Renew Magazine

As an aside, the panels were placed landscape covering nearly the whole north/north-west roof. The purpose of this was two-fold, generating as much power as possible for the area and reducing the heat radiated from the roof into the ceiling cavity, with the panels acting like a safari roof. Since the panels have been installed the temperature difference between rooflines, when the sun is directly overhead is about 7°C, being  38°C for the roof under the panels and 43°C for the exposed roof.

Temperatures were measured in the ceiling cavity using an infrared thermometer, when the room temperature is below 26°C. Vents are still to be placed in the gable ends of the ceiling cavity to aid cross ventilation. So hopefully the house should be a bit cooler in the afternoons and evenings. So far this (mild) summer, we have not needed to use fans in what is usually an extremely hot room.

Uncertain output

Unfortunately I do not seem to be achieving the maximum benefit: output so far is averaging 20kWh per day. Output starts from as early as 5am and stops around 6pm. The problem is from around 9.30am to 3pm the output does not change significantly, staying in the mid 3000s.

Other systems I am familiar with have a definite peak as the sun moves overhead. One observation is that on overcast days, when there’s a sunny break in the cloud, output will jump between high 4000s to early 5000s for a few seconds, then down to as low as a few hundred before rising to mid 3000s. Returning to mid to high 2000s once the sun is again blocked by cloud cover.

Fortuitously my system has battery backup and is easily configured so that I will always get at least the current rate that the energy retailer charges for the electricity generated, irrespective of what they do with the feed-in tariff.

Further explanation

Without government rebates my costing for a nominal 2kW system is around $12,000. This is broken down into $6000 for panels (ten 200W panels), $2800 for an inverter/charger at Jaycar, $1500 for 10kWh capacity ex-Telstra gel battery pack, $400 for two 60 amp solar regulators and $1300 for installation. Such a system will generate 3285 kWh per year in the Sydney area. My nominal 3kW system produced 5091 kWh in the last 12 months so I have tried not to give over-optimistic figures.

The beauty of having a battery backup system is the flexibility of either selling the generated power to the grid or else storing it and using it yourself. This means that if you missed out on some of the generous feed-in tariffs offered in different states, you will at least be always guaranteed the current peak rate charged for electricity. From July 2011 it was 25c/ kWh or 35c/kWh if measured on a time of use meter, according to NSW figures.

Assuming that $12,000 was paid for the system (unlikely as the Federal Government Solar Credits Scheme would bring down the price) the return could be as much as 6.8% pa. This calculation uses the 25c rate: 3285kWh x 0.25c = $821.25.

A more serious investor would put in a system with double the number of solar panels and use a larger capacity inverter/charger such as one from Xantrex or Selectronics, resulting in an outlay of $22,000 and a return on investment of 7.5%. These returns, with their guarantees (the return will only increase over the next 10 years as electricity prices increase) make PV solar systems, particularly ones with battery backup, a very sound investment. Take into account the current Solar Credits Scheme then $3000 can be deducted from the capital outlay for the 2kW system lifting the return to 9.1% pa. The return on a 4kW system jumps to 10.3%.

Solar credits

Note that there is no tax on returns from these investments so, depending on your tax level, a normal investment return in the order of 15% could obtain the same monetary return. On the other hand, if you are a part-aged pensioner, as my wife and I are, and own your own house, then your part-aged pension could increase because the investment becomes part of the family home, which is a non-assessable asset. This will increase the effective return by a couple of percentage points, making a possible return on investment of over 10%.

The team at the volunteer-run organisation decided to install equipment and infrastructure for better water and energy use, and with a prime city location, show visitors what is possible in retrofitting an existing building. Educational activities and resources have been developed around the environmental installations including an open day, workshops, information fliers, signage and tours.

The grant application

The project would be expensive and initially time consuming, so the only viable option was to apply for a grant. The grant was submitted to Lotterywest WA and, somewhat to our surprise, funded in its entirety.
We received funding for:

• Two 1.5kW grid-connect solar arrays for electricity generation

• A 38,000 litre rainwater tank for sub-surface reticulation in the garden and toilet flushing

• A heat pump hot water system

• An education package including signage and funding to run workshops

• A part-time education officer for 12 months

A number of smaller activities were also funded such as window insulation, an energy efficient fridge and freezer, PowerMate energy meters and LED lighting.

The first step was to employ the Education Officer, whose initial responsibilities were to liaise with and oversee installation contractors and manage the grant finances. We had allowed two days a week, however, for phase two, which involved signage and preparation of educational and workshop material, we should have increased the time to at least three days a week. You live and learn!

The nitty-gritty of equipment installation, performance and problems can be conveniently divided into  water and energy, and tie in well with existing efficient waste management.

Water smart tank

There are a lot of options when it comes to rainwater tanks, so do your homework before you buy. The tank we selected has the following features:

• 38,572L Highline steel tank with plastic bladder

• 2.56m high, 4.38m diameter, area 15m²

• Collects off 148.5m² of roof

• Wet system (buried pipes) with over 118 metres of stormwater pipe, 40 metres of blueline and seven metres of copper pipe used.

The tank cost $14,680 ($13,000 installed, plus $500 for paving, $600 for gutter cleaning, $300 for first-flush system, $200 for the sand base, $80 aggregate).

The rainwater tank comes with a 70 litre first-flush diverter. We were originally going to collect water from half the roof area, but when installation commenced we figured we’d be mugs not to use the whole roof. This was a great idea, except the first-flush diverter was too small and we had to spend an extra $300 installing three downpipe diverters. While it was obvious to use the collected water on the gardens, we decided to also connect the tank water to the toilets for flushing, thus reducing our mains water use during winter when the tank would fill but the water not used. This, of course, necessitated a lot of additional plumbing. We were caught by imperfect quotations; in this case the quotation was not from a plumber so make sure you are aware of the expertise of people submitting quotes. The original plan to run the plumbing connections beneath the building turned out to be impossible and we had to find at least another $500 to remove and replace 45 metres of brick paving, as well as additional piping.

The subsurface reticulation includes five stations covering approximately 90m² of garden on the west side of the building. Last summer the system was set to run twice a week for 30 minutes on each station, or five hours a week. With these settings water use is 3612 litres per week. One tank of water could run the reticulation for 10 weeks or if rainfall is good, for 26 weeks. Whenever the tank is empty, water supply automatically switches back to mains water.

Retrofitting an old church raised extra complications as it was difficult to access high gutters, there was no floor trapdoor to access the parts of the building that were raised and few detailed building plans could be found.
The final component was a diverter—supplied at cost by the manufacturer Redwater Australia together with a second unit donated and raffled—to send cold water back to the rainwater tank instead of down the sink when the hot water taps are turned on. This unit has worked really well, with just one small hitch when the tank installer accidentally connected the water back to the first-flush system, and not the tank.

After experiencing large electricity price rises, Aaron’s parents decided to install their own solar power system and so asked Aaron for his advice when shopping for their system. The first thing he noticed was a huge increase in solar companies compared to a few years ago, and unfortunately found that many did not bother to return his phone calls. This lack of a response helped Aaron eliminate the bad companies from the good ones.

“After shopping around for solar panels this second time I feel that I have learnt some valuable lessons from this rapidly growing industry. Unfortunately there seem to be some rogue operators popping up, after the cheap cash that some customers seem to be throwing around for possibly inferior products. However, it is not all bad news. With some research you can still find ethical operators out there who will still treat you well and offer good quality products for a reasonable price,” he says.

Based on his experiences, with input from friends and family who have also shopped for solar, Aaron has put together a list of tips for prospective solar households. He has also created a list of questions for solar companies or installers; a copy is available here.

Good luck!

Home efficiency first

Before installing solar electricity the most important thing is to make your house as energy efficient as possible. When you know your minimum household usage then you can go shopping for a solar system. The system can then be smaller, cheaper and cover more of your household power usage. This is a far better strategy then paying a fortune for solar panels to cover power usage of old bad habits and unnecessary power guzzling appliances.

Customer service
If a solar panel company does not answer your questions or does not bother to ring you back then strike them off your list as this is likely to be their ongoing attitude towards you. Also, beware of fast-talking, high pressure sales people with a lot of hype and very little information.

No pressure
Never be pressured into signing a contract on the spot. Shop around and get as many quotes as possible, and ask for contact details of previous customers so you can ask them about their experience. Most people are very happy to talk to you.

Brand names
Always ask for the brand names of the main components such as the solar panels and inverter, and research the brand name history on the internet. Ask people about the solar systems and the installer at online forums such as www.ata.org.au/forums or forums.energymatters.com.au. Go to sustainable open house days or just knock on the door of a house that has installed a PV system in your area. Most people are more than happy to let you know about their positive or negative experience with a solar installer.

Also, seek out companies and brand names that have been around a while. A manufacturer with an office in Australia is an asset due to the long 25 year warranties available. Be cautious of cheap unknown brands with little or no history.

The right price
Remember the saying ‘if it sounds too good to be true then it probably is’. The quality of components, installation and after-sales service can all be sacrificed when buying cheap products. This includes solar panel systems. PV systems can be grossly overpriced as well. It is best to get as many quotes as possible to work out the average market price.

Wait until complete
Never pay the full price until the installation is complete and you are happy with what was agreed upon—including metering. If there is still work to be done you could end up on the bottom of the company’s to do list.

Investigate RECs
Check for yourself how much money you will get for your RECs if you choose to sell them. A few installers have been known not to pass on the current price. Visit Green Energy Trading’s website www.greenenergytrading.com.au or consult the Office of the Renewable Energy Regulator via www.orer.gov.au for pricing and a calculator.

Complaints…hopefully not
To check that a PV solar panel and inverter brand name has accreditation in Australia, or to make a complaint about an installation, contact the Clean Energy Council on (03)9929 4100, email accreditation@cleanenergycouncil.org.au, or visit www.cleanenergycouncil.org.au

Price increases
Be wary of quoted prices repeatedly increasing as you get closer to signing a contract. Don’t be scared to question why or threaten to walk away if you are unhappy.

Firm date
Make sure the solar installer gives a date for installation in writing.

Fair trading
Familiarise yourself with your state’s Office of Fair Trading/Consumer Affairs Home Building Contract for work under $25,000. This contract will explain the rights and obligations of the home owner and the installer, such as whether the deposit is within the legal limit. In New South Wales the limit should be 10 per cent for work costing $20,000 or less or five per cent for work costing more than $20,000.

Insurance
Ensure the PV system is insured; in most cases this coverage comes under building insurance. When adding the system to your insurance remember to insure the full cost of the system, meaning the price before discounts, rebates and REC sales. In some cases standard insurance may not cover lightning strikes or power surges that damage your PV system. Additional extras insurance might be needed to cover fusion and damage to electrical appliances in this scenario. Check with your insurer for more details.

Full site analysis
Ensure the installers inspect your property first as there might be issues with  shade from trees and buildings, extra wiring and installation costs, space constraints or roof angles. Some installers might look at your roof via Google Maps and tell you that’s good enough. This is poor customer service, lazy and may cause problems when issues are discovered on the day of installation. Bringing the installers to your house will give you a feeling as to whether or not they are running a reliable business.

The right inverter
Some solar companies might suggest installing very large inverters for small solar panel systems, saying that is a better option because you can decide to increase the size of your PV system later, without having to buy a larger inverter. This is true, however, research suggests that if you decide not to increase the size of your PV system you may lose a considerable amount of power production because your solar panels and inverter are not compatible. Make sure the solar panels and inverter are size matched if you do not wish to upgrade at a later date. Inverters with flat efficiency curves do not have this problem.

Quality test
Looking for quality solar panels can be a difficult area to research. One recommendation is to check out the panel’s negative power tolerance rating. This determines the manufacturer flaw factor, for example, if a 180 watt panel has a negative tolerance rating of 20% then the true wattage may be 144 watts instead of the 180 that is claimed. Some suggest that any negative tolerance rating over 5% is unacceptable.

Fix your roof
Before installing a system inspect your roof for leaks, cracked, damaged and shifted tiles, re-capping or rusty tin. If necessary do some roof repairs before installation as repairs later on will be very difficult and expensive if you have to remove the panels. If possible ask your installer to put at least a 30cm gap between the rows of panels for easy roof and panel maintenance, as well as cleaning access.

Roof space
Be careful if there isn’t enough roof space to put all your solar panels on one side of the roof. Some installers will suggest putting some panels north and the rest either east or west and connecting both lots to the one inverter. Research suggests that this should not be done unless you have two inverters (one for each group of panels) or an inverter with two independent outputs. Otherwise a considerable amount of energy can be lost.

Correct placement of parts
Try to keep the solar panels, inverter and power box all within reasonable proximity to each other; if the panels are a long distance from the inverter and power box some loss of production can occur.
Ensure the inverter is placed in a cool, shaded and well ventilated location to prevent overheating and inefficient operation.

Rebates change
Be aware that state and federal solar panel incentives, feed-in tariffs, RECs and any other rebates can chop and change, sometimes with little notice, so it is important to find out what offers you are entitled to and how long these offers are likely to last. Consult  government departments for this advice, as advice from a solar company could be inaccurate.

Do your homework
PV systems can cost a lot of money so be careful about who takes your hard earned dollars. A little research might save you a lot of headaches in the future.

The Alternative Technology Association (ATA) has crunched the numbers to estimate the pay-back time for solar photovoltaic systems in each state based on the available Small Technology Certificates (STCs) under the Federal Government’s Renewable Energy Target (RET). In most states if you have a grid-connected system, you may also be eligible for a feed-in tariff and get paid for the clean, green power you put back into the mains grid. When installing a grid-connect system ask your electricity retailer what feed-in tariff they offer as some are more generous than others. Alternatively, you can check out the ATA Feed-in Tariff Survey.

The modelling is based on a 1.5kW system that fully installed would cost $9000 before payment of STCs. There is no direct federal government rebate for installing a solar power system. Instead they qualify for STCs created through the Renewable Energy Target market. The amount of STCs your system qualifies for is dependent on its size and your location.

The ATA research was used in Choice magazine’s article on solar payback times.

ATA Solar PV Payback Model Assumptions & Descriptions:

STC price: $35
The new fixed $40 price for STCs from small renewable energy systems is the price that liable parties such as electricity retailers are mandated to purchase these certificates for. The actual price received by the end PV consumer will be slightly less than this and dependent upon market offering by PV installers and certificate traders.

STC multiplier:
ATA modelled payback times using both the current 5 times STC multiplier under the Federal Solar Credits scheme, as well as using the 4 times STC multiplier, which is set to come into effect on the 1st July 2011.

Electricity export rate:
● For net feed-in tariff jurisdictions (i.e. NT, QLD, SA, Tasmania, Victoria and WA), ATA modelled two scenarios assuming a household exports 50% and 75% of the total electricity generation from their solar PV system into the grid.
● For gross feed-in tariff jurisdictions (i.e. NSW and ACT), ATA modelled 100% export of the total electricity generation from their solar PV system into the grid.
● NSW – whilst the NSW feed-in tariff was announced to end in January 2011, the ATA modelled a scenario for NSW based on the latest feed-in tariff policy in that state – i.e. 26c / kWh (gross metered).

Table 1: Solar Photovoltaic Payback Period for a 1.5kW system

Other:

• The following Zones were used for the purpose of REC / STC calculation:
  • NT: Zone 1 (Alice Springs)
  • QLD: Zones 1 – 3
  • SA: Zone 3
  • Tasmania: Zone 4
  • Victoria: Zone 4
  • WA: Zone 3 (Perth)
  • NSW: Zone 3 (Sydney)
  • ACT: Zone 3
• System degradation rate: 0.5% per annum
• Inverter is replaced after 15 years at a cost of $1,350
• Annual increase in retail electricity price: 3%
• Discount rate: 6%

The nickel metal hydride battery packs that came with the drills had been given a good run already and refused to accept charge after I’d used them for about a year. My preferred replacements, lithium ion batteries, would have cost so much that I could have purchased a whole new drill with new ni-cad batteries. This option being against my principles—I wanted to keep these perfectly functional drills working—I ended up buying two NiMH batteries online at a competitive price.

Two years of drilling went by and my replacement NiMHs were suffering the same fate. Using any one of four similar chargers, the charging period would only last for 15 minutes or so. Lifting the battery up and dropping it into the charger again soon became futile.

I decided to have a go at charging the batteries using solar power. A couple of years ago I was the happy winner of a 17 volt, 20 watt solar panel in ReNew’s Sustainable Sheds competition. [Ed note: read all about John’s super sheds in ReNew 107.] The output terminals of this panel were connected to the positive and negative terminals of the NiMH battery packs. They were given just a few hours each of high quality East Gippsland sunshine and wow, they have all taken the charge, although admittedly at less than their initial capacity. I now have four very functional battery packs again. The solar panel puts about one amp into the battery, so the 3Ah battery needs a good three hours to complete its charge. I’m a little unsure how the battery will respond to being left on the solar charger all day, such as if you fail to time it right. I try to start the charge mid afternoon, so the fading light tapers the charge.

Thanks ATA—what a saving in cost and resources!

In the new era of climate change we are told to brace for a more erratic climate, so what can be done to protect household renewable energy systems in extreme weather?

For Daryl Douglass, the ATA’s Cairns branch convenor, Yasi was the fourth cyclone he had experienced in far north Queensland. Fortunately, this time his home in Kuranda, near Cairns, was spared the full force of the category 5 storm. Daryl says the main concern for people in cyclone-prone areas is to have solar PV and hot water systems held down strongly enough to withstand extreme wind. People need to ensure installers fit their systems on cyclone-rated mounted frames with suitable brackets.

‘The last thing you need when you’re sheltering in your toilet from a cyclone is to have a solar hot water tank come down from the roof on top of you—those things weigh a ton,’ Daryl says.

Equally important in preparing for a cyclone, Daryl says, is to clear vegetation away from the house. Falling trees and branches are one of the main hazards created by hurricane wind gusts.

Mick Harris, an experienced installer and owner of the Enviro Shop in Melbourne, says grid-connected solar PV and hot water systems are very robust and generally safe in extreme weather. If grid power goes down, a grid interactive inverter will shut down. As a safety precaution before a flood or other extreme event, Mick says, the inverter AC mains isolator (usually in the meter box) and the PV array isolator (usually next to the inverter) can be manually switched off. ‘Inverters are very safe beasts. If anything goes wrong, they shut down,’ Mick says.

An energy audit involves a relatively simple three step process. First, go around your home with an energy meter (a PowerMate Lite is recommended) and add up the amount of electricity currently used. Second, work out ways to reduce that use and then implement those reduction methods. Lastly, return to step one and recalculate your energy usage to see if the reduction measures worked. In the long term, there’s little point installing a PV system that will just power a rarely-used bar fridge or energy hungry halogen downlights that could be replaced with LEDs.

Pick an installer for a quote

When selecting potential installers, first ensure they have accreditation with the Clean Energy Council (CEC). CEC registration means the installer has met the minimum requirements to competently position, install and connect a grid-connected system. At a meeting of photovoltaic installers in October, it was unanimously agreed to set up a new Best Practice Network that installers can sign up to if they are prepared to implement a set of (yet to be finalised) Best Practice Guidelines. The following information is based on these guidelines as they apply to the stages of quoting, installing and commissioning of a grid-connected PV system.

The quotation stage

The site visit

First, and most importantly, the quotation must be based on a full personal inspection of the site and premises. The site visit is the installer’s chance to assess the site and all shading issues, the strength of the proposed roof and discuss what size system will best meet your needs and give you the best return. This last point is based on the installer doing a basic energy audit and recommending what possible energy saving measures could be implemented to maximise the quoted system’s returns.

If an installer tries to give you a quotation based on a certain satellite-based picture service without a site visit, strike them off your list immediately!

The site visit is also your opportunity to assess the expertise of the installer; they should explain the meaning of net or gross feed-in tariffs as they apply, the issues applying to RECs, why most grid-connected systems do not provide power during a blackout, and more. This is also the time you should ask lots of questions to satisfy yourself that the installer is going to provide a system quotation that truly matches your intentions and usage patterns.

Read the full article in ReNew 114 and find out about the installation process, getting the system connected and billing. ReNew 114 also looks at the right type of solar home, top tips from a PV customer and advice from an energy policy expert when it comes to feed-in tariffs, time of use tariffs and RECs.

Green landlords are appearing in greater numbers across Australia, underlining that rental properties need not be neglected when it comes to sustainability.

ReNew is calling on people with green investment properties to contact the magazine and go in the running to win the Green Landlord Award.

To enter send us a description of what you’ve done to make your investment property more water and energy efficient for your tenants and the benefits of these changes. The entries can come directly from landlords, or tenants can nominate landlords to us.

Email entries of less than 300 words to renew@ata.org.au by Friday, November 5.

ReNew’s Green Landlord will win two 65-watt, 12-volt solar panels with a prize value of $700, with the winner announced in ReNew’s issue 114 in December. Thanks to Low Energy Developments for donating the prize.

For more information email renew@ata.org.au.

To complement ReNew’s call for green landlords, Green Moves is offering a half price listing for any suitable rental property that is listed on their website between now and 31 March 2011. If you’re a landlord and you have a ‘green’ rental property coming available, contact Danie at Green Moves on (03) 9024 5515 and take advantage of this great offer. Or if you have a rental property but it’s not that ‘green’, give Green Moves a call anyway and they’ll help you ‘go green’.

Want more information on green renting or being a greener landlord? Try these:

• ATA’s Sustainability rebates page gives details of federal and state government water, solar hot water and photovoltaic rebates available in your state
• Tax deductions for energy efficiency improvements in rental properties
• ATA’s Renters’ Guide to Sustainable Living (free PDF download)
• The Victorian Green Renters’ Guide: Sustainable living tips for renters, produced by Environment Victoria (free download or printed copy)
• Green Renters: an online resource for those who wish to live sustainably in rental property
• Just Change: giving renters and landlords the tools they need to access the many energy efficiency schemes available in Victoria
• “What about tenants?” Article in ReNew 102
• “Just change for tenants” Article in ReNew 108
  

REC stands for Renewable Energy Certificate, with these certificates being the trading currency for renewable energy in the renewable energy market. The value of one REC is equal to one megawatt-hour of renewable electricity generation (or in the case of some energy efficiency technologies such as solar hot water or heat pumps, one megawatt-hour of avoided electricity consumption).

Renewable electricity generators such as large wind farms, hydro-electric power stations or small-scale solar photovoltaic (PV) installations are able to create these RECs and sell them to the renewable energy market, thereby receiving a financial return.

The majority of RECs are purchased by electricity retailers, in line with their mandatory requirements set by the Federal Government under the Renewable Energy Target (RET). This cost to the electricity retailer is passed on to all electricity consumers (apart from a few large industrial users) in the form of a slightly higher charge per kilowatt-hour on your electricity bill. The Federal Government has recently expanded the RET so that 20% of Australia’s electricity supply (equivalent to 45,000 gigawatt-hours) comes from renewable energy sources by 2020.

What’s a REC worth?
Whether you’re a householder or a large-scale renewable energy developer, one of the key aspects of the market for any renewable energy investor is the variable price of RECs. The renewable energy market is a fixed market, with demand being mandated by the Federal Government each year. However, supply is not fixed, with any accredited renewable electricity generators being able to create RECs in any given year.

RECs are also traded through long-term contracts set up outside the electricity market. For example, a large wind farm operator might establish a contract with an electricity retailer to provide a fixed number of RECs for a fixed price over, say, five or ten years, in order to give both parties certainty regarding the supply and cost of RECs for business planning.

Recent RECs oversupply
Depending on the level of REC supply in the market, the price of RECs changes, similar to the price of shares. As an example, in April 2009 the price of one REC had reached a high of $54. By October 2009, with a significant oversupply in the renewable energy market, the price had dropped to $28. Historically, the renewable energy market has always operated with some level of oversupply, with more RECs being created than are required to be purchased each year. However, this oversupply has increased significantly in recent times, with the Federal Government giving more incentives to purchase solar hot water systems and heat pumps as part of the stimulus package, and under the Solar Credits Scheme (more detail on Solar Credits later in the article).

Greens senator Christine Milne has proposed that RECs generated by solar hot water systems and heat pumps be added on top of the Renewable Energy Target, so they are additional to the target and thereby don’t continue to decrease the value of RECs. It’s a complex problem: the drop in RECs value prompted by household energy efficiency incentives means that large-scale wind farm and solar investments are on hold until RECs gain value and can help fund big projects.

GreenPower and RECs
RECs can also be traded through the GreenPower mechanism. GreenPower is a voluntary renewable energy product that can be purchased by residential and business consumers to ensure that their electricity is tied to generation from renewable sources.

When a householder or a business purchases GreenPower through their electricity retailer, the retailer in turn purchases additional RECs from the renewable energy market. These RECs are purchased ‘in addition’ to the retailers mandatory requirements under the RET, meaning that the consumer has achieved investment and an environmental benefit on top of that mandated by the Federal Government’s target.
Solar credits and RECs.

One of the recent additions to the RET market is the Solar Credits Scheme. This new scheme came into effect in June last year, replacing the former Solar Homes and Communities Plan, which offered households a rebate of up to $8000 for the installation of a solar system.

The Solar Credits Scheme works by offering investors in small-scale renewable generation systems the ability to create and trade five times the number of RECs, thereby providing an increased financial incentive. This REC multiplier is available to solar PV systems up to 1.5kW in size, small wind turbines up to 10kW in size and micro-hydro systems up to 6.4kW in size. From mid 2012 the government plans to reduce this multiplier by a factor of one each year, until it expires in mid 2015, in anticipation of cost reductions in the small-scale renewable industry over that period.

One of the problems for consumers looking to invest in small-scale renewable energy systems under this new scheme is that it actually reduces the amount of new renewable electricity generation deployed in the market. If a householder can create five times the amount of RECs than normal (and bear in mind that small-scale generation units can create and trade RECs equal to 15 years worth of generation upfront), then for every five RECs created, four do not represent actual renewable electricity generation (i.e. four megawatt-hours).

These four RECs, once traded, will still be purchased by electricity retailers out of the market in line with their mandatory annual targets. In this way, investors in small-scale renewable energy systems are contributing to a reduction of the annual renewable electricity generation targets actually achieved. From the perspective of an individual household, one system may not make that much of a difference. However, given that over 70,000 micro-generation systems were purchased in 2009, the Solar Credits Scheme has the potential to substantially distort the achievement of the RET!

The way forward
Previously, many renewable energy system owners held on to their RECs to ensure that the renewable electricity generated from their system was additional to the mandatory government targets, as described in Don’t wreck those RECs in ReNew 105. Unfortunately, under the new Solar Credits Scheme, holding on to your RECs means that you miss out on any upfront financial assistance and pay the full retail cost of any solar, wind or micro-hydro electricity generation system. The Alternative Technology Association, along with a host of other environment, community and industry organisations, is currently lobbying the Federal Government to alter the Solar Credits Scheme to ensure the annual renewable energy targets are adjusted (i.e. increased) to account for the quantity of ‘fake’ RECs traded in the market.

In the long-term a much better mechanism to drive the uptake of small (and large) scale renewable generation is a strong gross feed-in tariff, whereby the investor knows exactly the price they will be paid for all the electricity they export and over what time frame, and the electricity networks know exactly how much additional distributed generation capacity is available. To date though we have seen only two effective feed-in tariff policies implemented for small-scale systems in Australia (in the ACT and NSW) and none for large-scale technologies.
With the current oversupply problems in the existing REC market and its inability to drive investment in the kind of large-scale renewable energy projects we need to deal with the climate crisis, the imperative for a strong, nationally consistent feed-in tariff to drive both small and large-scale technologies, complemented by a significant increase in energy efficiency investment, becomes more and more critical.