Turn back clock on solar discounts

Alex Easton | 26th March 2011

The first step in saving NSW’s solar energy sector would be returning to the old system of offering a one-for-one discount off electricity bills for power fed into the grid by solar systems, the Rainbow Power Company has said.

The company’s Paul O’Reilly and John Davis yesterday questioned claims the State Government’s botched Solar Bonus Scheme had blown out by more than $2.6 billion, saying the company suspected the figure was more like $685 million.

NSW Shadow Environment Minister Catherine Cusack questioned that result, saying she suspected the company had made an error in its figures.

But Mr Davis said the official figures did not add up and did not take into account things such as money earned by electricity retailers by on-selling electricity, and inaccuracies in assumed retail sales figures for power, which undervalued electricity fed into the grid from solar panels.

The problem dates back to the launch of the NSW scheme under former Premier Nathan Rees, which offered people with solar panels the chance to earn 60 cents for every kilowatt hour fed back into the grid when power was retailing for about 20 cents.

Mr Davis said the scheme was far too generous, triggering a rush for solar panels that quickly left the scheme oversubscribed, and in a matter months tearing through funding that was supposed to be spread over years.

The scheme has since been wound back and in six weeks the value of solar power being fed into the grid is due to fall to 6 cents a kilowatt hour, about the same as the wholesale price of coal.

Mr Davis said that would largely kill off any financial advantage for households considering solar panels, and could sound the solar industry’s death knell.

He said it also badly under-valued electricity from household solar systems, failing to account for a six-cent premium put on renewable energy by electricity retailers when on-selling power from coal-fired power stations, as well as the infrastructure costs associated with moving electricity from the Hunter Valley to the Northern Rivers.

Ms Cusack said she hoped Mr Davis was right and agreed there was information about the scheme she had not yet been given access to.

She favoured the return to the one-for-one system and that the coalition was committed to having 20% of the state’s energy generated from renewable sources by 2020.

In six weeks the value of solar power was due to fall to about the same as the wholesale price of coal.

Link to Northern Star Article

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