Responses to NSW Solar Bonus Scheme Reduction

NSW and Australia’s solar power industry reacted with disappointment to Friday’s announcement from the NSW government that the previous NSW Solar Bonus Scheme60c/kWh Feed-in Tariff would be revoked and replaced with a 40c/kWh tariff as part of the government’s efforts to get the ‘blowout’ incentive scheme under control. The sensibility and the legality of the decision, which sets out to end the Solar Bonus scheme completely, were questioned by key players in the solar industry, as well as by the 160,000+ recipients of the 60c FiT who stand to suffer financial losses.

œThe Government seems to be out of step with the more than 160,000 households that have backed rooftop solar. With this weight of public endorsement they should be supporting the solar industry, its customers and consumers and promoting a sustainable industry in NSW,” said Australian Solar Energy Society Chief Executive Officer John Grimes. He added that without the added incentives of a feed-in tariff, “clean solar power is subsidising highly polluting coal-fired power and that makes no sense.”

Mr Grimes also cautiously praised the NSW government’s decision to honour existing applications for solar power installations, whilst critisising the sudden, dramatic policy shift: œWhile AuSES welcomes the NSW Government’s confirmation it will honour existing applications for solar installations, it is deeply concerned about the future for solar in NSW. The decision, in combination with the REC (renewable energy certificate) scheme changes and solar budget changes on the federal level, has put the solar industry on edge and bracing for the unexpected. The cancelation of the scheme and the associated uncertainty will put 4,500 jobs at risk, may result in customers losing non-refundable deposits, and will leave installers sitting with stock that has already been ordered for pending installations.

Also in response to the news, Solar Shop Australia Chief Executive Officer Tony Thornton recalled Solar Shop’s warning to the previous government that the 60c feed-in tariff was too generous and would prove to be unsustainable, but that it is now too late to alter the scheme for those who were already contracted into it.  œCommitments have been made and Australians have spent millions of dollars purchasing systems with the expectation that they would receive a future repayment on those dollars invested, Mr Thornton said.

œNew South Wales residents made investment decisions based on a government- guaranteed 60c per kilowatt hour payment. That has now been cut to 40c per kilowatt hour, and many householders will today be shaking their heads in disbelief and wondering how they will balance budgets,” said AuSES head, Mr Grimes.

After announcing the news on our website, Solar Choice was inundated with comments from unhappy solar power system owners, many of whom explained that they had arrived at their decision to purchase solar power systems after thorough consideration and budgeting based on the 60c tariff.

One commenter pointed out the irony of the government’s decision. “(I)t seems that the gov’t has no problem spending the millions it makes via the coal industry, but it cannot ensure that renewable energy options remain affordable for everybody. The gov’t is also forgetting that it’s saving money on building new power stations, due to the feed-in of solar systems.”

A rally will be held on Wednesday 18 May at 11:30am in the Barnet Long Room at Customs House, Circular Quay. The purpose of the “Solar’s Last Chance” rally will be to give “a human face” to the crisis, and to persuade the government to give a greater degree of certainty to the state’s burgeoning solar industry. The recent boom in the solar industry and can be attributed in great part to government support, both on the state level and federal level.

© 2011 Solar Choice Pty Ltd

Sources and Links:

International Business Times, “Industry questions sensibility, legality of Solar Bonus Scheme slash”

Sydney Morning Herald, “Solar industry hits the roof over plans to slash power rebate”

Australian Solar Energy Society website

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. The most recent NSW Government election cemented the view of many voters that the previous Government was either inept and corrupt. Thus a vote for change.

    Regrettably the decision by the encumbent NSW Government now proves that both past and present Governments lack INTEGRITY – what does this say about the State of NSW. Do not do business here!

    The NSW Government suggests that the 60c/kWh FiT was never intended to provide “windfall” gains to recipients. Further it suggests that the 60c/kWh FiT is too generous given that the cost of purchasing solar systems have fallen significantly in the last one to two years. Falling prices – TRUE. However, it conveniently ignores the fact that the initial purchasers who crunched their numbers and worked their budgets out before investing paid the higher price for equipment and increased demand thus assisting the fall in prices. They still need to pay for their systems!

    The NSW Government is indirectly suggesting that the experts – be they consultants or public servants – they employed that recommended the original 60c/kWh FiT were wrong. Who is accountable? Do we get this money back?

    The NSW Government conveniently ignores that its policies are designed to drive decisions of its residents and those who live outside its borders. It does this through various activities designed to attract residents, industry and tourists to the state. Government decisions, revenues and expenditures are an integral to the State economy and decision making.

    Putting aside the financial aspects the NSW Government is now in a semi-enviable position of not having to find capital funds to build generating capacity that has been funded by 160,000 voters that are, in many respects, captive with an ability to only sell to one purchaser – the Government.

    What would be the NSW Government response if these mini-suppliers could withdraw their generating capacity either by selling it elsewhere or by storing it and using it for other purposes?

    One wonders to what extent Governments will go in the future. When they need more revenue will they simply retroactively change taxes and charges and write to each taxpayer demanding the additional payment?

    1. Update on potential class action: Solar Choice has been consulting with class action specialists Maurice Blackburn, as well as our usual solicitors Mallesons and Piper Alderman (the latter has also been engaged by Solar Energy Industries Association). As of last night 17.5.2011, the NSW Govt was yet to release the draft legislation setting out the retrospective reduction in solar feed in tariff. At this stage there is only last Friday’s press release from the Energy Minister Chris Hartcher – a media release itself can’t be the target of legal proceedings. The potential legal avenues under consideration, and pending formal advice are: a class action under trade practices provisions and/or contract law against any electricity retailer which attempts to retrospectively reduce the feed in tariff, seeking Court orders that compel them to pay 60c rather than 40c as well as any damages for feed in rewards not paid at the higher rate from 1 July 2011 (the Govt unfortunately can’t be sued for misleading and deceptive conduct as they are not a business entity); a challenge to the new law (once known) as being in breach of express and/or implied constitutional provisions, or in some other way beyond power. We’ll keep you posted on developments. All 20 NSW based Solar Choice staff are now off to join the 11.30am solar rally at Circular Quay – Angus Gemmell (Managing Director, Solar Choice Pty Ltd).

    2. Hartcher said …… Windfall profits for a few at the expense of many….
      ? What about us we are paying the solar inst. off at $ 112 a month. By the time we finish the cost per kw is likely to match the rebate. ? Who gets a windfall.
      We have a contract,and we are bound by it. My insurance does not pay for acts of god. Is that what we elected ?

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