Australia to start 2013 without a Solar Credits mechanism

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The Australian federal government has announced the phase-out of its Solar Credits mechanism for small-scale, mostly residential, installations six months ahead of schedule.

The phase-out,  which is effective from January 1 2013, comes shortly after the solar credit mechanism was reduced in July this year.

Administered by the Clean Energy Regulator, the legislative arm of the government, Solar Credits are provided in the form of additional tradable certificates called small-scale technology certificates (STCs) for eligible small-scale renewable energy systems including solar PV systems.

Although the multiplier, which multiplies the number of credits issued for the first 1.5kW of a solar power system, was always designed to reduce over time, the government believes this early phasing out of the multiplier will lower the impact of the “high uptake of solar PV on electricity costs for homes and businesses”.

By 2014, the government estimates that the Solar Credits scheme will cost electricity consumers around 70% less than in 2012. The overall reduction in electricity bills is expected to be A$80 to A$100 million (approx. US$83 to 103 million) in 2013, according to government figures.

In January 2012, Australian consulting company Solar Choice published estimates on the savings that would be lost to residents if the Solar Credits scheme was abolished:

  3x multiplier 2x multiplier 1x (no multiplier)
REC/STC Zone 1 109 ($3270) 72 ($2160) 36 ($1080)
REC/STC Zone 2 103 ($3090) 69 ($2070) 34 ($1020)
REC/STC Zone 3 93 ($2790) 62 ($1860) 31 ($930)
REC/STC Zone 4 79 ($2370) 53 ($1590) 26 ($780)

By contrast, the government has produced a chart (above left) to show the decline of system costs against low out-of-pocket expenses despite a reduction of the multiplier from 5 to 3 on 1 July 2011 and 3 to 2 on 1 July 2012.

The government announcement concluded that the installation of small-scale systems and solar hot water heaters will continue to be supported under the Renewable Energy Target scheme.

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