Solar Credits rebate likely to be prematurely reduced

Update 16 May 2012: Federal Climate Change Minister Greg Combet has publicly stated that the Federal Government has no plans to reduce the Federal Solar Credits REC Multiplier.

Financial incentives for solar PV systems through the Federal Government’s Solar Credits REC multiplier are likely to be prematurely reduced, according to industry experts Solar Business Services. A premature reduction will mean potential price increases of up to 37% from current rates for smaller, less expensive systems. As the REC multiplier only applies to the first 1.5 kilowatts (kW) of a solar system’s capacity, the cost of smaller systems will be disproportionately affected by such a premature reduction.

Federal Government Solar Rebate REC multiplier to fall from 3x to 1x?

The Federal Government Solar Credits rebate is scheduled to be reduced from 1 July 2012, but the degree to which it will be cut is currently in question. Under a premature REC multiplier cut, depending on the location and the REC/STC price at the time of system installation, systems stand to see a drop in financial support of anywhere between $1200 to $1600 from present rates, compared to only half these if the reduction to a 2x multiplier takes place as planned. These figures could be greater if the REC price is higher (it sits at around 25 dollars at the time of writing).

Should the Government decide to go through with the reduction, it will effectively be the end of the Solar Credits scheme and deja vu for all residential solar power industry players–last year the announcement that the REC multiplier would be prematurely reduced from 5x to 3x came on 5 May.

In addition to last year’s precedent, there are a number of reasons cited for thinking that the Federal Government may reduce the multiplier: The falling price of solar PV systems, pressure from the Federal Opposition and electricity retailers to scrap or weaken the Renewable Energy Target (the legislative framework under which the Solar Credits rebates scheme was established), and the fact that the Government has already pulled the plug on a key incentive for solar hot water systems.

A premature reduction will have serious implications on the future of the solar PV industry in Australia, which is still in the process of getting its legs. Numerous sudden, unexpected policy changes have characterised support for solar and renewables in general across the country, including the withdrawal of the Federal Green Loans program and the overnight, drastic reduction of several Solar Feed-in Tariff incentives.

What should I do to secure the 3x multiplier?

In order to secure the current generous Federal solar rebate discount under the 3x multiplier, homes and businesses must have their system installed before 30 June 2012. Alternatively, those who wish to err on the side of caution may want to enter into a contract with an installer as soon as possible for the 3x or 2x multipliers–last year some households and businesses who missed the deadline but had already signed contracts were eligible to apply for a ‘transitional’ REC multiplier of 4x. The government may offer such a concession this year as well.

Solar Choice has a network of installers across Australia, many of whom have the capacity to meet the 30 June deadline. Request an instant Solar Quote Comparison detailing the offerings of installers in your area by filling out the form to the right of this page. As Australia’s Solar Energy Brokers, Solar Choice provides free and impartial brokering and advice to our customers.

© 2012 Solar Choice Pty Ltd 

Top image via Picassodreams

James Martin II