Victorian solar subsidies to be reviewed, despite success worldwide

The rooftop solar panel incentives currently on offer in Victoria are set to be reviewed by the state's leading competition body.

According to The Age newspaper, The Victorian Competition and Efficiency Commission (VCEC) is expected to be asked today to undertake an inquiry into the solar feed-in tariff, reporting on whether it should be adjusted - or possibly phased out entirely. 

The move comes as the Baillieu government looks to develop future ''fair and cost-effective arrangements'' prior to the introduction of the federal government's carbon tax.

The tariff has already been reduced since its introduction, when the state government lowered the price from 60 cents per kilowatt hour to 25 cents.

The news comes as Britain announces a 10-fold increase in solar capacity in the last year - despite the government's efforts to reduce solar feed-in tariffs.

Figures from UK energy regulator Ofgem indicates that solar panels with at least 761.9 megawatts in capacity were installed in 2011 - up from 76.8 megawatts for the previous year.

"It's been a very busy and successful year for the solar industry," chairman of the Solar Trade Association Howard Johns told business news provider Bloomberg yesterday (January 12).

Up to 95 per cent of projects were installed in homes - generating two-thirds of the recorded capacity - as solar panel providers turned to the domestic market after Energy Secretary Chris Huhne called for a review in March 2011 in a bid to cut solar feed-in tariffs for commercial-scale plants.

Bloomberg figures predict that solar projects could cost up to US$572 million per year in tariffs - far exceeding government expectations.

While the government's energy department predicted 284 megawatts of solar power to be in place by April 2013, approximately 381 megawatts was installed in the last two months of 2011 alone.

The UK is not the only region experiencing exponential growth in solar panel installations spurred by solar feed-in tariffs.

Earlier this week, Germany also reported installation of nearly seven gigawatts for 2011 - with more than two gigawatts connected in the month of December alone.

The late surge in activity came before a 15 per cent reduction in the $2.80 per watt subsidy on January 1 2012 - another 15 per cent cut is likely to be introduced on July 1.

According to the German solar industry association Bundesverband Solarwirtschaft, solar power currently makes up three per cent of electricity supply in the country.

Posted by Mike Peacock - Solar correspondent

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