NSW government backs RET but recommends substantial changes

The NSW government has fallen short of calling for Australia’s Renewable Energy Target be scrapped, instead recommending significant changes to the legislation, including delaying its large-scale component, and clamping rooftop solar growth.

Breaking ranks with its conservative state and federal counterparts, the Baird government’s RET Review submission described the target as essential to investment and jobs, cost friendly to energy consumers, and key to the low-carbon transition.

In another interesting departure, it also disagreed with the big fossil fuel generators, which are lobbying for all incentives for household solar to be removed because they fear growth in rooftop solar will eat into generator revenues and profits.

In its submission, the NSW government warned against closing or capping the SRES (small scale scheme), arguing that, if done abruptly, this could lead to a “rush by consumers, and result in a boom followed by a bust” – an outcome NSW is familiar with.

It noted that REC Agents Association had estimated that the payback period for a typical solar PV system would slip from around 6-7 years to around 8-9 years without the small- scale technology certificates (STCs). This would reduce the value proposition for small-scale solar.

The submission suggested that the current clearing house price of $40 for the STCs was likely too high, given the falling costs of rooftop solar. Lowering the price cap would reduce the cost of the SRES scheme on consumers (retailers in NSW, although not the ACT, have been allowed to pass on the $40 cost to consumers, even when the certificates were trading at a substantial discount).

NSW says this could be done virtually immediately, as it is within the minister’s powers.

It, does, however, support the upfront incentive, as it provides an “important assistance” to help households and small businesses overcome capital investment barriers.

“Removal of deeming would increase the relative transaction costs for the service providers of households and small businesses and mean that these small end users have no access to the incentives provided by the RET,” it noted.

Despite all this, NSW also says the RET is on track to exceed 20 per cent by 2020, and suggests the timeframe to meet 41,000GWh be extended “until it is consistent with a true 20 per cent level.”

© 2014 Solar Choice Pty Ltd

Giles Parkinson