The review into Australias Renewable Energy Target (RET) has recommended scrapping or winding back the SRES, as it represents a high cost approach to carbon emission reductions. The recommendations have come as no surprise and households and businesses have been heading to solar installers in big numbers to inquire after PV systems before the subsidy program is closed.
At present, Australia has a market-based certificate scheme, to subside residential and commercial PV systems the latter up to 100 kW. The scheme is underpinned by the RET. When the RET was reviewed by a panel handpicked by the government this year, the investigating panel looked into the SRES, deciding it was too expensive.
Under the SRES, certificates called STC are generated when a rooftop solar array is installed. The STCs are generated dependent on the size of the system and are roughly worth AUD$750/kWh (USD$696/kWh). The average installation size in Australia is currently 4kW, which would receive a subsidy of around AUD$3000 ($2785).
As uncertainty about the SRES has mounted, installers have reported increasing inquiries for consumers wanting to lock in a system while the subsidy lasts. This is creating a min boom, of the type the solar industry is familiar.
Marketing increase
Solar quote generators Solar Choice and Solar Market have both been contacting clients to urge them to get quotes and pay a deposit for a system thereby locking in the STC subsidy.
Importantly, the [RET] Review states that contracts entered into prior to the imminent announcement will protect your subsidy, Solar Choice wrote in an email to its clients. So long as you have generated your contract prior to the pending announcement, then your subsidy will almost certainly be protected.
While the boom will deliver short-term windfall, particularly to the quote generator sites, its short term nature puts installers in a bind.
There is currently a tension between [installers] active marketing to get customers to commit to buy a system before support is reduced which is likely to increase short term sales and many solar businesses not committing any resources to developing and expanding their business due to policy uncertainty and a reduction sales in medium term, explained Ric Brazzale the President of RECs Agents Association (RAA) and CEO of Green Energy Trading.
Brazzale predicts that after the mini boom, that solar demand is expected to decline by 30% to 50%.
The RET review presented two options for the SRES in its findings. The first is to immediately cancel the mechanism. This, Brazzale said, will drop between 45% and 50%, according to modelling from the REC Agents Association. The second option is for the scheme to be wound up early, bringing forward the conclusion date from 2030 to 2020. Under this proposal the SRES would be scaled back over time.
My sense would be that we might get a reduction of 25% to 30% if the scale back option was implemented, Brazzale said.
While any kind of boom is good for short term business, it is not a situation that is being welcomed by the Australian solar industry. Almost all states and territories of Australia have seen similar solar mini booms as the state-based FIT schemes were wound up, or changes to the SRES scheme made. This is clearly evident in the installation spikes on the graph here from Australia's Clean Energy Regulator.
Known as the solar coaster by the Australian industry, it has lead to bubbles that have quickly burst, shortages of components and some have argued substandard workmanship and modules and inverters being used during boom periods.
As Australian cleantech journalist and the publisher of RenewEconomy, Giles Parkinson, points out stable policy and demand is what the industry needs.
Subsidies, in a few years, may not be needed, wrote Parkinson. What the industry wants is a measured and balanced approach to wind [subsides] down. The boom-bust cycle of solar-coasters are not good for business, customers or the economy.
The Australian Solar Council has been running the Save Solar campaign against the changes, and has thus far raised AUD$100,000 ($92,800) – since last Friday. It targets $158,000.
The October edition of pv magazine will feature an article by Giles Parkinson about the RET review process and implications for solar PV Down Under.
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