SMEs to feel “knock-on effects” of government decision to stop investing in household solar

SMEs that specialise in installing solar panels could come under increased pressure as a result of the federal government’s decision to cease investing in rooftop and household solar products.

Members of the solar community have told SmartCompany they are in shock after learning Treasurer Joe Hockey and Finance Minister Mathias Cormann reportedly sent a letter to the Clean Energy Finance Corporation (CEFC) instructing the corporation to only invest in large industrial-scale projects.

Fairfax reports the ministers’ letter said direct investments by the CEFC in household and small-scale solar projects should be “excluded” from the corporation’s $10 billion investment fund.

The letter reportedly referred to household and small-scale solar as among the “mature and established clean energy technologies” that should be excluded from the corporation’s activities, along with wind technology.

According to Fairfax, around a third of investments made by CEFC involve small-scale solar and the corporation has produced more than $1 profit for the Commonwealth for every $1 that has been invested.

The corporation’s investments have allowed households to receive rebates to install rooftop solar systems.

But John Grimes, chief executive of the Australian Solar Council, told SmartCompany small businesses and community groups were also eligible for the rebates, meaning the small business community will suffer a double-blow from the decision.

Grimes says there is “no question” the change will have a negative impact on SMEs that specialise in installing solar panels, a view that is shared by Peter Strong, executive director of the Council of Small Business of Australia, who told SmartCompany this morning there will be “knock-on effects” for the industry.

“What the CEFC did was provide a financing solution to allow lower income people, small business and community groups to finance their solar,” Grimes says.

Grimes says in many cases, these groups do not have the cash on hand to invest in solar panels and the CEFC played an important role in facilitating this type of investment. Without the CEFC-backed rebates, Grimes says “a whole class” of consumers will be “taken off the table” for SMEs.

This same group of consumers also includes very small businesses that are unable to install solar panels on their own roofs but who could team up with other tenants in an apartment block or a community group to invest in a small number of solar panels.

Grimes says members of the Australian solar industry are “just shocked” at the government’s decision.

“We’ve had uncertainty for almost two years while the Renewable Energy Target was being reviewed and we thought that had been put to bed,” he says.

“And then we wake up and find the Abbott government has not paused a beat.”

However, Jenny Paradiso, co-founder and managing director of Smart50 finalist SunTrix, told SmartCompany this morning there are still other financing options available to households and small businesses that want to invest in solar.

Paradiso says SunTrix has not previously been offering its clients CEFC financing options and therefore says the government’s decision won’t “cripple” her business or others like it.

But she says the government’s decision is “not going to help”.

“My personal point of view is I am not surprised,” Paradiso says.

“The Abbott government has been against renewable energy from the beginning. It’s not just solar, but wind as well.”

The government’s decision comes as businesses in the Australian solar industry continue to face difficult trading conditions.

One of the major players in the sector, Ingenero, collapsed into voluntary administration in July 2014. Family business Solar Guys was also liquidated in last year and followed a spate of collapses in the solar industry.

Grimes is also concerned with the message the government’s actions sends to the Australian public.

“The really difficult thing is people hear this and they think all support for solar is gone,” he says.

“They think the industry will close down, it can be misleading.”

SmartCompany contacted Treasury but did not receive a response prior to publication.