Solar industry overcast about Victoria’s move to slash feed-in tariffs

The solar industry has given a mixed reaction to the Victorian Government’s decision to scrap feed-in tariffs from 25 cents to just eight cents, saying the program deserves more support but also welcomes the chance for renewables to stand on their own legs.

States have been slashing feed-in tariffs for months now, especially in states with Liberal and Coalition governments, due in part to rising demand. The more homes using solar power and contributing to the grid has meant more payouts.

Victorian Energy Minister Michael O’Brien announced the changes yesterday, saying the new rate will take effect from next year.

The changes to the scheme also mean that some incentives will now include a range of other technologies as well.

“People in public housing, tenants who cannot access solar, are paying higher electricity bills in order to subsidise the rooftop solar for other people. That wasn’t sustainable at those rates.”

The Victorian Government will set the price until 2016 based on wholesale electricity prices, after which the price will be set by the market. The decision was based on recommendations made by the Victorian Competition and Efficiency Commission.

But John Grimes, chief executive of the Solar Energy Society of Australia, told SmartCompany the announcement is a bittersweet one.

“It’s our position that there should be two policies here. The first is a right of access so there is a presumed right to access that grid.”

“The second is that governments pay a fair price for clean solar energy. In our view, eight cents is not a fair price and is below our minimum threshold level.”

However, Grimes says as states continue to cut tariffs there are a growing number of people taking up solar regardless of government support.

“That’s due to two factors. The first is the ever increasing price of electricity, and the second is the reduced cost of technology.”

“For someone considering solar now, it’s the economically responsibly choice. It means that solar will continue to grow rapidly, and will be the new dominant electrical force we see in Australia. So it’s happening whether governments support it or not.”

But at the same time, it cannot be denied the rolling back of government support has led to a volatile market, especially for SMEs.

Several have collapsed in the past year as governments have wound back support. Adelaide-based Solar Shop, one of the largest solar companies in the country, collapsed into administration last year.

Grimes says the industry wants to work together with government to make sure users get the best outcome, as the current situation isn’t ideal.

“We know solar can help bring prices down. And we want to see this done in a coordinated way, rather than just a haphazard method.”