Solar Feed-In Tariff for NSW

The announcement today by the Minister for Environment and Climate Change that NSW will introduce a feed-in tariff for solar photovoltaic (PV) systems up to 10 kilowatt is great news for the PV industry and particularly good news for residents and small business operators who have already, or are wanting to, invest in this form of renewable energy. The policy will take effect in January 2010.

While many people and groups have been calling for a gross feed-in tariff, this net feed-in tariff is certainly better than none, and returning a rate of 60 cents per kilowatt hour is very generous. A net feed-in tariff means that the installation will earn money for energy surplus to the household or business need, and sent to the grid. A gross feed-in tariff would have seen all power generated, including that used within the home or business, paid a tariff.

The Minister and Government has rejected that proposition for a number of reasons including the view that the net system will encourage greater energy efficiency from the premise, and that the feed-in tariff must be paid for by all power users by way of a small increase across the user base. That is true, though it is unclear to me just what the variation in cost might be. The Minister's statement also identified that many people would be financially unable to invest in PV systems and that the net feed-in tariff was more equitable for those people.

As well as the 60 cents per kilowatt tariff, which is some four times the retail energy rate, household or small businesses will still gain the benefit of power they generate and use, thus not having to purchase power at 15 cents per kilowatt.

Even though a typical installation will take an estimated 12 years to pay off, this new policy on a Feed-In Tariff is great news which will drive investment in PV systems creating jobs and further encouraging investment in improving the technology. Minister Tebutt and the Government need to be congratulated on this one!