Demand for residential solar systems has decreased in the region of Victoria after the Andrew’s government solar scheme was placed on pause several months ago.
For more than 200 Victorian businesses registered as approved solar retailers, the result has been devastating, leading to many staff members being retrenched and some businesses choosing to abandon the Victorian solar market.
In a demonstration staged against the scheme, more than 300 people representing affected businesses gathered on the steps of the state parliament last week, demanding either changes to or the elimination of the scheme.
The results of the poorly organised scheme have filtered through to consumers, as Solar Choice’s Solar Price Index noted a 13 percent increase in average solar prices in Victoria during July 2019.
The $1.34 billion scheme is geared toward helping 650,000 homesteads save half of the price of their solar-powered system with a limit of $2225 per household.
In the months that followed the inception of the program, the demand for solar energy nearly doubled, with 3300 installations taking place in September 2018, increasing to an average of more than 5500 installations over the ensuing six months.
To respond to the enhanced demand, solar installers hastened to employ additional staff members and purchase more equipment to address the need created by the billion-dollar subsidy program.
This trend collapsed within six months, as the scheme’s allotted fund was drained.
Most Victorian installers experienced descending sales as customers have decided to wait several months until the scheme is reintroduced.
In the wake of severe criticism from the solar industry, the state government shifted the application process to supply at the most 3333 rebates monthly which, in July, was claimed in the first three days.
The new quota system has capped systems installed in the state, as only a small number of eligible patrons are willing to go ahead sans the rebate.
This has inspired some people to suggest that the scheme should be eliminated, with the quota permitted by the scheme only slightly more elevated than the quantity of installations occurring in Victoria prior to the scheme, supported by the national solar rebate system.
Fears arose that the 3333 quota was being unfairly divvied up among “clever” installers gaming the system; concerns somewhat eased by Solar Victoria chief executive officer Stan Krpan, who asserted in an interview with RenewEconomy that of the installers getting rebates in July, the top 35 represented 15 percent of the market share.
However, Krpan’s viewpoint on challenges that face the installers is that the scheme simply represents added volume for the market. He does not believe that the quota will result in a market cap.
He also asserts that the “teething issues” facing installers will diminish as they adjust to the new scheme.
So as not to draw “solar cowboys” to the scheme to take advantage of rebates at the expense of the consumer, the state government has debuted one of the most stringent application processes in the solar industry.
Stan Krpan says that installers who have experienced success in having their quotes approved for the rebate have been pro-active with customers in the days leading up to the reintroduction of the scheme.
The application process in some instances asks customers to download a face-recognition app via their phone to affirm their identity.
Many believe that the Andrews government has not communicated sufficiently with the solar industry, with the allocation of the initial stage of the rebates expiring with no warning supplied to installers.
While the government has consulted with some entities in the industry, it’s evident that they have not paid heed to the suggestions and warnings they get. Ultimately, the majority of solar industry businesses are confronting negative cash flows and threats to their corporate survival.
The majority of installers have asked for adjustments to the scheme that would enhance demand over a longer period of the month and enhance demand outside the scheme.
For instance, shifting the eligibility to include only households with a combined income of less than $100,000 (as opposed to $180,000) would substantially lessen the households competing for the rebates and the decision-making inertia in those who would no longer be eligible for the scheme.
Another choice would be to reduce the rebate to $1112.50 and double the quota to 6666, which would empower residential solar volumes in Victoria to be restored to the levels seen in the first six months of the scheme.
Both of these choices would enhance the flow of industry demand, empowering solar installers to manage their businesses in a more effective manner, while also reaching the “650,000 homes with solar” target established by the Andrews government.
If the government won’t shift the implementation of the scheme, and the rebate quota continues to be attained in the first days of each month, some believe that the industry might fare better without the scheme—opting instead for an environment in which all businesses exist on a level playing field and can build success from installing high quality systems with a return on their investment.