THE Rudd Government will scrap its $8000 rebate to households installing rooftop solar power and instead require electricity retailers to increase their own solar subsidies.
In another policy shift, Environment Minister Peter Garrett said yesterday the Government would end its subsidies to household solar power generation because soaring demand had swollen the cost to the budget.
In its May budget, Labor limited the rebate to low and middle-income households earning less than $100,000 a year. From July, it will scrap the rebate for them too because too many of them are claiming it.
In October alone, almost 1000 households were paid to install 1.35 megawatts of rooftop power, almost as much as in all of 2005.
Industry sources said that while it cost about $12,500 to buy and install a typical 1kW system, bulk schemes organised by local councils had cut the net cost to households to as little as $1500 to $2000, after deducting the $8000 rebate and subsidies of about $1000 from electricity retailers.
The Government will replace the rebate by temporarily requiring retailers to lift the amount they pay households five times over, for systems installed between mid-2009 and mid-2012.
The new deal will include high-income households, and is expected to result in a big shift in demand.
In Melbourne, on current prices, the temporary hike would lift the subsidy from about $800 to $4000 for a 1kW system or $6000 for a 1.5kW system. The cost will be added to electricity bills.
From 2012, the payments will shrink rapidly, returning to their old levels by 2015.
The Government announced the new rules when unveiling draft legislation for its renewable energy target that requires retailers to buy 20 per cent of their power from renewable energy providers by 2020.
Chief executive of Conenergy Australia Rodger Meads welcomed the market-based approach, saying it would free the industry from the whim of Treasury, as was the case when the May budget suddenly changed the rules.
Markus Lambert, of Energy Matters, told The Age people earning under $100,000 in Melbourne would now pay up to $5000 more for a 1.5kw system, squeezing them out of the market.
The Opposition and the Greens criticised the scheme. Opposition climate change spokesman Greg Hunt said it was another attack on the affordability of solar panels for households wanting to do right by the environment.
Greens senator Christine Milne said by overpaying customers the new rules would overstate the amount of renewable energy actually generated.