GREG Combet will today move to ease average household power price rises by about $50 a year by deepening cuts to incentives for people who install solar panels on their roofs.
The Climate Change Minister is expected to announce another scaling back of the solar credits scheme — the second such move by the government in six months — which will see the average rebate to households installing a 1.5 kilowatt system in Sydney, Melbourne, Perth or Adelaide fall from $6200 to $3720.
Today’s announcement, which comes as the government becomes increasingly concerned about the impact of rising cost-of-living pressures on its electoral stocks, is expected to save householders between $25 and $35 next year. This is on top of changes announced last December that were expected to save $12 a year.
This will be achieved by lowering the amount of high-cost power that electricity retailers must buy under the government’s renewable energy target. As it moves to confront cost-of-living pressures, the government will also today announce it will ask state and territory governments to make sure their feed-in tariffs “do not impose an unjustifiable burden on electricity consumers”.
Mr Combet will argue the scale-back was vital in light of continued growth in the industry and its impact on power prices.
But the government will honour existing written contracts to install small-scale solar panels made under current arrangements. Solar panels are granted renewable energy certificates based on the amount of power they produce. Electricity retailers must purchase the certificates at $40 each under the government’s amended RET.
Under the solar credits scheme, householders are eligible for an upfront payment worth five times the value of certificates their solar panels will produce.
That was to have been scaled back to four times from July 1 under changes announced in December but the scale-back will be deepened today when the government declares the multiple will be cut to three from July 1.
The move will hasten the phase-out of the scheme. The multiple will fall from three to two from July 1, next year and then revert to one from July 1, 2013.
Mr Combet will argue that strong demand for solar panels had continued despite December’s announcement, fuelled by declining system costs, the strong Australian dollar and economy as state and territory feed-in tariff schemes.
He will also argue the generous support for solar panels has contributed to a fall in the installation of solar hot water heaters. The drop in the multiplier will help reduce the oversupply of renewable energy certificates.
Under the solar credits scheme solar panel installation has ballooned. The number of installations supported by the RET grew from 15,000 in 2008 to more than 60,000 last year and 120,000 last year.
The Australian also understands the government has been concerned that the solar panel scheme was favouring affluent home owners, while renters and lower-income earners were subsidising the scheme through higher power prices.