Saturday, 14 May 2011

Rein on solar panel credits sours business

2 May 2011, Page: 8

WHEN Tony Pecora and his electrician mate started a solar power company four years ago, they ploughed their savings into the venture with the expectation that federal moves towards reducing fossil fuel use would spark a clamour for solar panels. Instead, stock is sitting idle on the shop floor after changes in the federal government's management of solar credits flooded the market. "It's complete incompetence,' Mr Pecora said. "If you want business to actually have faith in what's going on and have confidence to invest money, there must be stability".

The number of solar installations supported by the renewable energy target scheme has blown out from fewer than 15,000 systems in 2008 to more than 120,000 last year. Until July, the solar credits scheme will provide eligible householders with an upfront payment worth five times the value of certificates their solar panels would produce. The multiple of five will then be reduced to four, and lowered each year after that to rein in the support mechanism.

The move came after the huge take up caused by the original generous subsidies flooded the system with Renewable Energy Certificates, causing their value to plummet and sparking an investment freeze among big energy investors in major projects such as wind farms.

The government moved early last year to rescue the system, splitting Renewable Energy Certificates into large scale and small scale markets, and in January the government opened an online clearing house for small scale technology certificates (STCs), where sellers offer them at the fixed price of $40 each. Then it wound back the subsidies to solar panel installations in a bid to stop the flood of new Renewable Energy Certificates.

There is still a surplus of 796,100 certificates, with figures from the Office of the Renewable Energy Regulator showing only 78,016 have been bought so far this year. Mr Pecora's company in Melbourne's southeastern suburbs employs 15 electricians and three sales staff, and is finding it difficult to manage monthly overheads of $100,000. Each container of stock ordered from overseas is an additional $250,000.

Mr Pecora said he was negotiating with customers who had ordered solar panels, but feared jobs would be cancelled if the quoted prices rose. "People aren't going to fork out another $1500", he said. "The only way it's going to work is if they do a carbon tax and tax people for what they pump into the air".