Solar rebate is too popular

Sydney Morning Herald
Thursday 21/8/2008 Page: 2

REBATES for solar panels will continue to be paid to householders by the Federal Government even though the original allocation for this year is likely to be exhausted next month. The decision to drop the eligible income level for the $8000 rebate has not had the desired effect. Instead of slowing the number of applications, the rate has increased to up to 700 a week. If the present rate continues, the cap of 6000 will be reached next month.

Rather than take away an attractive incentive for households to install the rooftop systems, the Government has decided to keep paying the rebate, potentially blowing out the cost of the program, which was given $25.6 million for this year. But the long-term future of the rebate is not guaranteed as the Government examines the best way to help households get set for the expected price rises for energy when the emissions trading scheme begins in 2010.

"This is a critical process we are undertaking in the months ahead and throughout this consultation process we will continue to meet demand for those Australians who most need assistance to put solar panels on their roof," the Minister for the Environment, Peter Garrett, told industry representatives this month.

A spokesman for Mr Garrett said yesterday the future of schemes designed to encourage people to invest in renewable energy would be discussed at a meeting with the industry in Sydney tomorrow. In the May budget, the Government reduced the income threshold for the rebate from $150,000 per household to $100,000. It was also capped at 6000 households.

The solar industry was furious, predicting it would go under because the cost of solar panels meant wealthier households were more likely to be interested in installing the environmentally friendly energy systems. Instead, applications have continued to pour in, but for much smaller systems which cannot generate the same power. Although people are still applying to install solar panel systems, the industry is pushing the Government for a decision on the long-term future of the rebates.

It argues the rebate system is inefficient because the numbers of rebates funded by the Government are constantly fluctuating, making it difficult to plan. "We're very busy now but what about the next six months? Do we hire or fire?" one industry member told the Herald yesterday. "The rebate has already changed a few times so people feel it can change again." Industry wants the rebate scrapped and replaced with a national feed-in tariff law which would pay those with solar panels for the electricity they generate.

Greens Senator Christine Milne said interest in environmentally friendly power would mean widespread support for feed-in laws which are in place in some of the states and territories. 'A feed-in tariff gives longterm market guarantees separate from government subsidies and relieves governments from having to find new cash each budget," Senator Milne said. "The best way to sustainably support the growth of renewables is to give investors certainty by putting in place a mechanism like a feed-in tariff, such as the one I have introduced into the Senate."