The Victorian Coalition Government has accepted the recommendations of the independent Victorian Competition and Efficiency Commission's (VCEC) final report into distributed generation and will introduce a new, fairer feed-in tariff for roof-top solar.
The Coalition Government will also extend eligibility for the new feed-in tariff beyond solar to include other forms of renewable and low emission generation.
The VCEC review, released today, found that offering over-generous feed-in tariffs to new solar customers would result in all Victorians, including vulnerable families, paying even more on their bills to subsidise households with rooftop solar.
VCEC recommended establishing a feed-in tariff that is sustainable, predictable and free from cross-subsidies.
Energy and Resources Minister Michael O'Brien said that Victorians installing solar or other renewable energy systems of less than 100 kilowatts will be able to access the new feed-in tariff from 1 January 2013.
Solar customers currently receiving the Premium Feed-In Tariff (PFIT) or the Transitional Feed-In Tariff (TFIT) will not be affected by the recommendations. PFIT and TFIT rates and scheme conclusion dates will not change.
VCEC recommended that the feed-in tariff be extended to all sources of low emission energy generation, and that the new tariff be established in a range of six to eight cents per kilowatt an hour in 2013. However, the Coalition Government has decided to initially set the tariff at the top of that range.
The new tariff will provide a minimum of eight cents per kilowatt an hour for excess electricity exported to the grid, which reflects the adjusted wholesale price of electricity. The rate will then be updated on an annual basis in line with the adjusted wholesale electricity rate.
"Solar systems are now more affordable than ever, with the cost having fallen by around two thirds since 2009 and continuing to fall," Mr O'Brien said.
"The Coalition Government supports the growth of low emissions energy sources, but that support must be fair to all, including vulnerable Victorians who pay the subsidies through higher electricity bills. Over-generous subsidies can no longer be justified," Mr O'Brien said.
"The PFIT scheme established by the former Labor Government is collectively costing Victorians an extra $41 million on their electricity bills every year through to 2024.
In line with the VCEC recommendations, the TFIT scheme will be closed to new applicants. The "one-for-one" Standard Feed-in Tariff arrangements will also be closed to new applicants.
"If you have already paid a deposit or have already had a solar system installed, you may still be considered for the Transitional rate, provided that all the required paperwork is lodged with your electricity suppliers by 30 September 2012," Mr O'Brien said.
This includes accurately completing and submitting:
- a Solar Connection Form;
- an Electrical Work Request;
- a Certificate of Electrical Safety; and
- a feed-in tariff contract application.
In addition to meeting the paperwork deadline, customers will also need to have their meters upgraded and be receiving credits from the feed-in tariff by 31 December 2012.
Customers currently signed up under "one-for-one" SFIT arrangements will also continue at their existing rate until the end of 2016.
Mr O'Brien said the continuing strong take-up of solar systems in Victoria demonstrated that the TFIT, introduced in January 2012, had supported a sustainable solar industry and jobs.
"Victoria saw a 33 per cent increase in solar connections for the first six months of 2012 compared to the same period in 2011, despite the feed-in tariff stepping down from 60c/kWh to 25c/kWh. This demonstrates that it is the falling cost of solar and the rising price of electricity that is driving uptake, rather than feed-in tariffs," Mr O'Brien said.
"We have avoided the 'boom-bust' experience in other states that eliminated all feed-in tariffs without warning. We will continue to work co-operatively with the industry to ensure that our success continues," Mr O'Brien said.
Mr O'Brien said consumers should be wary of pressure to make a quick decision to install a solar system based on government subsidies.
More information about feed-in tariff eligibility and the steps involved to sign-up is available from the Department of Primary Industries on 13 61 86 or www.dpi.vic.gov.au/feedintariffs. VCEC also recommended action to minimise barriers to increased uptake of distributed generation, primarily in relation to the process for grid connection.
The Coalition Government will now commence implementing these recommendations, including providing increased information to customers seeking to connect distributed generation, and working with industry to streamline the connection process.
Victorian Treasurer Kim Wells welcomed the final report and thanked VCEC for its work in reviewing feed-in tariffs and barriers to distributed generation.
Download a copy of the Victorian Competition and Efficiency Commission Final Report July 2012 - Power from the people: Inquiry into distributed generation at http://db.tt/sVWNrY9n
Download a copy of the Victorian Government response to Victorian Competition and Efficiency Commission's Final Report September 2012 - Power from the people: An inquiry into distributed energy at http://db.tt/cR9C367b