Solar mean and means

It is not ‘means’ tested. But it can mean a nightmare. The phone call: My business is wanting to purchase a small scale solar PV array, and I noticed the contract will not guarantee my price, and the price potentially will increase indirectly because the import of electricity will not remain a constant and directly because it is likely the Small Scale Technology Certificate (STC) will not be fixed for the duration.

Why is import of electricity important? The price of electricity is generally either regulated or contestable. Regulated prices are reset according to an application for price changes – you are a price taker. In short, the price changes each reset period and usually set by state government bodies. In a contestable market set by rules of the national body, to reduce your energy consumption you can carry penalties and price risk. Hence, you might find you have to pay a higher price because you have reduced your import of energy needs. Therefore there is no incentive to reduce your energy use.

Next matter is the popular selling point of Solar, and it is the opportunity to benefit from the export of energy. It follows that just as import prices changing is a risk, so is export energy a price risk. Especially when feed in tariffs (FITs) are being phased out, and in Australia – a review of the Renewable Energy Targets (RET), and the promised repeal of the carbon pricing mechanism could see a collapse of the renewable certificate price. The new’ish’ government is hopeful ‘affordable’ energy will follow the review.

So, if you want to protect your purchase by way of a price guarantee from third parties. You most likely cannot if you are larger than 7.5kWp (residential) but under 300kWp. Why? The energy retailers have no interest because of uncertainty exposing them to the price shocks, and commercial buyers of power have a line drawn in the sand of an economic value of no less than 300kWp export capability.

So, if paying a fixed price is important to you – then you should choose an installer who guarantees the price quoted – clearly and irrevocably. Is it possible? Yes, but the vendor needs to be courageous and needs to laterally rethink how they operate. But, we will save that thought for another post.

Still interested in Solar. Onward then we go: What can still be done in Australia to reduce the upfront cost of solar power systems even after hearing “the solar rebate ending”. There is still a financial incentive from the Australian federal government for installing solar. But you need to be quick if you consider the report on the RET review will reach government by July and ‘put to death by the Reich’.

What is tipped to go is the solar subsidy for anyone buying a solar system of up to 100kW. It is called the STC program. Which stands for Small-scale Technology Certificate. Whilst CO2Land org has previously been concerned that the STC is a distortion of the market, it believes any change should be phased out and not shut off suddenly. Another thing to consider is the STC scheme is not described as a rebate (even though it is = it is politically difficult to call it that). If you check what The Clean Energy Regulator says on their website, it says:

“Under the Small-scale Renewable Energy Scheme the reduction in the cost of your solar panel is not a rebate. You will not qualify for any Government-based financial recompense at the completion of any process relating to STCs.”

The meaning of this is that the cash you get off your solar system price does not actually come from the government. It is a government scheme that compels other people to buy your certificates.

So it is a government run scheme, using other people’s money, and it becomes confusing when you consider the question what must change when all government schemes use other people’s money – is it not?  So, if you are confused over why does a scheme that will save you money and tick the box as a financial incentive be considered to have to walk the plank.

The solar Financial Incentive is a subsidy to assist with the upfront cost of installing a Solar Power System. Currently, it is not ‘means’ tested in any way. However, the criteria for claiming it are:

1) Your system is less than 100kWp in size.

2) You get it installed and designed by an accredited professional.

3) You use panels and inverters that are approved for use in Australia.

We said FITs are being phased out, but each state may differ in what is offered. So check out the following, as an example: The Feed In Tariff (FiT). “The FiT is a State Government subsidy in which some states pay you for the electricity that your solar system will export to the grid”.

How to get involved in the Solar Financial Incentive Scheme involves:

1) The regulator creates Renewable Energy Certificates (RECS).

2) The government mandates that fossil fuelled generators have to either build a certain amount of renewable generation (wind/solar) or buy the right to other people’s renewable energy systems in the form of RECs.

3) When you purchase a solar power system for your roof, the government gives you a number of RECS depending on the size of your system is and the region of Australia it is installed.

4) The special type of RECs that you get for under 100kWp solar system are called “Small Scale Technology Certificates” (STCs).

5) You (or more likely your installer) sell the STCs to the fossil fuel generators and use the cash to offset the upfront cost of the solar system purchase.

6) The STC price is a bit like a share price – it fluctuates on the open market depending on supply and demand. E.g. when the solar industry is booming (usually just before the rebate is cut!) then the STC price drops and vice versa.

7) “You can see the current market price of a STC here. Look for the number in the box in the bottom RH corner labeled: STC”.

8) Almost all solar system prices you see advertised will already have the solar Financial Incentive included in the pricing. So watch out for that too.

Earlier we said the amount of solar rebate that you can claim depends on where you live: It is broken down into zones that roughly mean live in the lower southern parts (zone 4) and get less incentive than other parts with central west parts (zone 1) getting the most.

But, beware of a small number of unscrupulous companies that use the “Inflated STC Price Scam” appear to be deceiving the customer into thinking they are getting a great deal and then hitting them with a bill for thousands more than the quoted price when the system is installed.

——

Be clear on what you want:

CO2Land org is aware that many installer/vendor quotes are virtually silent on saying they guarantee what is said in the quote as the STC price.

Co2Land org believes the truly good guys will be totally upfront and transparent that the final amount payable may go up (or down) based on the STC price on the day of the install.

It is up to you to make the decision to buy based on the facts. When ready to sign – why not say ‘This contract is signed for this fixed price only’ and make it a written condition, and have all parties endorse each copy!

 

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