The amount of Solar Credits you receive for installing a new solar system may be reduced in the later part of 2010, ahead of schedule.

According to the Office of the Energy Regulator’s (ORER) website, the Regulator has the power to adjust the Solar Credits multiplier, and “the Government will consult on draft regulations to implement this arrangement later this year.” The website goes on to explain that “it is the intention that solar credits for small generating units (SGUs) would be reduced if the…Regulator determines there is systemic evidence of relatively small or no out-of-pocket expense to owners of SGUs.”  However, what the Government deems as a “small expense” might translate into significant savings for new customers who install before legislative changes take place.

The Solar Credits multiplier

RECs are a type of credit given for installing Solar, Hydro, or Wind electricity-generating units. A rooftop entry-level 1.5 kW solar system may receive around 30 RECs, depending on the zone in which it is located. The REC price for home solar will be set at $40 per REC from January 2011, but will fluctuate at market rates until then.

As discussed in The REC Market, the Solar Credits multiplier was created in 2009 to encourage the expansion of home solar units. RECs were to be valued at five times their market rate for the first few years, then phased out by 2015. So 30 RECs valued at $40 each, and multiplied by five, would result in savings of $6000.

Obviously, as the multiplier decreases, your potential credit would also decrease. If the multiplier is reduced from 5 to 3, your savings would only be $3600 rather than $6000!

Part of the logic behind the Solar Credits multiplier is to reward early uptake of solar panels, and to taper off the incentives as the Government gets closer to its Renewable Energy Targets. While periodic review is necessary to ensure that the program remains on track, the Regulator must bear in mind that sudden changes in policy may result in instability for home consumers and the market. Hence, ORER should be called upon to implement a reasonable transition time of 3 or 4 months in announcing any changes to the multiplier, especially if doing so ahead of the schedule listed in the Regulations. This would allow installers to remedy any backlog of new installations, and would benefit home consumers who would like to take advantage of the full credits to which they are entitled.

Multiplier applies up to 3kW capacity

ORER’s announcement to review the multiplier follows upon changes in the Renewable Energy (Electricity) Act, which was amended in June 2010. In addition to separating the Renewable Energy Target into the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES)—and creating two types of RECs based on these distinctions—the new policy also increases the amount of kilowatt capacity that may be multiplied under the scheme.

Previously only the first 1.5 kW was entitled to be multiplied—everything over 1.5 kW was awarded a 1-to-1 REC credit. New legislation increases this amount to the first 3kW of capacity, with a 1-to-1 REC value over 3kW. The larger capacity represents a greater portion of the average household’s energy needs.

To sum up

The Small-scale Renewable Energy Scheme presents significant savings for home solar energy systems, particularly to those who are able to jump on board before the Solar Credits multiplier is decreased.

Due to the rising growth in people taking up renewable energy solutions, Australians are now paying the price with massive electricity price hikes. The March 2010 quarter consumer price index showed annual electricity inflation hitting 18.2% - the biggest electricity price increase since the early 1980's when general inflation was in the double digits.

This price hike is on top of the previous 12 month increase of 7.7% and the 10.0% increases from the March 2008 figures. In April, Origin Energy Managing Director, Grant King said power prices could triple by 2020.

Considering the current quarterly bill for households in Australia is $300 on average, this is a huge increase and would take the average household spend on electricity to around $3,600/year by 2020.

As more and more people realise the value in renewable energy solutions, this situation will only get worse, as a shift is created in the supply and demand for traditional sources of electricity. If one can make their home non-reliant upon traditional forms of electricity they will of course avoid these and any further price increases.

The added benefit to more people taking up renewable energy solutions is it makes them more affordable as demand increases, not to mention the overall benefit to our planet and well-being of future generations.

The long-awaited renewable energy feed-in tariff scheme will pay households 40c a kilowatt hour for electricity exported into the power grid.

Details of the scheme, the funding for which was announced in the state budget last week, were unveiled by Energy Minister Peter Collier today.

However, they were immediately slammed as "ludicrous" by the Greens.

The payments will be made to householders with new and existing solar, wind and micro-hydro systems feeding into the South West Interconnected System and regional power grids.

The systems, which include tenanted properties, must be owned by the homeowner. Payments would be made for 10 years.

Synergy customers would be allowed systems up to 5kW, while that limit doubled for those covered by regional retailer Horizon.

Mr Collier said payments would be made from August, with registrations accepted from July.

However, the scheme has been widely criticised by conservation groups, who say that the net feed-in tariff, as opposed to gross feed-in, would mean little in the way of actual payments.

With a net scheme, only excess power above that required by a household is paid for, while with a gross scheme all power generated is paid for, with the householder still required to pay their full power bill.

Mr Collier said the tariff would be in addition to that paid under the existing renewable energy buyback scheme, so householders could receive at least 47c a kWh.

“This provides a genuine incentive for home owners to install renewable energy systems, which not only has a positive impact on the environment but it will also help householders manage their electricity bills,” he said.

A feasibility study was also being undertaken into the potential for a similar scheme for businesses.

But Greens MLC Robin Chapple said the scheme was "meaningless" for the "well-meaning people" who would consider installing small-scale systems.

"The Minister today has made ludicrous claims about the payback period under his scheme, but unless householders have more solar panels than they need the payback period is simple - never," he said.