Utilities & generators pushing for weaker small-scale Renewable Energy Target

The rooftop solar PV industry in Australia is likely to see some or all of its tariff support and other incentives removed because of pressure on the government from leading utilities and generators.

The new conservative government in Australia is about to launch the details of the terms of reference for a new review into the national Renewable Energy Target (RET), which includes a small-scale scheme that focuses on rooftop solar.

There is growing speculation that Small-scale Renewable Certificates (SRECs, aka Small-scale Technology Certificates or STCs) – which effectively provide an upfront payment equivalent to every megawatt-hour (MWh) of solar electricity produced – may be cut in a RET revamp.

Already, Origin Energy, the largest retailer and generator in the country, has called for the price cap of the STCs to be scaled down from $40.

However, there are reports that state-based utilities, owned by conservative state governments, want to go further and remove the incentives altogether.

Some state-owned generators such as Stanwell Corp in Queensland, which owns more than 4,000 megawatts (MW) of coal and gas fired generation, blame the impact of rooftop solar PV for eroding their entire profit margins in the last financial year.

The RET is already threatened with being diluted as utilities and generators push for the fixed 41,000GWh target for 2020 be removed or postponed. They cite falling demand and want the target to reflect 20 per cent of actual demand.

Australia already has more than 3,000MW (or 3 gigawatts (GW)) of rooftop solar, and is adding around 700-800MW a year. More than 10 per cent of Australian homes have rooftop solar, but some states boast penetration rates of more than 20 per cent.

The RET once offered 5 certificates for each estimated megawatt hour of electricity produced by rooftop solar. This – in combination of generous state-based feed-in-tariffs – created a flood of certificates and forced authorities to separate the small scale scheme to absorb the excess. The multiple was rapidly brought down to 1 as it became clear that the cost of rooftop solar PV had fallen.

 © 2014 Solar Choice Pty Ltd

Giles Parkinson