On the 6th May 2008 the Victorian Government announced that Victoria would join Queensland and South Australia in a feed-in tariff for solar power. The scheme will see homeowners paid 60c for each kilowatt-hour (kWh) of renewable electricity fed back into the grid from a grid-connected solar power system. The scheme is proposed to run for 15 years.

However, while leading international feed-in tariffs are paid on the entire generation, Victoria, like the other states, is offering to only pay homeowners for the excess electricity exported to the grid after what is consumed in the home. This raises some serious concerns around equity issues and the ability of these schemes to deliver the levels of renewable energy uptake desired.

Further, the scheme is capped at 3.2 kilowatts (kW), which means any installations larger than 3.2kW appear as though they will be ineligible to access the tariff. The scheme is not eligible to non-residential buildings (meaning community buildings, Local Councils and small to medium sized businesses miss out) and the tariff is paid as a credit off the householder’s consumption - as opposed to a direct cash payment. Most worringly, any household ‘in credit’ at the end of 12 months will see that credit distinguished. For an energy efficient household with a reasonable size system, this could mean that anywhere around $500 - $1,000 worth of credit or more could be lost after 12 months.

One positive to come from this announcement is the increase on the South Australian and Queensland models from 44c/kWh to 60c/kWh. However this is probably overshadowed by the 3.2kW limit (the other states have implemented 10 kW eligibility limits) and it is disappointing to see yet another state introduce a modified feed-in tariff which will in all likelihood fail to bring about a significant increase in uptake of solar across the state.

How you can help

ATA encourages you to write to your local member of parliament, Peter Bachelor (the minister responsible for developing the scheme) and the Premier, John Brumby, requesting that they review their decision. We are calling on the Government to make the feed-in tariff equitable and effective by adopting the following changes:

1. Make the 60c/KWh tariff payable on gross, not just net generation

By only paying for the excess electricity generated, such a scheme will discriminate against both owners of smaller grid-connected systems and those who are more likely to consume electricity during the day, such as senior citizens or stay-at-home parents. Additionally, calculating payback times becomes unworkable. Whilst generation across the year is fairly easily calculated, it is virtually impossible to know what portion of this will be returned to the grid.

Feed-in tariff schemes paid on total production from renewable energy systems, such as all international examples, suffer from none of these problems. They provide certainty of return, and it is this certainty of payback which creates the incentive for people to invest their own capital in solar power. By not providing this certainty, these Australian schemes run the risk of not only being discriminatory, but also being ineffective.

2. Increase the system size limit for the 60c/kWh tariff to 10 KW and allow businesses and community organisations to participate. Introduce a 48c/kWh tariff for systems between 10 KW and 100 KW.

The Brumby Government’s model excludes any solar systems larger than 3.2KW. This will effectively deter households from installing larger systems. And for those energy efficient households that have systems in the order of 2.0 - 3.2 kW, there will be an incentive to consume more energy toward the end of the 12 month billing period in order that the household does not lose too much credit – surely a perverse incentive when we should be encouraging energy efficiency.

The proposal also excludes business, local government and community organisations like churches from participating. This restriction should be removed to encourage all sectors to invest in renewable energy. We also propose a secondary, tiered tariff of 48c/kWh for larger systems between 10kW and 100kW in size.

Please write a letter to the addresses below to encourage the government to reconsider the proposal in light of these points.

Supporting arguments and background materials

Click here for ATA’s paper: The design of a feed-in tariff for Australia
Click here for ATA’s paper: The case for a feed-in tariff for solar micro-generation

Write to

Hon. Peter Batchelor
Minister for Energy and Resources
Level 20, 1 Spring Street
Melbourne VIC 3000
Email: peter.batchelor@parliament.vic.gov.au

Hon. John Brumby
Premier of Victoria
C/o Department of Premier and Cabinet
1 Treasury Place
Melbourne VIC 3002
Email: john.brumby@parliament.vic.gov.au

To find you local state MP click here