Uncertainty for SA Solar Industry as Parliament Rejects Feed-in Tariff Increase

By Rich Bowden

South Australian investors in rooftop solar energy have been left shaking their heads after events in the state capital this week saw the solar feed-in tariff retained at 44c instead of the promised increase to 54c.

On a positive note though, the decision sees the lower rate extended for two years past its original end date later this year.

In a June 24 press release which appeared to blame everyone but his party for the turnaround (the title LIBERALS AND GREENS BETRAY SA HOUSEHOLDS was a giveaway) South Australian Energy Minister Michael O’Brien offers an explanation of sorts.

“The Government reluctantly accepted the [Opposition] amendment to get the legislation through parliament and to give certainty to industry and consumers going forward.”

However far from bringing certainty to South Australia’s solar industry, the decision has left the industry and solar consumers wondering what to expect next. Particularly in light of the same minister’s words in April when he assured all in a media release that “South Australian households and small customers will be guaranteed a payment of 54 cents for each kilowatt-hour of electricity fed into the grid.”

In truth the Labor government was pressured by the Opposition and Greens to extend the scheme past its original concluding date of September 2011 to avoid a sudden massive reduction in demand for rooftop solar panels after the close of the scheme.

South Australia’s Clean Energy Council CEO Matthew Warren said that, while the extension of the term was a welcome move, it underlined the challenges facing the solar industry in South Australia and its knock-on effect on small business.

“… there should be no misunderstanding about the serious impact this legislation will have on the economic viability of many solar installer companies,” said Mr Warren. “Much of the South Australian solar industry is made up of small businesses.”

Warning of tough times ahead for those (especially small) businesses reliant on the demand created by the solar feed-in tariff he added “…some will find ways to adjust to the lower levels of support, many will not.”

Mr Warren did accept the Government’s argument though that the amendments would help to avoid a spectacular falling off in demand after the original cut off date — the so-called “boom and bust” scenario that has dogged the solar industry in Australia.

“This is important for South Australian consumers and the industry. There’s no doubt the industry is disappointed with the severity of the changes, but we are appreciative the Government was open to significantly improving its original legislation,” Mr Warren said.

“Without these amendments there would have been a huge spike in demand for solar after the proposed increase in the feed-in tariff, followed by a big slump when it ended later in this year.”

Clearly the solar industry in South Australia, as elsewhere in Australia, needs some kind of certainty and consistency from its state government so that investment in the future of the iconic renewable industry can be made.

As pointed out by the Clean Energy Council, many small businesses and their employees are reliant on the correct signals of support to come from their government.