Renewable Energy Target (RET) review will soon be underway: What are the implications for solar PV?

The Renewable Energy Target (RET) is one of the most important policy mechanisms for renewable energy in Australia, and it is arguably the only one that affects every player in the renewable energy sector in the country. The RET, which was made mandatory under the Howard government in 2001, has undergone several changes since its introduction, but the upcoming 2014 review may be the most crucial turning point for the program that the country’s renewable energy industry has yet seen, with more to lose than ever.

After just under half a decade of explosive year-on-year renewable energy growth (thanks largely to relatively renewables-friendly federal and state governments), a federal government largely unenthusiastic about this industry has come into office, and much of the momentum that the industry has gained over the past several years could very well be lost if the scheme is changed significantly in the review. The Australian Solar Council today issued a ‘solar alert’ to rally interested parties for the upcoming, uphill battle that the industry as a whole will likely face in ensuring that the RET is not effectively de-toothed.

In particular, there are fears that smaller solar systems (up to 100kW in capacity), which are widely deployed in residential and small to mid-sized commercial applications, would see a significant cut in incentives. At the moment, the RET is subdivided into 2 separate programs–the LRET, which provides support for large-scale renewable projects (100kW+), and the SRES for projects up to 100kW. It is widely believed that, of these 2, it is the successful SRES that will have the bigger axe taken to it. This is especially so in light of the fact that the SRES’s strength was unexpectedly wound back even under a more pro-renewables regime, which implemented a series of premature ‘STC multiplier’ reductions. Given the new government’s apparent determination to axe all programs related to clean energy (even the CEFC, which has been earning taxpayers money), the chance of the scheme escaping the review with only minor changes is slim.

Australian Solar Council CEO John Grimes says that “the future of the small-scale scheme for solar PV is in considerable doubt’, noting that the terms of reference (soon to be released) for the review seem to have small-scale solar specifically in mind. The 3 things that will be reexamined under the RET will be 1) the targets and timeframes of the scheme, 2) how the scheme can be modified to reduce its impacts on the cost of electricity, and 3) how to reduce costs for liable entities (i.e. utilities and big polluters).

A likely scenario is that the 20% renewable energy target for the year 2020 will be reduced or pushed out by a decade or more (point 1 above)–something that incumbents in the electricity industry have been pushing for for some time. With a government more receptive to their opinions and ideas, a watering down of the RET is more likely than ever. Additionally, the misguided view that ‘green schemes’ are to blame for the bulk of the electricity price rises that Australia has seen in recent years (apparently to be addressed by points 2 and 3 above) may have more prominence now than during any previous review to date. This could serve as an excuse for the government to further weaken the targets–ironically not impacting electricity price rises much at all.

What can be done to influence the outcome of the review?

The renewable energy industry has grown monumentally in the past few years, now employing 18,000 people in 4,500 small and medium businesses across Australia. The number of households with solar panels is well over 1 million at this point–comprising a veritable political constituency in and of itself. These voices need to be heard loud and clear during the review. One step in the process of the RET review is a period during which submissions can be made about any proposed changes to the scheme. Solar Choice will publish these details as they become available.

In the meantime, anyone who is interested in joining the cause should reach out to Solar Citizens and 100% Renewable Energy, who are the premier not-for-profits engaged in unifying the voices of renewable energy supporters in Australia.

Thinking about going solar? Now may be a good time.

Whatever the outcome of the review, those considering installing a system should think about doing so soon. The effective subsidy for solar systems through the RET is likely to fall by the end of the review; unless solar PV system prices drop dramatically between now and when it is concluded, prices could quite possibly be higher afterwards.

Solar Choice can help you compare installers and prices. Request a Solar Quote Comparison by filling out the form to the right of this page, or give us a call on 1300 78 72 73.

© 2013 Solar Choice Pty Ltd

James Martin II