Sunday 31 October 2010

Sun Sets on NSW Household Solar Power Industry

A couple of days ago the NSW state government announced the outcome of their review of the solar power incentives scheme. As expected, the "feed-in tariff" was cut, as the scheme had proved more popular than expected and the targeted capacity had already been exceeded (and was therefore going to cost the government a lot more than expected). It was also proving to be a political liability, as people began to realise that to pay the 60c per kWhr tariff to those who had installed a PV system (usually middle and upper income households), all electricity consumers were going to be slugged with higher power bills (which would have greater impact on lower income households).

However, the cut to only 20c per kWhr was a lot more drastic than expected. At that rate, it really won't be worthwhile paying up front to have a PV system installed, even with the cost heavily subsidised by the federal government rebates. At 20c per kWhr for "feed-in" electricity generated by the PV system, and electricity consumption costing up to 17c per kWhr, the net value of electricity generated by the PV system will take a decade or more to pay back the up-front cost of installing the smallest (and most subsidised) PV system. Larger systems will probably never generate enough net revenue to pay for their cost.

Fortunately our application to have a PV system installed had been made well before the new feed-in tariff was announced, so we will still get paid the higher rate (for the first 4-5 years). On the downside, the change will probably drive all the PV system installers out of business in NSW. Our installer (NuEnergy) is based in Victoria, so hopefully they will stay in business and the reduced demand for new PV systems in NSW from now on will just mean that our new system gets installed on time (due sometime in December).

We'll see how this all works out. I'll track total installation cost, power generation data and net revenue and post occasional updates.

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