Federal Government’s new solar credit scheme reduces renewables incentives
The Government has announced that it will scrap the $8000 solar rebate sometime around the middle of 2009. The Solar Homes and Communities Plan (SHCP) will be replaced by an alternative incentive, called ‘Solar Cridits’, delivered through the Mandatory Renewable Energy Target scheme.
The new scheme will involve solar PV installations (and other small-scale renewable energy) to be eligible to create Renewable Energy Certificates (RECs) at an increased rate than at present. A renewable energy system will create five RECs for every megawatt hour (MWh) of electricity generated. These RECs will be issued up front for 15 years’ worth of expected generation from the renewable energy system.
These RECs can then be sold to the market, as electricity retailers are obliged to surrender RECs in line with the government’s national renewable energy target, recently expanded to 20% by 2020. In reality, most renewable energy installers and retailers will probably offer to do the trading for you, offering the value of your RECs as a discount on your system cost.
The value of the rebate will vary depending on the price of RECs. As at December 2008, a REC was worth around $45, whish means the rebate will be worth around $5000 for a 1 kW installation, or $7500 for a 1.5 kW system. The scheme reverts back to one REC per MWh for systems larger than 1.5 kW. That is, you’ll get the five times multiplier for the first 1.5 kW, then one–for-one after that.
However, there are some concerns with the proposal. For people installing solar PV to increase Australia’s renewable energy quota, claiming RECs for your system is a bad idea.
This issue was explored in an article Don’t wreck those RECs in the October-December issue of ReNew. Click here to download the article.
Under the proposed scheme, not only will claiming RECs be the only rebate available, but by doing so it seems that you will actually be reducing Australia’s renewable energy by 4x the size of your system!
There is no indication that the number of actual RECs will be increased for every solar system installed, so if you are taking 5 out for every 1MWh of electricity generated by solar, that’s 4MWh of electricity that isn’t being generated by another renewable energy source. In fact, the legislation says: (4) For the purposes of this Act, a certificate created in accordance with the regulations as mentioned in subsection (2) has a value of 1 MWh (even though the certificate does not actually represent 1 MWh).
A copy of the draft legislation for the scheme is available from the Department of Climate Change’s website. The Department is welcoming comments on the draft legislation before the 13th of February 2009.
