The Penalty of Success

On Wednesday October 27, the NSW premier Kristina Keneally announced changes to the Solar Bonus Scheme. The scheme, which previously paid 60 cents per unit of electricity produced by on roof small scale solar power systems, has been slashed by two thirds and now will pay only 20 cents per unit. This piece of legislation will be disastrous for the fledgling industry which has made tremendous growth over the past two years.

At the time that the Solar Bonus Scheme was first announced, industry veterans were very surprised at the generosity of the payments and it is now clear that the rate was a little high to be sustainable. However, the review conducted last month by the Keneally government in which nearly every submission pointed towards a rate of 40 to 50 cents as being a proper setting for the payment, has been utterly ignored and a rate chosen that is unsustainable for the industry. Surveys confirm that businesses are taking 80 to 90% falls in new orders and job losses in excess of 1000 are expected in the coming months.

The most successful feed in tariff was that introduced in Germany in 1991, which pays around 60 Eurocents per unit. Despite criticism towards the generosity of the scheme, the German government held its nerve and the scheme is credited with the creation of over 250 000 full time jobs (generating billions of dollars in export income) and has assisted the nation to raise its renewable energy generation from 6% to 16%, with projections to meet 27% of power generated by renewable energy by 2020. What a pity our government does not have the courage and vision to persist with far sighted policies long enough for the industry to flourish.

The entire industry as well as environmental groups and all those concerned about the issues of climate change and carbon pollution implore the NSW government to reconsider this unbalanced and costly decision. To destroy the industry now just as it is getting into its strength will not only set back the renewable energy sector by several years but also squander the benefits of the money spent so far, deriving far less benefit than might otherwise have been the case.

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