Australia’s Solar Hot Water Rebate – For How Much Longer?

The Australian Government’s $1600 solar hot water rebate has certainly been popular; with thousands of Australians taking advantage of program. Solar hot water systems have been flying out of warehouses across the country.
   
But the rebate isn’t sitting well with everyone in the Australian renewable energy industry.
   
On top of federal and state incentives, each qualifying solar hot water system sold is also accompanied by Renewable Energy Certificates (RECs). A Renewable Energy Certificate can be traded for cash or in some cases a point of sale discount, making solar hot water systems even cheaper for consumers. The value of these certificates fluctuates according to market conditions and with so many RECs on the market now, this has led to a drop in their value.
   
Keppel Prince Engineering, who manufacture about 40% of Australia’s wind turbine towers, says they might be forced to shed 150 jobs, blaming the influence of solar hot water related Renewable Energy Certificates.
   
Some analysts have said that the influence of solar hot water RECs may even mean Australia will not be able to achieve its Renewable Energy Target (RET) goal of having 20 per cent of electricity generated through renewable sources by 2020; as RECs allocations will be disproportionately taken up by solar hot water systems instead.
   
The market price for a Renewable Energy Certificate has dropped from around $50 to as low as $26 in recent months. Some companies, including national solar hot water solutions provider Energy Matters, locked in higher REC values before the free-fall, meaning they can offer their clients more generous rebates on solar hot water. However, for large-scale wind and solar energy projects, many ventures are temporarily unviable as a result of low REC values.
   
According to the ABC’s World Today, a spokesman for the Clean Energy Council says one way to avoid this situation would be to set a floor price for renewable energy certificates. The Australian Greens, under their proposed Safe Climate legislation, would see the removal of solar water heaters and heat pumps from the definition of renewable energy.
   
Others in the industry are concerned that the low value of RECs may provide the excuse for the government pull the $1600 solar hot water rebate altogether; and with little notice, as has been the trend with solar subsidies in recent months. 
  
Over the last 4 months the Australian solar industry has seen three very important incentive programs axed prematurely. In early June the SHCP solar rebate ended before the official cut-off date and consumers and industry were left hanging for nearly two months before the Solar Credits program legislation was finally passed. In late June the government axed the remote power rebate for most of Australia with no warning; and earlier this month, the National Solar Schools Program was also suspended without notice.