Solaray Energy and its sister company, Intero Energy Systems have been providing solar PV systems to the residential and commercial markets in NSW since 2009.
Solaray has installed thousands of small-scale solar PV systems in the range of 2kW to 100kW. Intero Energy has provided design and implementation services for solar PV projects ranging from 50kW to 200kW and is currently engaged in consulting and Project Development services for several multi-million dollar projects.
Solaray employs, either directly or indirectly, dozens of people with a particular emphasis on the development of younger employees and returning to work parents in part time roles to match school hour employment – primarily in the western suburbs of Sydney. Development of commercial and business skills amongst tradespeople and contractors is also a major focus for the company.
BASIS OF SUBMISSION
This submission will address some of the questions raised in Section 3 of the Call for Submissions Paper: ‘Impacts of the Renewable Energy Target’. As there are numerous entities already providing detailed submissions on many aspects of the RET Review, in particular the macro environmental and economic aspects, this submission will only address areas where we believe our experience and expertise are of particular value.
How has the RET influenced the development of the renewable energy industry?
The renewable energy industry has grown rapidly, largely due to the influence of the RET.
In particular, the market for small-scale solar has exceeded even the most optimistic projections of just a few years ago.
However, the rapid reduction in global solar PV product cost in 2011 meant that the scale of the SRES was for some time in excess of that required for the development of a mature, professional industry.
This has, of course, when combined with over-generous state based feed-in-tariffs, lead to a market free-for-all and the consequent consumer issues with cheap product, shoddy installation services and so on.
The attempts by government to reduce the SRES (via the reduction of the REC/STC multiplier), whilst well-meaning, were often conducted in a knee-jerk way that lead to a short term boom followed by a dramatic (and for many companies a terminal) reduction in consumer demand. This roller-coaster effect (which has occurred regularly over the last 5 years) has delayed the development of a sustainable and mature industry as it has reduced investor confidence.
The renewable energy industry is likely to be one of the largest industries in the world over the next several decades, in terms of employment, skills development and investment, and it is important that any government involvement positions Australian companies to be long term sustainable players in this market.
Do small-scale renewable energy systems still require support through the SRES? If so, for what period will support be required for?
Small-scale solar PV systems still require support through the SRES to ensure that the development of the industry continues. However, it is likely that the costs of solar PV products will continue to fall over the next several years – although this may well be offset by any fall in the Australian Dollar.
Notably, we are not projecting any major reduction in costs for the installation component of solar PV as efficiency gains are often countered by an increase in regulatory standards and requirements.
Our view is that the level of support provided by the SRES is required for at least the next 3 to 5 years. Importantly, any reduction in the SRES support to small-scale systems must be done in a controlled, predicable fashion – preferably in small increments to avoid boom-bust industry dynamics.
How should reforms to the RET be implemented? What transitional issues could arise and how might they be addressed?
If changes to the SRES and therefore the STC program are to be implemented, it is critical that these changes are done in a predictable, methodical and above all, slow way. Rapid and unpredicted changes in the past have lead to immediate job losses, curtailment of investment and the loss of valuable expertise and knowhow as people leave the industry, in most cases never to return.
The reduction of the deeming period of the STCs could be reduced by say 2 or 3 years every year, meaning they would be in effect at only a nominal or zero value in less than 5 years. This time frame would allow the industry to continue to invest and develop without creating artificial demand.
It is important that the expected STC demand target – and therefore the expected value per STC – is taken into account when contemplating reductions in the eligibility of small-scale systems to generate STCs. A massive reduction in the value of an STC (eg if the overall Renewable Energy Target is reduced) combined with a reduction in the number of STCs issued for small-scale systems could have a devastating effect on employment and investment in the industry.
Jonathan Fisk and Peter Thorne