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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. |
