The popularity of solar energy and its widespread uptake in the community has meant that generous feed-in tariffs have far exceeded cost expectations, and as a result have been closed. In some states, these decisions have been welcomed; in others it has been condemned.

Criticism from the solar industry has, for the most part, not been about the closure of the schemes; in fact this has been encouraged by some states. It is how the government in question makes these changes. Time and time again, the industry calls for sustainable, consistent policy.

New South Wales

The most notable of the recent spate of feed-in tariff reductions – the announcement in mid-May of the retrospective closure of the state’s Solar Bonus Scheme, effective 29 April – initiated a strong response from the solar energy industry and the general public.

The proposed legislation included:

  • Closure of the Scheme to new applicants effective midnight 28 April 2011
  • Abolition of the 300 megawatt(MW) connected capacity limit
  • Assessment of all applications received by businesses before 29 April 2011, and if still eligible would receive Solar Bonus Scheme tariff payments
  • For the 20 cent tariff – customers already receiving or who applied (but are not yet connected) for the 20 cent tariff rate before 29 April 2011 would not be affected by the changes
  • For the 60 cent tariff – customers already receiving or who applied (but are not yet connected) for the 60 cent tariff would receive a 40 cent tariff rate from 1 July 2011 for the remainder of the Scheme.

The Scheme, which commenced on 1 January 2010, was said to have cost the Government approximately $1.44 billion, according to a new report by KPMG.

However, due to a strong public campaign by companies and solar industry bodies, the Government agreed to drop the proposed retrospective reduction and closure of the feed-in tariff three weeks after its initial decision.

The state’s solar industry remains in a critical state and the solar industry is pushing for a 1:1 tariff system in order to make solar energy prices at parity with prices directed from coal-fired energy generation.

New South Wales Premier Barry O’Farrell said that the decision should return certainty to the industry, but conceded that the decision to not proceed with the proposed changes was due to the fact that the legislation was unlikely to be passed in the Upper House.

“I have listened to community and backbench concerns about the retrospective nature of the changes,” Mr O’Farrell said.

“I wanted to do everything possible to reduce the cost to taxpayers of the Solar Bonus Scheme and keep a lid on electricity prices. However, I am a realist and there is no point putting up legislation to the Upper House which is going to be rejected.”

Clean Energy Council CEO Matthew Warren said that the O’Farrell Government was to be congratulated for its demonstrated commitment to the solar industry in New South Wales.

“The new Government has inherited a difficult situation, but it has honoured the investment of solar households while working hard to ensure the development of this important emerging clean energy industry,” he said.

Queensland

The Queensland Solar Bonus Scheme will now have a cap on the size and number of new systems eligible for the scheme, announced by the Government on 10 May.

The Government intends to change the Scheme so that the bonus will be retained at the current rate of 44 cents per kilowatt hour (kW/h), and there will be a limit to the size of eligible individual solar photovoltaic (PV) systems to 5 kilowatt capacity and to just one system per premises.

The decision to roll back the tariff has been well received by the industry, with the Sustainable Energy Association of Australia (SEA) welcoming the announcement.

“The certainty provided by consistent policy approaches using market mechanisms to stimulate the Queensland renewable energy industry is welcomed,” said Prof. Ray Wills, SEA Chief Executive.

Australian Capital Territory

On 1 June, the Australian Capital Territory Government announced that the Micro Generator component of the state’s feed-in tariff scheme was officially closed as of midnight on 31 May 2011.

Minister for the Environment and Sustainable Development Simon Corbell said that the Legislative Assembly agreed in February 2011 to changes to the scheme to ensure that the cost to consumers was maintained at a reasonable level.

“To do this, the Government set capacity caps on both the Micro and Medium Generator categories within the Scheme,” Mr Corbell said.

Transitional arrangements for the closure of the feed-in tariff will be applied, and be based on those used by the Commonwealth on similar programs.

However, the Government said that the closure of the Micro category did not spell the end of the feed-in tariff, and that the Government sees the future of renewable generation in the Australian Capital Territory as being at a larger scale.

In February 2011, the government introduced a Medium Generator category (for installations greater than 30 kW and up to 200 kW) and an allocated cap of 15 MW.

“That cap remains largely uncommitted; householders who are still interested in investing in renewable energy can join one of the community groups that are forming to create community-owned generators,” Mr Corbell said.

Later in 2011, the government will introduce legislation for a large-scale generation feed-in tariff, whereby 40 MW is to be allocated to large generators (solar farms scale) by a reverse auction process in the next 12 months.

Western Australia

On 20 May, the Western Australian Government introduced a change to the residential net feed-in tariff scheme following a review by the state’s Office of Energy.

A new rate of 20 cents/kWh will apply to all applications received by Synergy and Horizon Power from July 1 2011. However, existing customers will not be affected by this change.

Energy Minister Peter Collier said that the new rate was necessary to ensure the scheme remained sustainable and that the benefit householders received was in line with the cost of their renewable energy systems. Recipients will continue to receive payments through the scheme for 10 years, helping householders recover the cost of installing grid-connected renewable energy systems.

Changes to the scheme will not affect payments from Synergy and Horizon Power for the purchase of renewable energy fed into the grid, which are in addition to the feed-in tariff.

New renewable energy system owners may still be eligible for the 40 cents/kWh rate under certain conditions.

Mr Collier said that the scheme would also be capped, as it was in other jurisdictions across Australia, closing when the total capacity of renewable systems installed under the feed-in tariff scheme reached 150 MW. To date, almost 70 MW of generation capacity have been accepted into the scheme.

South Australia

The South Australian feed-in tariff, introduced in July 2008, continues to operate but was amended in April 2011 so that customers receive 54 cents/kWh, up from the previous 44 cents/kWh.

In addition to the 54 cents paid, retail electricity providers will be obliged to pay a cost for the power they receive from residents with a fair and reasonable payment to be determined by the Essential Services Commission of South Australia.

The State Government also replaced the previously announced cut-off point, which was a total scheme capacity of 60 MW, with a closure date of midnight on 30 September 2011.

All new connections made after August 31 2010 will need to satisfy the new eligibility criteria in order to participate in the amended scheme.