Solar panel pay-off claim rejected

The time it takes to pay off an average solar system will blow out after the Victorian government slashed an incentive scheme for rooftop panels, according to expert analyses.

Consumer and industry groups have challenged the Baillieu government’s claim that it will still take less than a decade to pay off a standard solar system through savings on power bills after changes announced this week.

Since 2009 electricity companies have paid households and businesses 60¢ a kilowatt hour for electricity fed into the power grid.

With the system nearly at its legislated cap, Energy Minister Michael O’Brien announced the rate would be cut to 25¢ while an inquiry was held into feed-in tariff schemes.

Mr O’Brien said the declining cost of solar panels - now about $4600 for a 1.5 kilowatt system - meant they could still be paid off inside 10 years.

Alternative Technology Association policy director Damien Moyse said the government’s modelling appeared overly optimistic.

The association found a 1.5 kilowatt system would take 14 years to pay off under the new rate. For a 2 kilowatt system it found it would take more than 20 years.

Mr Moyse said it was difficult to see how panels could be paid off so quickly when the 25¢ rate would only last for five years.

”Our role is to advise consumers on whether this is a sound financial decision. If its 20 years’ payback, we will have to tell them, no, it doesn’t make much sense,” he said.

He said the association hoped to meet with the government to clarify its claims.

Clean Energy Council policy director Russell Marsh said recent modelling found a 22¢ tariff tied to inflation would lead to a payback time of 14 to 16 years. He said the 25¢ rate would cause a large drop in consumer demand and would put 1000 jobs at risk.

Mr O’Brien stood behind the government’s figures. He said the 25¢ tariff meant Victoria had the second-most generous rate behind Queensland.

Households have until September 30 to submit paperwork to receive the 60¢ rate. Those already receiving this rate will not be affected.

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