RET Review: Commercial solar power impact

RET Review: Commercial solar power impact

The Warburton review of the Renewable Energy Target was released on 28 August 2014 and has the potential to negatively impact the fledgling commercial solar power industry.

The panel tasked with reviewing the Renewable Energy Target have now tabled their recommendations with a key outcome being that the scheme “should be substantially reformed”. There are a number of changes to the scheme suggested, with the primary recommendation being for a progressive closure of the Small-scale Renewable Energy Scheme (SRES) and the closure of the Large-scale Renewable Energy Target (LRET) to new entrants.

The SRES currently reduces the upfront cost of solar power systems up to 100kW by up to 40% through the creation of small-scale technology certificates (STC’s). Where the Abbott government seeks to wind-down the scheme, the upfront solar system cost will go up. For a 100kW commercial solar power system, that upfront rebate can be as much as $80,000.00.

Possible scenarios for a wind-down of the SRES range from orderly reductions in the number of STC’s applicable to the solar power system through to immediate abolishment of the scheme.

The government’s official response to the report will not come for another few weeks according to the Sydney Morning Herald. It is not clear yet which of the panel’s recommendations it will seek to implement, although at this point nothing seems off limits. Certain changes to the RET will only be possible with legislative approval in the senate, but others could be implemented much faster. Any change to the RET will impact the commercial viability of a solar power system.

The second part of the scheme is the Large-scale Renewable Energy Target (“LRET”). The LRET comprises the most significant portion of the scheme to meet the mandated 41,000 gigawatt-hours (GWh) of electricity from renewable sources. For commercial solar power systems, this means systems over 100kW in DC capacity are able to claim Large-scale Generation Certificates (“LGC’s”) annually for the amount of renewable energy they have produced in that year. Besides the generation of electricity, these certificates often form an important portion of the return on capital in renewable energy plant ownership.

The panel recommends that the LRET is either closed to new entrants or there is a reduction in the target.

The Sydney Morning Herald quoted Pacific Hydro head Lane Crockett as suggesting that an inquiry into the government’s handling of the RET review might be in order if the RET were wound back. “Frankly, if they do this, I would call for a Senate inquiry into what’s gone on”. The Greens Senator Milne said “There’s certainly the numbers in the Senate to get an inquiry up.”
“They have caused such investment uncertainty and sovereign risk for the renewable energy industry that it is absolutely outrageous that they are sitting on this report.” Bloomberg New Energy Finance has warned that changes to the RET could set back the Australian renewables industry by a decade.

Solgen Energy is assisting clients wanting to install commercial solar power systems across Australia to lock-in rebates under the Renewable Energy Target. Solgen Group Director, David Naismith said “The strength of the Solgen Group allows us to forward trade renewable energy certificates many months ahead so we can bring certainty to our commercial solar customers today.”

Contact Solgen Energy today on 1300 660 704 or email your request to sales@solgen.com.au.

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