1 December 2010 – Minister for Climate Change and Energy Efficiency, Greg Combet today announced that solar credits would be phased out a year ahead of schedule, partly because the cost of installing solar panels had dropped.

The move will cost households that want to install an average solar energy system about $1200 more from July next year.

“Under the solar credits amendments, support for household solar installations will begin to be phased out a year earlier than previously planned,” Mr Combet said.

“The cost to install solar panels has reduced substantially since the Solar Credits mechanism was first announced in December 2008, driven by a strong economy, a high dollar and falling technology costs

“In this time, demand for solar installations has also increased rapidly, as the out-of-pocket cost to households has dropped and generous State and Territory feed-in tariffs have provided additional support to households.

“The Government has always emphasised the importance of households bearing some of the cost of installing solar systems,” Mr Combet said.

“For this reason, the Government moved amendments to the Renewable Energy Target, or RET legislation in June 2010 to enable these changes to the Solar Credits scheme. These amendments were supported by the Coalition and the Greens.”

Mr Combet said the move followed “extensive industry consultation with the clean energy sector and energy utilities on draft regulations targeted at ensuring that solar systems are not provided for little or no out-of-pocket expense.”

The phase out of the solar credits multiplier will be brought forward by one year, from:

  • 5 to 4 on 1 July 2011;
  • 4 to 3 on 1 July 2012;
  • 3 to 2 on 1 July 2013; and,
  • 2 to 1 from 1 July 2014.

Key points from Mr Combet’s media statement on Wednesday included:

  • the Government to reduce the proportion of renewable energy certificates that electricity retailers are required to purchase from small-scale systems.
  • The Government intends to set this at 14.8 per cent for 2011, and this is expected to save the average household around $12 in electricity costs in 2011 compared to not reducing the multiplier.
  • The solar credits scheme provides support by multiplying the number of renewable energy certificates created by these systems.
  • Solar credits apply to the first 1.5 kilowatts of capacity installed for systems connected to a main electricity grid and up to the first 20 kW of capacity for off-grid systems.
  • The support is provided to households when they pay the upfront costs of installation, and this will continue through solar credits equivalent to more than half the upfront out-of-pocket costs for a typical 1.5 kW PV system.
  • For systems installed after 1 July 2011 with the multiplier reduced from five to four, support for a 1.5 kilowatt system in Sydney, Brisbane, Perth or Adelaide, would be reduced from about $6200 to about $5000.
  • Systems installed before 1 July 2011 will not be impacted by the changes, allowing industry and households time to adjust.
  • Taking into account industry feedback, the $40 small-scale certificate price will remain unchanged and the regulator will not be given the power to further reduce Solar Credits support, providing greater certainty to the solar panel and solar hot water industry.

Details: www.climatechange.gov.au