Rees takes a shine to solar 40 panel incentive

Sydney Morning Herald
Tuesday 10/11/2009 Page: 9

THE State Government will increase the incentive for families installing solar panels by about $1500, overturning its cautious approach to supporting the technology. In the process, it has broken ranks with every other state and turned its back on advice from the NSW Treasury. The decision will buy the Premier, Nathan Rees, valuable support at this weekend's ALP state conference, since the move is supported by the Electrical Trades Union which is headed by the party's state president, Bernie Riordan. The unions Victorian branch released a study in September pushing for the generous subsidy.

After a review initiated by Mr Rees, the cabinet yesterday decided that households with solar energy systems will be paid for all of the electricity they generate, receiving the so-called gross" feed-in tariff and not just the smaller "net" amount for surplus electricity they actually sell into the power grid. This also means all other electricity users will pay the electricity bill of families with solar panels. Only the ACT has this generous gross feed-in tariff, with all states supporting a net tariff to limit the cost.

The switch is expected to give the NSW solar industry a significant boost by sparking a big increase in households installing solar panels. The cabinet decision will increase the average amount each household would receive from installing solar panels by more than 60%, to about $1500 a year. The Government's backflip will ensure that solar systems pay for themselves within 10 years of installation, depending on the amount of electricity generated. Previously, the extended time it took for the systems to pay for themselves made many families reluctant to install the panels.

'A 'gross scheme' is based on the total solar energy produced in your home rather than payments based only on what you don't use," Mr Rees said. "These changes will see an average family paid around $1496 a year. "That's a 62% increase on the previous scheme and means households can pay off their investment in solar panels in around eight years."

In September the Electrical Trades Union released a report based on work by Access Economics to argue that switching to the greater tariff could create as many as 22,500 "green" jobs. Countries such as Germany and Sweden have given the solar energy sector a push by adopting generous subsidies built around adopting a gross feed-in tariff. As many as 48 countries have adopted the same approach.

In NSW, a gross tariff is expected to cost all households about four cents a week, or about $2 a year, according to Muriel Watt and Robert Passey, researchers at the Australian Photovoltaic Association, who examined data collected by the Centre for Energy and Environmental Markets at the University of New South Wales. "It's important for political leaders to take bold steps on climate change," said Jeff Angel of the Total Environment Centre. "This will have the dual benefit of creating a significant number of jobs as well as dampening the need for additional coal-fired power stations. This fits in well with the Premier's preference for a future with no new baseload coal power."