What are Solar Credits, and why are solar rebates reducing June 30 ?

The Australian Government supports the deployment of renewable energy in Australia's electricity supply through the Renewable Energy Target (RET) scheme. The RET guarantees a market for additional renewable energy generation, using a mechanism of tradeable Renewable Energy Certificates (RECs).

Solar Credits is a mechanism within this scheme that provides additional support to households, businesses and community groups that install small-scale solar PV electricity systems by multiplying the number of RECs able to be created for eligible installations. More RECs equates to a larger rebate.

Each solar power system installed essentially earns a quantity of RECs, and these are typically credited against the upfront purchase price of a new system reducing the cost.

For systems installed from 1 July 2011 to 30 June 2012, the Solar Credits multiplier is three, and the government expects this to reduce by a factor of one each financial year until the standard rate of RECs creation (a multiplier of one) applies for systems installed from 1 July 2013.

The Governments aim is to reduce support of the Solar Credits scheme over time, reflecting reductions in technology costs. Solar electricity is eventually expected to be at paritiy with conventional fossil fuel generated electricity costs without any reliance on rebates.

The next proposed rebate drop is expected from June 30, 2012. However the Federal Goverment has a history of changing solar rebate policy at short notice. In mid 2011, the multiplier was unexpectedly reduced by a factor of 2, from 5x to 3x - and a month earlier than expected.

So what's the bottom line? Those thinking of going solar, should do so now to maximise their solar rebate & obtain the best price. Systems will need to be installed by June 30 at the very least, possibly earlier if the government chooses to reduce the rebate earlier. Installation lead times for most providers mean that orders will need to placed well before these dates.

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