Solar Industry debacle- feed in tariffs not the only problem in NSW

I'm in the mood for a good whinge so I thought I might give you a dose on my perspective of the Solar industry.

Firstly- when I encouraged fellow Councillor John Ferguson to support the outrage of Shoalhaven constituents and raise an urgency motion condemning the changes to the NSW solar tariff scheme, John was pretty much booed out of the Chamber by the dominant Liberal faction on Council.-Funny that (Not).

The moves in NSW politics to reduce the tariff for those who were promised a 60c rebate for the next seven years is just part of the problem for the Solar industry which is used to the storms created by government around rebates and has many times before put the industry through a rush / bust cycle.

The move mostly effects the bank balances of those who have counted on a level of income return to payback their system. New people wishing to purchase solar power are still doing so knowing that the scheme is suspended but that they are safe guarding themselves from rising energy costs and helping manage Australia's carbon footprint.

I would argue that they are also contributing to the micro energy generation which will mean that there is less reliance on coal fired power and therefore less need to build a new coal fire energy plant.

Some simple maths for you to keep in mind throughout this blog.

100kwh of electricity = 1 tonne of carbon emission

1tonne of carbon = 1 Renewable energy certificate

The current rebate scheme CREATES 5x the value of the Renewable Energy Certificate meaning that for every tonne of carbon offset by a renewable energy source 4 more tonnes are emitted but not offset as the generation capacity doesn't EXIST!

The rear action in this debacle comes from the Federal Governments - Renewable Energy Certificate Scheme or RECS.

The Federal Government has been offering a 5 times multiplier on renewable energy certificates since it took away the flat $8000 rebate early last year.Effectively that meant that on an average two kilowatt system the rebate would be about $6000 once the RECS were sold into the RECS market. Of course markets are volatile places-but what the federal government failed to see that this creation of FALSE CARBON CREDITS has flooded the market and there are not enough mandated buyers to purchase the 3 million extra certificates ( at this point the market needs 9 million certificate not 12). This has driven down the price of RECs from around $36-38 each to a measly $20-25 almost half .

For some owners / installers 4-6 weeks ago when they sent their paperwork of to create RECS they had an expectation to make around $6000 to offset the costs of installation. It takes four weeks for the government to create the certificates and by that time the market had crashed and people were left with a considerably smaller rebate i.e. between $2000-$4000 depending on the price in the spot market. Some installers who had entered into contracts that allowed buyers to just pay the difference are out of pocket by 25% of the value of the system. A big hit for a small business.

Solar still isn't cheap with 2kilowatts costing approx $11600 and that is mostly the cost of equipment- not the old formula of 50% for materials 50% for labor as you just end up out pricing yourself with competitors if you took on that simple formula.

But to put the icing on the cake the government doesn't guarantee the price of $40 to the householder but to the polluter. Example if Endeavour Energy needs 5 million certificates to reach its 5% renewable energy target and goes to the market place and the market price is $60 per certificate- they can then go to the government and purchase certificates at $40.

 (REMEMBER: 4 million of those certificates have no generation capacity behind them as they are multiplier certificates! and effectively only offsetting 1% of the targeted 5%)

Like I said this is one confused country when it comes to solar rebates no wonder the installers/suppliers have been faced with rush / bust cycles before and I am sure will continue to in the future. Government really needs to talk to the industry and how it can do it better. I would suggest a small cash rebate, plus the real value of RECS not the multiplier and  a national feed in tariff mandated  by the federal government- I might have it wrong too but surely anythings better than the mess the industry is in now facing down another bust cycle!

Go to Energy Matters web site for the full version of this chart the Closed state is NSW!