Amendments to Solar Credits Discount Scheme for 2011

(There is a new, up-to-date as of January 2011 blog entry regarding the Enhanced Renewable Energy Target here. If you have any comments or questions please see that article first!)

The Minister for Climate Change and Energy Efficiency announced today the schedule by which reductions to the Solar Credits Discount Scheme will be effected. If you’re fully installed by 1 July 2011 you’ll get the maximum benefit of the current discount scheme – otherwise the cost will rise by approximately $1,000 for an entry level 1.5kW system (presuming a $32 Renewable Energy Certificate (REC) value).

The good news is that a long term plan has been outlined in parallel with the original intension of the legislation to phase out the discount at a steady and calculated rate.

The Solar Credits Multiplier, which multiplies by five the number of Renewable Energy Certificates (RECs) that are allocated for the first 1.5kW worth of grid-connected solar energy installations in Australia, is to be reduced accordingly:

  • 5x to 4x on 1 July 2011;
  • 4x to 3x on 1 July 2012;
  • 3x to 2x on 1 July 2013; and,
  • 2x to 1x from 1 July 2014.

The only changes that have been enacted were to bring the commencement of the reduction in the multiplier forward one year. This reflects the original aim of the legislation to phase out the multiplier in correspondence with the lowering costs of manufacturing and importing of solar components and competitiveness in the solar installation industry.

In addition, the introduction of a minimum $40 value for RECs is to go ahead as planned. The Office of Renewable Energy Regulator (ORER) will not hold the authority to manipulate either of these guidelines when it sees it appropriate. This will grant further stability to the industry.

Given the recent cuts to the NSW State Solar Bonus Scheme and the past experiences of rebates and grants being cut without warning, the layout is being welcomed by the Industry. Legislation that allows for forward planning and anticipation greatly assists not only residential householders, but encourages steady and stable growth for the industry as a whole.

Written by Jarrah Harburn & Justine O’Neill

Solar Choice

© 2010 Solar Choice Pty Ltd

(For a bit more context regarding what RECs are, please see our previous entry on how to determine your Solar Credit discount.)

James Martin II

Contributor at Solar Choice
James was Solar Choice's primary writer & researcher between 2010 and 2018.

He is now the communications manager for energy technology startup SwitchDin, but remains an occasional contributor to the Solar Choice blog.

James lives in Newcastle in a house with a weird solar system.
James Martin II

Comments

  1. This is something I was searching for. Really helpful and informative read. Hope to see more similar posts in the future.

  2. Hi, I have been given a quote for solar but part of the conditions are that I change to another electricity supplier, specified by the installer, they also mentioned that it is a 4 week wait for country energy to approve the shift. Why do I need to change suppliers & can’t all electricity providers do FiTs?, and would it be quicker just going with country energy?

    1. Hi Ingrid. The installer that gave you your quote may have an agreement with the electricity retailer. The rules on feed-in tariffs differ from state to state. What state are you in?

      We here at Solar Choice can offer you a free solar power quote comparison anywhere in Australia. You can fill in this quote comparison form and get one automatically, or give us a ring on 1300 78 72 73. We are more than happy to answer your questions directly and give you an idea as to what your options are.

  3. for example if i need to install 3kw solar system to my home, how much i need to spend from my pocket and how much will be the government rebate

  4. Can I get paid both the REC & paid for the power I contribute to the Grid ? (Or is a choice of one or the other)

    Also, is the REC a “One Off” or is it a saleable commodity each year ??

    1. Hi Arthur. A REC is a one-off payment for the power your unit is expected to generate in the course of its lifespan, so the REC payment is a one-off thing. Depending on the size of the system and your location, you will be allocated a different number of RECs, whose value is subject to market fluctuations, as we have mentioned. In addition to the RECs, you can also get paid for feeding the electricity you generate into the grid. This is called a feed-in tariff (FiT), and the rates vary from state to state. So yes, you can take advantage of both schemes. The REC scheme is a federal government initiative, and the FiTs are state-by-state. You can read about FiT rates here.
      Hope this cleared things up for you.

    1. Hello Geoffrey,
      Thanks for your comments. Sorry that we haven’t managed to make things clearer for you. If you give us a ring on 1300 78 72 73 we can assist you directly and answer your questions one by one! Or you can fill out a quote request on our main page (www.solarchoice.net.au) and someone will get back to you soon!

  5. 3 kw system for 2 adults and home office little use of aircon. with 50 cent feed in tariff is approximately break even with the power bill but has been particularly cloudy this year.

  6. My prospective supplier/installer is quoting RECs @$34. Is this correct?
    ORER seems to warrant the price at $40.

    1. As we mentioned in a newer blog entry that you can read here, the REC price is only guaranteed at $40 if you sell your RECs through the Office of the Renewable Energy Regulator (ORER) Small-scale Technology Certificate (STC) Clearing House, in which case it is not guaranteed that you will find a buyer. RECs are a tradeable commodity, so the price fluctuates, and different installers may offer different rates. Typically, if your installer offers to give you the money for your RECs up-front in order to fund the installation of your system, they may take a cut. You are not obligated to hand over your REC rights to your installer, although this can be convenient and beneficial to do for many customers, especially if they cannot afford the up-front costs of a solar power system.
      One of our brokers can help you out in a bit more detail if you send us a free quote comparison request or give us a call on 1300 78 72 73.

  7. I have been reading all afternoon, and am still totally confused. I am in Melbourne and am prepared to install to a 3kw unit? I am hesitant to believe all the sales reps tell me as it varies greatly. If I am to spend ?$6000 what would my expected saving be on a bill averaging $500 per quarter

    1. Hi Mike,
      Thanks for your comment. It can be a bit confusing; there are actually two schemes that you need to think about: the Solar Credit scheme (which has to do with Renewable Energy Certificates or RECs), and feed-in tariff schemes.
      First of all, the Solar Credit scheme offers a one-off incentive. Depending on the size of your system, you will get a different number of RECs, which you are able to sell or trade and whose price is currently guaranteed at $40/REC. When you install a Solar Power system, they estimate the amount of energy that your system will produce over the course of its life and you are allotted a certain number of RECs according to that. This number will depend on your location and the size of your system. Power companies are obligated to purchase RECs as part of the federal government’s Mandatory Renewable Energy Target Scheme. Most people, when they have a system installed, let the installer have the RECs (also leaving all the paperwork to the installer) after negotiating a deal for the system. This means that your system will mostly pay for itself up front, as your installer can benefit from the sale of the RECs, and they will therefore credit you with the cash from the RECs, greatly reducing the overall cost of your system installation.
      Feed-in Tariffs, on the other hand, vary from state to state, and they apply to the electricity that you actually generate and ‘feed in’ to the electrical grid. For more information on how gross- and net- feed-in tariffs work, please see this previous entry. This entry gives an overview of energy consumption vs feed-in tariffs. For an up-to-date account of the current feed-in tariffs state-by-state, please see this entry.

      Or you could just get in touch with one of our solar brokers for a free price quote comparison–they can break it all down for you, as could any installer they might put you in touch with. You can get in touch with us by clicking here. Best of luck!
      -James Martin

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