Victoria’s decision to cut feed-in tariff has industry concerned

The Victorian Government will be closing the Transitional Feed-in Tariff by 30 September 2012. This tariff offers eligible properties with small-scale solar PV systems of five kilowatts or less a minimum credit of 25 cents per kilowatt hour for excess electricity fed back into the grid. To be considered for the Transitional Feed-in Tariff, all paperwork needs to be submitted by 30 September 2012.

Those who do not qualify in time for the Transitional Feed-in Tariff will be able to apply for the reduced Standard Feed-in Tariff, of 8 cents per kilowatt hour. This is based on the wholesale rate of power and will be available to eligible premises producing sustainable electricity from a range of sources, with the addition of new technologies expected in early 2013.

The electrical industry association NECA is concerned that the move will place significant pressure on the electrical industry to rush through the installation of household solar systems.

NECA is concerned that the requirements set by Energy and Resources Minister Michael O’Brien could lead to the hasty installation of solar systems as installers are placed under pressure by solar retailers and customers to meet the cut-off date.

While NECA has welcomed the inclusion of other small-scale renewable energy technologies as part of the scheme, the association is disappointed that the feed-in tariff has been slashed to eight cents.

The Clean Energy Council has expressed similar views. “It is appropriate that the Victorian Government reduces the level of its support scheme, given the recent reduction in the cost of solar power systems. However, the proposed feed-in tariff of 8 cents per kilowatt-hour is too low and does not reflect the fair and reasonable value of the electricity and other benefits that solar power systems provide to our energy system,” said Clean Energy Council Policy Director Russell Marsh.

NECA Victoria Executive Director Philip Green said, “The government has given the electricity distribution companies until the end of the year to connect customers’ solar systems to the grid, but only a few weeks for electricians to install and have the system inspected.

“This creates the danger that companies selling residential solar will promise customers that their systems be installed by the 30 September cut-off date, creating enormous pressure on electricians who install solar systems to meet this tight deadline.

The solar industry, said Marsh, now employs approximately 4800 Victorians and has stimulated $1.34 billion of private investment in Victoria. This change could have a serious negative impact on an industry that has been delivering major economic benefits to the state.