Solar industry hits roof over plans to slash power rebate

Sydney Morning Herald
14 May 2011, Page: 11

UP TO 110,000 participants in the state government's solar bonus scheme will have the rate they are paid for generating electricity slashed from 600 a kW to 400 from July, a move that will save the NSW budget an estimated $470 million. But the state's solar industry says it will be destroyed by the change, saying it will now be impossible to sell up to $200 million worth of panels already purchased by solar installers. About 40,000 electricity customers who had applied to join the scheme before it was suspended to new entrants for two months on April 28 will be allowed to do so at a 200 rate.

The Energy Minister, Chris Hartcher, announced the decision yesterday and said the scheme would not be reopened to new customers. The government would introduce legislation to retrospectively enforce the new rates. "It's still going to cost the taxpayer, it's still going to cost the people of NSW, but we have now a finalisation that is in the interests of everybody", he said. Under the scheme, electricity customers with solar panels are paid by power companies for energy generated back into the grid. The companies pass on the cost to their electricity customers through their electricity prices.

The scheme proved so popular that the former premier Kristina Keneally was forced to cut the rate for new entrants from 600 to 200 a kW last year and divert money from the climate change fund to cover a looming cost blowout. After the election it was discovered the scheme was still underfunded by $749 million. The Coalition government made the decision to absorb the extra cost into the budget instead of charging power companies to avoid putting pressure on electricity prices.

The Australian Solar Energy Society said the change would "send a chill down the spine of every NSW solar company and every resident concerned about climate change". The industry will rally at Circular Quay next Wednesday to protest against the retrospective change to the tariff rate. The Solar Energy Industries Association said it had already been contacted by people who were cancelling purchases. "This decision will destroy the industry in NSW if it goes ahead", the association's chairman, Ged McCarthy, said. "I have already consulted with lawyers and we will launch a class action against this retrospective legislation if it goes ahead. We have no choice but to fight it on behalf of our businesses and their customers".

A small, 1.5 kW solar panel system can earn about $1000 a year under the tariff in Sydney, but that would be cut by a third, meaning it could take years longer to pay off. The opposition environment spokesman, Luke Foley, criticised the decision to introduce retrospective legislation, which, he said, "penalises tens of thousands of people doing their bit for the clean energy future". The Greens MP John Kaye said the Coalition had supported the introduction of the 600 tariff when the scheme was introduced: "Never again will households or the clean energy industry trust even a legislated promise. The future of rooftop renewable energy has been dealt a savage blow".