The Truth Behind the NSW Solar Scheme

Archived News, Posted on 23 May 2011

The solar industry has put more data before members of the NSW government and key minor parties arguing its case that the cost of the solar bonus scheme has been inflated, and that it would make sense to claw back some of the cost from energy retailers that are making windfall profits from the scheme. The Australian Solar Energy Society says production monitors suggests the government has overestimated the cost of the scheme by $232 million. It also says that only 240MW of the connections might be at the 60c/kWh rate, rather than 300MW as the government suggests, which would further reduce the cost if true.

AUSES says further savings of more than $100 million can be made by offering a 1:1 feed in tariff to those installations over and above the 300MW cap. This would would leave the solar households better off as they could effectively use the system to offset higher retail rates charges by retailers. And retailers would not be receiving electrons for free.

Indeed, AUSES says that windfall profits for retailers identified by the Independent Pricing and Regulatory Tribunal could be as high as $416 million over the life of the scheme. These profits are delivered when retailers re-sell electricity provided from solar panels that have been funded entirely by taxpayers. There is a concern that extending the life of the scheme at a lower gross tariff of 20c could simply extend the windfall profits of the retailers. The retailers argue that windfall profits don’t exist because of network and retail infrastructure costs.

Meanwhile, the industry is suspicious about the timing of a report released by the NSW Fair Trading department that suggested out of 55 rooftop solar installations inspected, 16 had flaws, and some of them were serious and unsafe. This contrasts with a survey funded by the Federal Government’s Office of Renewable Energy Regulator, which found that of 350 installations inspected nationwide (including 83 in NSW), none were considered to be unsafe. The survey found that the number of “substandard” installations had fallen to 6 per cent in 2010 from 40 per cent in 2006, and those considered high quality and compliant accounted for 70 per cent on installations, although this was down from 87 per cent in 2009 as the criteria was strengthened.