The independent pricing regulator has recommended that NSW solar panel owners be paid up to 10.3 cents per kilowatt hour for excess electricity they feed back into the grid.
However, the government should not mandate the payments, which should be left to the discretion of power retailers, the Independent Pricing and Regulatory Tribunal (IPART) says.
On Wednesday IPART handed down its final report on solar feed-in-tariffs, which recommended a subsidy-free payment of 5.2 cents to 10.3 cents per kilowatt hour for the year 2011-12.
The move has been met with dismay from the industry, with many concerned about the capability of many to survive.
NSW Greens MP John Kaye said the low feed-in-tariff would be a “death blow” in the wake of the withdrawal of the federal solar hot water rebate.
“Solar panels will become a boutique industry rather a mainstream component of reducing greenhouse gas emissions and bringing down electricity bills,” Dr Kaye said.
IPART chief Jim Cox said the benchmark range represented a “fair and reasonable value” for solar panel owners, adding that the most important source of financial benefit to them was through savings on their power bills.
The tribunal said a typical solar panel owner would save about $300 a year on the power bill, and earn about $50 a year from a subsidy-free tariff.
The one-for-one feed-in-tariff advocated by the solar industry was rejected by IPART, which said any payment above its recommendations would either increase all consumers’ power bills or require a subsidy from the state government.
“Setting a higher feed-in tariff than 5.2c to 10.3 c/kWh for 2011-12 would involve a subsidy, incurring costs that need to be recovered from higher electricity prices or the NSW budget,” Mr Cox said in a statement.
IPART recommended that the tariff not be mandated by the state government, which ordered the review after the multi-million-dollar blow-out in its Solar Bonus scheme.
Instead, the government should publish a benchmark range to inform consumers, who can then shop around for the best deal from retailers.
IPART’s benchmark compares with the 60c/kWh that original members of the much-criticised Solar Bonus Scheme are currently paid by government.
The rate was later reduced to 20c, and the coalition government closed the scheme early last year because of massive cost overruns.
In its report, IPART also recommended retailers contribute to the costs of the Solar Bonus Scheme.
“We will publish a recommended contribution for 2012-13 in June 2012,” the tribunal said in its statement.
“For illustrative purposes we have calculated that a contribution of 6.5c/kWh would have applied in 2011-12.”
