Recent developments in Tasmania have resulted in speculation that the state’s solar feed-in tariff incentive–currently among the most generous in all of Australia–will be reduced following the sell-off of state-owned electric utility Aurora Energy at the beginning of next year. The utility is to be split into 2 separate companies in the privitisation plan. Such sell-offs of state-owned utilities are ostensibly intended to result in more competition and therefore more choice for electricity customers, but solar customers are wary of official promises that a ‘fair and reasonable’ rate will replace the current 27c per kilowatt-hour (kWh) currently on offer.
Attention Tasmania customers:
Current Tasmanian solar feed-in tariff rates
Under the current arrangement, Tasmanians who install a solar photovoltaic (PV) system are eligible to receive around 27/kWh that their systems export to the power grid–i.e., that they do not consume themselves. This rate is tied to the amount that households pay for electricity that they purchase from the grid–the retail tariff–and will theoretically fluctuate as this rate rises and falls. This arrangement, sometimes called a 1-for-1 solar buyback scheme, is not a legislated rate as were the NSW or Queensland Solar Bonus Schemes. As such, it has no specific end date and there are no official guarantees concerning how long it will be offered to new or even existing customers. On the back of the current arrangement, the number of rooftop solar systems in the state has grown from 4,000 at the end of 2011 to around 10,000 now.
A decision to reduce or eliminate the feed-in tariff could have significant consequences not only for those who are weighing whether to have a system installed, but also for the 10,000 households who made the decision to install a system based on the assumption that they would continue to receive the 1-for-1 rate indefinitely. On top of this, the success of the solar industry in the state–which is less sun-blessed than others–is heavily dependent on incentives. Although solar panels can still offer considerable benefit to homes and businesses simply by diminishing the amount of power that they must purchase from the grid, an extra ‘buffer’ is added and the business case for going solar is strengthened where feed-in incentives exist.
Solar Feed-in Tariff reductions in other states to date
What is likely to happen in Tasmania?
Regarding the future of the feed-in tariff, to date, Tasmanian Resources Minister Bryan Green has only said that a ‘fair and reasonable’ rate must be decided on. This particular phrasing, if the experience of other states is considered–notably, NSW, Victoria, and Queensland–can be taken as code for guaranteed rates as low as 6c/kWh, or possibly even market-based system in which electricity retailers compete against one another for solar customers by offering more for solar, with no minimum mandatory rate. If either of these situations comes to be, homes and business are still likely to invest in systems. However, with returns lower than what they would be with the 1-for-1 rate, the industry is unlikely to see the sort of growth that it has seen in the past couple of years–unless solar PV system installation prices fall further in the state. This is unlikely to happen in the near future, however, as 2013 is widely expected to be an ‘adjustment year’ for the industry, with prices set to rise after years of steep declines.
Mr Green has been under pressure from advocacy groups and solar installation companies to bring certainty to the situation by making a clear decision as to the future of the incentive as soon as possible. The Tasmanian Greens have suggested that guaranteeing current rates for the next 2 years is the appropriate path to take because it would give both solar businesses and their potential customers a degree of certainty about their investment. An announcement from the government is expected to be made very soon.
Let the Tasmanian government hear your thoughts about the feed-in tariff
In the meantime, petitions exhorting the Tasmanian government to ensure the continuation of the feed-in tariff are in circulation. Visit the Save Our Solar Tasmania homepage to have your say in the matter. A comprehensive roundup of what is at stake and how to take action can also be found on the Waterworks Valley website.
Top image by Jeff Schmaltz, via Wikipedia.
© 2013 Solar Choice Pty Ltd
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