The Federal government has announced that the Renewable Energy Certificate (REC) Solar Credit multiplier for solar photovoltaic (PV) systems is to be reduced from 5x to 3x on 1 July 2011. The REC multiplier had previously been expected to be reduced to 4x, but citing the overall vitality and strong growth of the solar power industry, the alleged impact of this on electricity price, and the effect of the Solar Credits support on other forms of renewable energy technology, the Minister and Parliamentary Secretary for Climate Change and Energy Efficiency announced in a media release that they have decided that the greater drop is appropriate.
The additional credits issued under the REC multiplier are part of the Small-scale Renewable Energy Scheme (SRES). They provide additional incentive to those who wish to install solar PV arrays on their homes by offering potentially up-front discounts on solar power system installations–the first 1.5kW of a system currently receives 5 times the number of RECs (1 REC = 1MWh of renewable energy) it would ordinarily be eligible for as calculated by actual expected power generation over its lifetime. The REC scheme has been extremely popular and successful, and has encouraged a large numer of solar power system installations by increasing their affordability.
Even after the changes, the Solar Credit multiplier will still provide households with an up-front discount of up to one third the cost of a typical 1.5kW home solar power system. In addition to this, it is worthwhile to note that there are still a number of generous state by state feed-in tariff incentives that offer ongoing revenue for grid-connected solar systems, not to mention the electricity cost savings of generating your own power. œThe changes announced today will continue to support households, small businesses and community groups with the upfront cost of installing solar panels, while also helping to moderate market demand and placing the industry on a more sustainable development path, CCEE Minister Greg Combet stated, according to the media release.
Meanwhile, in a Clean Energy Council media release responding to the REC multiplier announcement, while supporting the move to reduce the REC multiplier to 3x, Chief Executive Matthew Warren countered that the solar power industry should not be a scapegoat for rising electricity prices. œFor some time now the Clean Energy Council has been concerned about the stability of the solar market. We have been consulting with industry, analysing the market and talking to Government. We acknowledge a reduction in the solar credits multiplier for next year will help create longer-term certainty for the industry, he said.
œThis decision has nothing to do with rising electricity prices, and everything to do with supporting an industry of the future. That’s why any job losses in this industry are the worst kind of job losses. œSo it’s a necessary change, but it will hurt, he said.
The government announcement comes just as the REC market price has seen significant recent declines–from a previous high of over $40 to a current of well under $30 at the time of this writing. The fall in the value of RECs is attributed at least in part to the flooding of the REC market with ‘phantom RECs‘ created by the Solar Credits scheme. Although at this point pure speculation, it is possible that limiting the number of RECs through the multiplier drop may have something of a stabilising effect on REC prices as REC supply is reduced.
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