastically reduced support for solar panel operators, with the Australian Solar Energy Society warning that multiple businesses are on the verge of collapse.

The Victorian Government has announced a new transitional feed-in tariff for properties installing solar panels to reduce the current tariff. Energy and resources minister Michael O’Brien said the new scheme is not retrospective, unlike the NSW scheme, and that the new rate will not affect those currently accessing the premium feed-in tariff.

However, the new transitional tariff will offer customers 25 cents per kilowatt hour, a reduction from 60 cents per hour. This will affect all new users, while a report into the scheme is due next year that may recommend further changes.

“The new scheme will still mean people investing in rooftop solar systems will have an average payback period of less than 10 years, about the same as forecast when the PFIT scheme was first introduced,” O’Brien said in a statement yesterday.

“People who have already paid a deposit or are already having solar systems installed must make sure all the required paperwork has been submitted before September 30.”

However, despite the Government’s insistence that prices should be lowered due to cheaper solar technology and the closing statutory gap of 100 megawatts, solar operators are frustrated, given the reduction is a repeat of the New South Wales’ Government approach.

John Grimes, chief executive of the Australian Solar Energy Society, says it is another example of how solar policy is “just switched on and off”.

“Moving in a single jump is not ideal. Governments need to do this better. If they were going to do this over time, that’s fine, but it’s a huge jump, and now everybody will be racing to sign up as many people as possible.”

O’Brien has said that while it is unlikely new buyers will be able to access the premium rate, those people who have already started paperwork should follow up their transactions quickly.

“There are a few other question marks here, such as how we don’t know what’s going to happen between September and the beginning of January.”

“Having said all this, at least they didn’t do what New South Wales did and turned off the rate retrospectively. But we need action in this area, when we are experiencing a solar recession.”

Philip Green, chief executive of the National Electrical and Communications Association, said in a statement he was disappointed by the decision and said that although the use of a transitional tariff was welcome, the rate should have been higher.

“While we welcome the review by the Victorian Competition and Efficiency Commission, we call on the Government to index the TFIT to ensure it remains a fair and reasonable incentive for consumers to install solar systems.”

“It’s extremely important that the Government works to ensure that the electricity distributors and retailers do their bit to ensure that customers are not delayed in meeting the September 30 deadline.”

He also said the Government needs to “hold distributors and retailers to account”.

Grimes says it is reasonable that feed-in tariffs are reduced over time, but they need to be reduced in a reasonable fashion.

“We know that the average length of house ownership is seven years, so we need to show a payback to people with that in mind. The tariff will change over time, but it needs to be small, regular incremental changes, rather than policies that switch support on and off.”