Climate Change Minister Greg Combet announced late this morning that the government will be phasing out the solar credits multiplier of 2 STCs per megawatt-hour to just one six months ahead of schedule on January 1, 2013.
Currently STCs are trading at around $32. With the current multiplier of 2, for a 1.5 kW system in Sydney, Perth, Brisbane and Adelaide this equates to a rebate of almost $2000 and in Melbourne, it’s about $1700. Even if the small scale renewables target is not changed and the STC price consequently rose to $38, the level of the rebate for such a system will drop by around $700 in Melbourne and $800 for the other mainland capitals. However because of the timing of Combet’s announcement it is still possible for the regulator to adjust the SRES target downwards and this could mean that the STC price does not noticeably rise above current levels.
It seems hard to believe that such a change wouldn’t hurt sales. In addition, because the change has been announced with such little notice, and going into the slow sales period, the industry will have difficulty responding to any surge in demand to get in before the rebate drops.
According to the government, phasing out the multiplier early will, “strike the appropriate balance between easing upward pressure on electricity prices and supporting households and suppliers who install solar PV”. The government estimates that as a result of this decision there will be an overall reduction in household electricity bills in the order of $80 to $100 million in 2013.
Yet considering solar PV sales are now relatively stable rather than growing explosively, the risk of further cost blowouts seems remote. So it is a little strange that the minister has chosen to make this unscheduled change.
One thing it appears to reinforce is the perception that Combet will act to implement recommendations from the Climate Change Authority on containing the costs of the small-scale Renewable Energy Target (or SRES). At present the solar PV industry is deeply concerned about the current proposal the Authority has put forward for containing costs, worried it is too unpredictable and applies an inequitable benchmark on the kind of financial return investors in solar PV should be entitled to receive.
by Tristan Edis from Climate Spectator