Moreland Energy Foundation

On 1 December, the Federal Minister for Climate Change and Energy Efficiency Greg Combet announced that the scheduled wind-down of the solar credits scheme would begin one year early (see media release). 

The scheme was designed to progressively reduce the 'multiplier' for solar systems as technology improved and the cost of systems declined, but Mr Combet said that faster than expected cost reductions and support in many States through feed-in-tariffs have led to the decision to speed up the process.

Implications

What does this mean for people considering installing solar panels or other small renewable energy systems?

In a joint submission to the Senate Standing Committee on Environment, Communications and the Arts Inquiry into proposed changes to the Renewable Energy Target legislation, MEFL and ATA continue to strongly support the proposed changes to the Renewable Energy Target scheme, with a couple of notable exceptions.

MEFL's submission noted that the timely passing of legislation and adoption of the changes to the RET will see a re-invigoration of the large-scale renewable energy industry as well as increased certainty and confidence to small-scale renewable energy proponents.

In a submission to the Department of Climate Change and Energy Efficiency’s Enhancing the Renewable Energy Target Discussion Paper, MEFL has welcomed the intention of the Government’s proposed changes to the RET and provided a number of suggestions on the implementation and operation of the changes.

MEFL applauds the separation of the incentive for small and large scale renewable energy technologies as an important step in ensuring that voluntary action by communities and individuals is additional to national targets and reviving the ailing large-scale renewable energy industry.

However there are a number of concerns with the proposal, outlined in MEFL’s submission along with a range of key recommendations outlined to ensure the proposed changes are as effective and efficient as possible.

MEFLhas been actively campainging for changes to the Renewable Eenrgy Target (RET) scheme for some time, due to serious concerns about the design of the incentive for solar electricity under the RET.

As it stands, Solar Credits creates both a disincentive to indivuduals wishing to install roof-top solar electricity panels as well as distorting annual renewable energy targets due to the presence of 'phantom RECs'.

For more details on issues with Solar Credits, see MEFL's previous post

The Commonwealth Government recently agreed to review the scheme through COAG, looking specifically at whether adjustments should be made to the RET scheme to account for 'phantom RECs' created by Solar Credits.

In our submission, MEFL calls for:

• the immediate adjustment of annual RET targets, ongoing on an annual basis, to take into account the effect of the Solar Credits scheme; and
• the transition to a gross national feed-in tariff for small scale renewable energy and a national energy efficiency target scheme for energy efficiency technologies such as solar hot water.

Concerns around the real impact individuals can make by acting to reduce their greenhouse pollution have been getting a lot of attention recently in light of the proposed Carbon Pollution Reduction Scheme (CPRS).

Specifically, there has been a strong focus in the media because, under the current CPRS proposal, once the Government sets an emissions target, individuals undertaking voluntary action such as installing solar power, reducing their energy consumption and buying GreenPower will have no impact on the nation's overall emissions, as it simply frees up permits for other polluters to use. As a result, the same amount of gas will be going into the atmosphere and therefore there will be no net reduction in greenhouse pollution. Whilst this may be partially correct, it is only one aspect of the picture.

In mid-2008 the Federal Government announced an expansion of the national Renewable Energy Target (RET) to 20% of Australia's electricity consumption by the year 2020. Following a consultation process, draft legislation was released at the end of 2008 which will bring the new RET into effect.

Whilst MEFL welcomes the increased target for renewable, there are some concerns about the decision to introduce a 'solar multiplier' for small-scale renewable such as roof-top grid-connected solar electricity.

Under the proposal announced by Peter Garrett and Penny Wong in a press release on the 17th of December, the current $8000 rebate for solar panels will be replaced by the 'solar multiplier' which effectively offers residents five Renewable Energy Certificates (RECs) for every megawatt-hour of clean energy their system produces, instead of the usual one REC per megawatt-hour.

Whilst on the surface this may seem like a generous offer, in effect it means that individuals taking up this offer will effectively be diluting the amount of renewable energy generated under the national target, as there will be four RECs available in the market which won't represent any actual generation.