On Sunday 18 August, Tasmanian Energy Minister Bryan Green released the government’s decision on the solar feed-in tariff for Tasmania. The government’s policy is good news for existing solar owners. But the announced policies create many problems for the future of the solar industry and are forcing people to make hasty decisions about their future investment in solar.

What you need to know right now

• Existing solar PV owners will continue to get the existing 1:1 feed-in tariff (FiT) until 31 December 2018.
• If you have been thinking about installing solar or upgrading your existing system, you have only until Friday 30 August to find an installer, agree on a system size, sign a contract, pay a deposit and get your connection application in to Aurora if you want to get the 1:1 tariff for the next 5 years.
• To avoid the risk of having your application rejected because of missing details, you should submit to Aurora by Thursday 29 August.
• If you fail this deadline by even a day, you will get only around 8c instead of 28c for the electricity you export to the grid for the next five years.
• The changes only impact on payment for electricity you export, you will continue to get the financial benefit of avoiding purchasing electricity at up to 28c for all the solar electricity you generate and use at the exact time it is generated.
• The proportion of the electricity you use yourself rather than export varies widely depending on the size of your system and how much electricity you use when the sun is shining. In general you will use more of the electricity locally (and therefore get more financial benefit) if the solar system is smaller, and if you use electricity during the day.
• Even if you are eligible for the 1:1 tariff now, maintaining your eligibility for the next five years could be difficult. You will lose the 1:1 tariff if you upgrade your system, sell your house, rent out your house, change the name on the electricity bill to anyone except your spouse, or are disconnected for failing to pay a bill.

Positives in the government announcement

There are some positive aspects to the government’s announcement compared with the government Issues Paper released in May this year. Most notably the 1:1 tariff (now called the legacy tariff) has been extended from 3 years to 5 years.

Eligible systems ordered before 30 August this year can be installed any time in the next 12 months. This will go some way to avoiding the boom and bust cycle for the solar installation industry which always seems to accompany government policy changes around solar.

The legacy tariff will now be available for customers on any contract once new retailers enter the Tasmanian market from January 2014. The previous proposal was that it applied only to the standard contracts from the two retailers who will buy Aurora’s customers. This will mean that solar PV owners can shop around for the best deal, rather than being locked into a less competitive contract.

During the consultation process a metering anomaly was identified that current solar owners were not able to use their solar power to offset electricity they were buying for heating and hot water (tariffs 41 and 42). This is not a problem for those on the 1:1 tariff but would have disadvantaged those getting the new 8c FiT. The government has undertaken that Aurora will fix this metering anomaly.

Problems with the government policy

By far the biggest problem with the government policy is that it has set a very low interim feed-in tariff of 8c and the terms of reference for setting the FiT after 1 January are biased towards setting a similarly low rate. The 8c rate is justified mainly be reference to mainland determinations and takes no account of the different circumstances in Tasmania.

Tasmania is unique in that our hydro system makes it easy to use less water when solar power is being generated, and to use more water when demand peaks. This means that solar energy directly adds value to the ‘battery’ of our water storages, allowing peak demand to be met easily and also allowing more energy to be exported to the mainland at times of maximum prices – a direct financial benefit to the state.

The government position paper argues that the value of exported solar power should be “no greater than the market value of the exported energy to the retailer” explicitly rejecting any recognition of the broader economic benefits to the state  and the other benefits of a solar industry such as generating employment and addressing climate change.

In most cases electricity exported by solar households will be used by neighbouring households very close to the point it is generated, avoiding transmission and distribution loses. Retailers paying 8c for this electricity will be immediately reselling it, typically for 16-28c.

A feed-in tariff in the range of 15-20 c/kWh would better reflect the many benefits of continuing to support solar power in Tasmania, while still contributing to the costs of the electricity system and allowing retailers a reasonable mark-up on the electricity they buy and resell.

Consumers and the industry have been in a ‘wait and see’ mode since the release of the FiT issues paper in May, and had a reasonable expectation that the required changes would take effect from the end of the year when Aurora’s retail operations cease. Last Sunday’s announcement gave households just 12 days to finalise decisions about future purchase or upgrades to their solar installations to benefit from the existing 1:1 tariff. 

Next steps

The 8c FiT announced by the government only applies until 31 December. Legislation will be introduced into Parliament shortly setting the terms of reference for the determination of the future FiT beyond 1 January. The government’s proposed terms of reference are very narrow and we will be lobbying for improvements.

It is also clear that the government wants a rushed process with minimal consultation. The Issues Paper in May set out a detailed process for public consultation including a draft determination for public comment.  The final position paper replaces all of this with the very bland requirement to “undertake such consultation as is considered appropriate”.

What you can do now

There are three simple things we are asking supporters of solar power to do right now:

• Tell everyone who wants to install (or extend) a solar PV installation that they need to contact an installer as soon as possible;
• Encourage all your contacts to sign our petition which calls for a fair price for solar being legislated before electricity retailing is privatised;
• Phone or email your local MP and let them know that you are not happy with the proposed 8c FiT and that you want the future FiT to recognise the many benefits of solar power for Tasmania, and to be set by a transparent and consultative process.

What we have learnt

The united voice of solar owners can have a real impact. The work of Solar Citizens, Save Solar Tasmania and other groups has forced the government to listen and has resulted in a much improved result for existing solar owners. All our supporters should feel proud of this result.

There will be many future challenges for the solar industry as we move from the old centralised model of power generation and distribution to a more sustainable, decentralised and democratic energy system.  The next battle we need to win is the setting of the future feed-in tariff.

Please sign the petition, follow our Twitter feed and spread the word to keep in touch with our ongoing campaign.