Saturday, 11 December 2010

Solar subsidies to end sooner - Energy programs to be reassessed

Thursday 2/12/2010 Page: 3

ROOFTOP solar has suffered another hit with the federal government announcing that subsidies for households that install panels will end sooner than first planned. And Climate Change and Energy Efficiency Minister Greg Combet says he is looking at all programs in his portfolio to assess their role and effect when an economy-wide carbon price is established. In a move that had been expected, Mr Combet yesterday sped up the phase-out of a subsidy program giving households up to five times more renewable energy credits for the electricity generated by their solar systems.

The extra credits, which are cashed in on a market, will now end a year earlier in mid-2014, with the credit "multiplier" reducing every year until then. The government says the move will save average households $12 in power bills next year because energy retailers will be forced to buy less renewable energy credits. Mr Combet said he acted because the cost of rooftop solar panels has fallen dramatically in recent years, and in combination with generous state subsidies, households had very little out-of-pocket costs. The government has always emphasised the importance of households bearing some of the cost of installing solar systems", Mr Combet said.

Opposition climate spokesman Greg Hunt said the solar backtrack was another embarrassment for the government following failings in other environment programs, such as insulation and green loans. Chief executive of the Australian Solar Energy Society John Grimes said he was not too concerned about the decision, adding there was recognition in the industry it had to be sustainable by mid-decade without government help. In an interview yesterday Mr Combet told The Age that while it is important to support emerging technologies such as solar, there had to be "balance" in government programs.

Mr Combet said he was looking at the role all programs in his portfolio would play once a carbon price is in place. Mr Combet said a program's effect on increasing electricity prices, social equity and whether it is economically rational in light of carbon pricing, will factor, but no further decisions on programs are imminent. Mr Combet also voiced opposition to a national feed-in tariff for renewables, which the Greens have long campaigned for, but maintained strong support for the 20% renewable energy target. A report by energy expert and government adviser Rod Sims recently stated renewable energy programs such as targets and tariffs will drive future increases in electricity prices, but a carbon price will have little effect.

Greens Senator Christine Milne yesterday told participants at a solar industry conference they should fight to protect and expand programs supporting solar, because "old industry sectors" will push for their removal when a carbon price is established. Senator Milne later told The Age complementary measures will be discussed between Labor and the Greens in their negotiations around carbon price, saying a higher carbon price means fewer extra programs will be needed to "decarbonise" the economy, though both will ultimately be part of the policy mix.