The Renewable Energy Target Review Paper – What it might mean for you
On 17 February 2014, the Government announced a review of the Renewable Energy Target Scheme. Carried out by an expert panel, the results of the review have now been released. Including proposals to wind back, or even eliminate certain parts of the scheme, it has the potential to impact the Small Scale Renewable Energy Scheme (SRES) – the scheme covering your residential or commercial solar PV system.
Although it’s not time to panic, there is a sense of imminent change in the air. Significant changes outlined in the Renewable Energy Target Review Paper are aimed at solar rebates and solar tax credits – so if you’ve been thinking about installing a solar PV system on your home or business, now’s the time to act. Here’s why:
The proposals
The review panel has made two key recommendations about the SRES:
- To cut the number of Small Scale Technology Certificates (STCs) by a third and cap them to 10kw, closing the scheme in 2021
- To immediately abolish STCs altogether
But let’s start with the basics – what are STCs?
Small Scale Technology Certificates – STCs
STCs are tradable commodities under the SRES. They represent the amount of electricity your small scale solar panel system generates in megawatt hours over the course of its lifetime (up to 15 years). Under the current SRES, you’re allowed to claim a set number of these certificates, using solar credits to increase the number you can claim, lowering your electricity bill.
How many you can claim depends on your location, system type and size, and whether it’s eligible for solar credits.
Option 1 - Reducing STCs and capping at 10kw
Under these proposed changes, the STC credit would fall by around $1200. For residential solar, this will have no real effect. In fact, it may even make the market more competitive, with solar firms offering ‘Beat the rebate cut’ specials.
However, for the commercial solar market, the story’s different. A 30kw system could lose $16,000 in rebates, and a 100kw system $70,000. 30kw systems will remain highly viable, but it may be more difficult to justify a 100kw system as a capital purchase.
Option 2 - Immediate abolishment
Although prices will rise if STCs are immediately abolished, solar PV systems will still be cheaper than they were two years ago. And with payback and leasing options available, solar will still be a financially sound way to source your electricity. However, it makes sense to maximise your investment while you can, and get in before any price rises take effect.
The future
It’s important to note that no decisions have been made about what the next steps will be. The Government’s only recently received the report and is in the process of considering the recommendations now.
It’s also worth noting clean energy groups like the Clear Energy Council, Australian Solar Council and the Sustainable Energy Association continue to lobby the Government to maintain the SRES in its current form. So the changes may not be as far reaching as the report proposes.
However, we don’t know what’s going to happen, and according to some commentators, the likelihood of change is strong. And with rebates and tax credits currently available, it’s a great time to access all the benefits you possibly can. That way, you won’t be as hard hit by changes made in the future.
For more information on installing a solar PV system in your home or business, contact ustoday.
Image Source: Financial Review, credit: Andrew Meares
