29 April 2011 – The NSW government has all but axed the solar bonus scheme, citing a major blowout in costs after high take-up by consumers.

The scheme was officially suspended for two months from midnight Thursday, but NSW resources and energy minister Chris Hartcher told a large property industry gathering in North Sydney on Thursday morning that the government would not support the scheme.

Industry sources said the move would decimate the solar energy business estimated to employ 14,000 Australia-wide, with up to 40 per cent in NSW. They say it has left about 25,000 consumers in NSW who have signed up for the scheme not knowing if their expectations would be satisfied. Victoria is also expected to scrap its solar feed in tariffs when the cap of 100 MW
Is reached, expected mid year.

The program guaranteed consumers a feed-in tariff for solar energy produced by photo voltaic systems on their roofs. The tariff has varied from 60 cents a kilowatt hour when the scheme commenced a year ago (compared to the grid price then of about 17 cents a KW/h) to currently 20 cents a kilowatt hour.

Mr Hartcher, speaking at a ceremony to mark connection of Investa’s trigeneration energy plant at Coca-Cola Place in North Sydney, said that the government would not continue the scheme.

“We are not going to allow the present solar bonus scheme, which is already in deficit for $ 2.4 billion, to continue,” he said. “We are not going to sponsor such a scheme.”

However, he said the new government was still committed to renewable energy and energy savings initiatives as long as they were “economically rational”.

“The new NSW government is fully committed to energy sustainability but we are committed to achieving it in an economically rational and sensible way… we will encourage a sensible attitude towards the environment and towards energy efficiency in the community, and that’s why we look very much to business to set the example [such as with Investa’s trigeneration plant].
“The NSW government had 100,000 people sign up to the solar bonus scheme and it’s had cost overruns, but the concept is great. That idea, that people can reduce their electricity bill, is a great one but it needs to be encouraged in a sustainable way.”
By today (Friday) the minister’s office made an official announcement and said the scheme was on hold for two months from midnight Thursday. A solar summit stage one event to be held at Parliament House next Friday would, in part, decide its fate.

The former Labor Government’s solar bonus scheme has blown out by more than $759 million, with the total cost based on existing applications reaching up to $1.9 billion, Mr Hartcher said.

“We believe this to be a fair and responsible measure for a policy that, from the outset, has been characterised by an extraordinary level of mismanagement,” he said.

“We made a commitment during the election campaign to hold a Solar Summit within our first 100 days of office to examine Labor’s bungled solar bonus scheme,” Mr Hartcher said.

“We want to quickly get to the bottom of how this outrageously expensive policy was put to the NSW Parliament.”

The summit will seek to determine the solar bonus scheme’s true cost, as well as identify opportunities to limit cost blowouts through restructuring the scheme.

The minister said stage two of the summit would establish a “sustainable future for the NSW solar industry and encompass broader industry involvement”.

Chair of the summit will be NSW chief scientist and scientific engineer,
Mary O’Kane.

Nigel Morris, director of SolarBusinessServices which consults to the solar energy business, said the scheme had initially been capped at 50 MW, but had blown out to 300 MW. “That’s effectively 150,000 consumers buying two kilowatt systems,” Mr Morris said.
Currently, however, there was an additional 50 MW of demand.
“My punt is that this is the largest looming disaster – 25,000 punters who applied for the scheme who believed they would get through. The government might let them through, but it will cost more.”
Mr Morris said he believed the news would decimate the industry in NSW by 50 per cent. It currently employs 30-40 per cent of the 14,000 people directly employed in the photovoltaic industry.
Mr Morris said the industry “always knew” the program would end but that this was 30-60 days earlier than anticipated.”
“There is always a concern when there is no transition program. But there was a market before this program and there will be a market after this program.”

Mr Morris said the federal government was also expected to soon announce it would slash its capital investment subsidies for solar panels of up to $6000 “by somewhere between $1500 and $3000”.
Consumers have had a rocky ride trying to keep up with the “here today, gone tomorrow” subsidies for solar energy.
A 5 KW system currently sells for about $3000 installed, and that is now set to increase to between $4500 and $6000.
A year ago, however, a system of this size was quoted for a site in Sydney at between $7500 and $9000.
Mr Morris said the wild gyrations in the industry had been driven by politics rather than policy.
“What’s happened is that the coal fired power lobby which is immensely powerful has lobbied successfully and made a whole lot of agitation to blame the PV industry for electricity price rises.”