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Renewable Energy News

TUESDAY 07 JUNE, 2011 |

NSW Government Backs Down On Solar Feed In Tariff Cut

by Energy Matters

Several media outlets are reporting NSW Premier O'Farrell has backed down on his decision to slash the contracted solar feed in tariff rate for those who originally joined the New South Wales Solar Bonus Scheme.

According to the Sydney Morning Herald, Premier O'Farrell said there was no point in putting forward legislation that did not have widespread support and would ultimately be rejected.

In addition to closing the NSW Solar Bonus Scheme in May, the Premier had planned to renege on contractual commitments of tens of thousands of original contracts under the Solar Bonus Scheme that guaranteed participants 60 cents per kilowatt hour for electricity generated by their solar power systems; intending to slash the rate to 40c.

The move created uproar in the solar industry and among solar households that made a purchase decision based on the guarantee made by the previous Government. The O'Farrell government, while in Opposition, also promised to honour those contracts.

The New South Wales situation generated knock-on effects for the solar industry throughout the nation; rattling investor confidence in the sector and threatening jobs.

The proposed retrospective legislation caused problems for the Premier within his own party as well, with one Liberal MP writing a letter to the Premier; reminding him of a Coalition philosophy: "retrospective legislation to alter contracts is unprecedented and repugnant."

The industry responded to the planned cut with a series of actions spearheaded by the Australian Solar Energy Society (AuSES) and the Solar Energy Industries Association (SEIA). The industry was also able to show how hundreds of millions of dollars could be saved from the Solar Bonus Scheme without retrospective cuts.

What is still unclear is the situation going forward for new connections of solar power systems to the mains grid. AuSES has demanded legislation be put in place to force power companies to pay the same rate for solar energy sourced electricity as customers pay for coal fired power from the grid.