Solar support to be cut again; sector at each other's throats

The Australian Solar Council has revealed that it believes the Climate Change Authority (CCA) is likely to recommend reducing the number of years for which solar systems can claim renewable energy certificates or STCs upfront.  It also remains concerned that the Authority will stick with its earlier proposal that solar systems above 30 kilowatts in size be ineligible to claim certificates upfront at all, and instead be supported through the Large-Scale Renewable Energy Target or LRET.

At present STCs are awarded upfront to solar PV systems on the basis of one certificate per megawatt-hour of generation these systems are expected to produce over fifteen years (the “deeming period” is 15 years).  However the Solar Council claims that the CCA is likely to recommend that this deeming period be progressively reduced by one year for each year after 2015. So in 2016, 14 years of generation would be eligible for STCs, and in 2017 it would be 13 and so on such that by 2029 STCs could only be claimed for a single year.

The CCA has been grappling with how it might place some kind of cap or constraint on the costs of the Small Scale Renewable Energy Scheme (SRES). The scheme at present places no cap on the amount of PV systems that will be supported by the scheme.  In the last few years the amount of systems sold and consequently the costs of the scheme were dramatically higher than government had expected. 

In its preliminary findings, the CCA had recommended a complex model for containing costs based on reducing the number of STCs to a level that would allow buyers of systems to obtain no better than an average ten-year payback.  This was strongly criticised by the solar industry on the basis that it would be complex to determine, and provide a lower financial return than what is common across a range of other industries.

According to the Solar Council this recommendation is likely to be dumped, and replaced by the reduction in the deeming period.

However the Solar Council is still unhappy with this proposal.  In its newsletter to members it states,

“The Australian Solar Council does not support the phase-out of deeming.

“We know what happens if governments have the option to fast track any phase out arrangements - they use them, and solar programs always get cut short.”

“Once you have a phase-out timeline in Regulations (which can be easily changed by the Minister of the day), we know politicians will jump in and change the dates, causing chaos for the solar industry.  That's been our shared experience for the last few years - the solarcoaster - and we shouldn't expect anything different in the future.”

Controversially the Solar Council says that the phase out of deeming was, “argued for by another renewable energy industry association”, which clearly points the finger at the Clean Energy Council. 

Clean Energy Council's deputy CEO, Kane Thornton disputed this claim, telling Climate Spectator that they had never argued for a phase-out of deeming. Instead they continue to argue for no change to the SRES because its cost will rapidly decline over the next few years anyway.

However he conceded that out of a series of options for containing the costs of SRES such as the CCA's original 10 year payback proposal, and the idea of a specific cap on the cost of the scheme, the phase out of deeming was the lesser of the evils on the table.

Thornton's view was that the Solar Council's alternative proposal of placing a cap on the number of certificates that could created by the SRES carried considerable risks, due to the need for legislative change via Parliament.  While the Climate Change Authority had proposed a cap on costs of 1.5% of household energy bills, according to Thornton, the Parliament might legislate for a far lower number, so it wasn't a wise idea to pursue.