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NSW Solar Bonus Feed in Tariff Change to Slash New PV Installation Rates

October 27, 2010

Today, the NSW Government relesased a media statement that the over-generous subsidies provided to small scale installation of solar PV systems would be slashed.

Instead of $0.60/kWh, the scheme is now set to $0.20/kWh.

Source: AECOM Solar Bonus Scheme: Forecast NSW PV Capacity and Tariff Payments, October 2010

This blog has previously commented on the rate of payments allowed by the previous scheme –  specifically addressing lack of technology innovation incentive and the regressive nature of the programme.  Indeed this blog predicted the demise of the programme in its previous incarnation.

Now, solar PV systems will continue to be installed, but at a much slower pace.  Electricity prices are likely to continue to outstrip inflation for several years to come for retail customers, thus incentivising those who are able t o take long-term perspectives to participate – particularly as pre-financed payment options become more readily available and understood in the market.

Analysis by the engineering group commissioned to review the options for the scheme concludes that the $0.20 tariff will still result in well over $1bn in aggregate payments to December 2016 – which represents a 67% reduction compared with Business As Usual (i.e. continuation of the $0.60 tariff rate).

NSW consumers will continue, therefore, to subsidise PV without clear innovation benefits, nor the network savings cost savings benefits to all consumers being explained.

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