Incentives for solar energy cut due to austerity measures. Does this sound like a worldwide trend? Just ask the residents of New South Wales, Australia, who are up in arms over the government's recent declaration that it will cut funding to the Solar Bonus Scheme. This program has provided a huge impulse to residential solar energy in Australia through a 60 cent per kilowatt hour rebate to participants.
According to an article by 9News, over 120,000 residents take part of the program. The government decision will close the program to new applicants and retrospectively slash the rebate for existing participants from 60 cents to 40 cents beginning July 1, 2011, saving the government over $470 million. This means that all program participants who previously had a 60 cent rebate will now only get a 40 cent rebate, regardless of when they may have signed up. The decision reflects the cruel reality around the world that renewable energy incentive programs are an easy target for budget cuts.
Australia's renewable energy industry is on the rise. The 2010 Clean Energy Australia Report estimates that renewables made up 8.67 percent of all generated electricity, a significant rise from 2009. Grid parity for solar energy is expected by 2014 or 2015. Under the existing Solar Bonus Scheme, which came into effect Jan. 1, 2010, electricity customers with solar panels are paid by power companies until December 31, 2016 for the energy they have generated back into the grid. The cost to the power companies is distributed to their electricity customers through their prices.
A typical 1.5 kilowatt solar panel system can earn approximately $1,000 a year under the 60 cent tariff in Sydney. The program has proven to be extremely popular to residents of New South Wales (NSW). Despite its success, in October 2010 the rebate for new entrants was amended to 20 cents per kilowatt hour in order to save the government money. However the program was still heavily underfunded and further action was deemed necessary by NSW authorities, prompting this most recent government decision.
The NSW Resources and Energy Minister, Chris Hartcher, announced the government's decision on Friday, May 13. The new scheme is "still going to cost the taxpayer, it's still going to cost the people of NSW, but we have now a finalization that is in the best interests of everybody," Hartcher was quoted as saying in The Sydney Morning Herald. The newspaper reports that the solar industry in Australia will be destroyed by such a change, saying it will be almost impossible now to sell the $200 million worth of solar panels already purchased by solar installers. Ged McCarthy, chairman of the Solar Energy Industries Association is determined to fight the government's decision: "[Coal and electricity subsidies] are the drivers of higher power prices, not solar, and it is time the dishonesty stopped."
Theage.com interviewed longtime NSW resident Peter Rejto, who felt double-crossed by the government's decision. Rejto spent $26,000 on roof solar panels when he signed up for the Solar Budget Scheme in August 2010. Hartcher's decision will leave Rejto an estimated $6000 out of pocket, costs he expected to make up by 2016 under the original 60 cent per kilowatt hour rebate plan. "People entered into a contract," he said. "If they can't trust the government to honor a contract, why would they trust anything?"
While the solar program rollback in Australia is not the first of its kind, it certainly is a step in the wrong direction. Governments around the world are facing tight budget crunches, and unfortunately for solar advocates, renewable energy programs are often among the first to be cut.