Australia’s national electrical industry association has criticised a decision by the Victorian state government to slash solar incentives, the second major blow this week to the state’s renewable energy industries.
The National Electrical and Communications Association (NECA) of Australia, the only association for electrical and communications companies in the country, expressed dismay at a Thursday announcement from Victoria’s Minister for Energy and Resources, Michael O’Brien, to replace its Premium Feed-in Tariff (PFIT) scheme for solar energy with a reduced incentive programme.
Under the current PFIT scheme, some 50,000 customers in the state receive 60 cents for every kilowatt hour of excess electricity fed into the grid using their small scale solar systems.
The scheme is reaching its cap of accepting 100 megawatts of solar power across the state.
Victoria’s Coalition government has responded by introducing a new five-year scheme called the Transitional Feed-in Tariff (TFIT), which pays 25 cents per kilowatt hour for fed-in electricity and will be put in place from 1 January 2012. The new rate is slightly higher than the average retail rate for electricity.
Mr Philip Green, the Victorian executive of NECA, said in a statement that he was concerned at the low price offered by TFIT. “It’s probable, at a time of rapidly rising electricity costs, that over the five year life of TFIT the 25 cents rate will slip below the average retail electricity price,“ he said.
But, he praised the introduction of the transitional rate as a way to provide a softer landing for the solar industry and ensure its on-going viability in Victoria. Other states in Australia have responded to similar situations by closing down corresponding feed-in tariff schemes.
He called on the government to ensure that solar energy remains an attractive option for customers.
“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,” he said.
NECA has advised both the Minister’s office and the Department of Primary Industries with respect to the phasing out of PFIT.
According to a statement on the Department of Primary Industries’ website, the rate reduction from 60 cents to 25 cents is due to the decreased cost of solar panels, leading to a reduced need for incentives. Even under the new TFIT scheme, solar customers will still have a pay-back period of less than ten years.
Customers already in the PFIT scheme will continue to receive the premium rate, one of the highest in Australia, until the end of 2024. Customers who finish new installations and submit all required paperwork before the 30th of September will still be eligible for the PFIT scheme.
“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 30th September deadline,” said Mr Green.
Uncertainty over the government policy is affecting business investment within the industry.
Last week, a British Solar energy company Mark Group said it would cancel plans to expand its rooftop solar services in Victoria, which would create about 120 jobs, if the government did not provide consistent policy.
The solar industry is not the only renewable energy sector to be thwarted by unfavourable policies in Victoria. This week the state passed restrictive regulations on the siting of new wind turbines. The Australian reported the Clean Energy Council’s finding that up to 70 per cent of potential wind farms projects will be affected, resulting in the loss of billions of dollars in investments.
