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Solar Credits scheme withdrawn early

19th Nov 2012

The federal government has announced it will be phasing out the Solar Credits scheme earlier than intended - in what could come as a blow for the PV installation industry.

Solar Credits will now be wound down from January 1 2013, with minister for climate change and energy efficiency Greg Combet claiming it will be a boon for electricity consumers.

The politician said power bills will be reduced by between $80 and $100 million next year because of the decision.

Solar Credits offer additional support for small-scale solar PV installations by multiplying the number of certificates such systems generate under the Renewable Energy Target.

In other words, it enables people to receive assistance in covering the upfront costs of getting new installations - with industry experts claiming it is a big incentive to invest in solar power.

However, Mr Combet said demand is so strong for household solar, that the scheme can be curtailed early.

"This will lower the impact of the high uptake of solar PV on electricity costs for homes and businesses," he remarked.

"Bringing forward the phase-out of the multiplier to 1 January 2013 will help place the industry on a sustainable path and ease pressure on electricity prices."

Mr Combet said an additional benefit of withdrawing the scheme early is that it will allow solar hot water heaters to operate on a level playing field with solar PV.

This is because solar hot water wasn't included under the Solar Credits mechanism, putting it at a distinct disadvantage.

So what happens to people who have already signed an agreement under the old terms? Well, it seems they benefit from the existing legislation.

This will also be the case for those who get systems installed before the phasing out begins next year.

Data published by the minister showed 880,000 rooftop solar PV systems have been put up since the Labor government came to power in November 2007.

The reasons listed for such a surge in demand were state and territory feed-in tariff schemes, rising network prices, incentives under the RET and the high Australian dollar.

Rapid reductions in the price of solar power systems were also cited as a contributing factor.

Mr Combet implied that uptake will continue to increase regardless of the Solar Credits scheme being pulled.

"The carbon price improves the economics of household solar and this change will enhance the complementarity of the RET support with the incentive the carbon price provides," he explained.

Posted by Mike Peacock

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