Renewable Energy (Electricity) Amendment Regulations 2010 (No. 8), 2011 (No. 2) and 2012 (No. 8)/Phase-out of the Solar-Credits Mechanism

05 June 2015

Post implementation Review – Department of the Environment

On 1 December 2010, the then Minister for Climate Change and Energy Efficiency announced the former Government would progressively bring forward the phase-out of the Solar Credits mechanism. The solar credits mechanism provided upfront support to boost the installation of small renewable generation systems, particularly rooftop solar photovoltaic (PV) systems, under the Renewable Energy Target (RET). The more rapid phase out of the solar credits was implemented progressively from July 2011 to December 2012 through regulatory amendments made in late 2010, mid-2011 and late 2012: Renewable Energy (Electricity) Amendment Regulations 2010 (No. 8), 2011 (No. 2) and 2012 (No. 8). The Office of Best Practice Regulation (OBPR) identified that the then Department of Climate Change and Energy Efficiency (DCCEE) did not prepare a Regulation Impact Statement (RIS) for Renewable Energy (Electricity) Amendment Regulations 2010 (No.8) and 2011 (No.2) prior to decisions being announced by the former Government. Consequently, DCCEE was found non-compliant with the best practice regulation requirements for these amendments and therefore was required to undertake Post-Implementation Reviews (PIRs). DCEEE was granted an exemption from preparing a RIS by the then Prime Minister in relation to the Renewable Energy (Electricity) Amendment Regulations 2012 (No.8) and was therefore also required to undertake a PIR for this amendment. After responsibility for the RET was transferred to the Department of Industry, Innovation, Climate Change Science, Research and Tertiary Education (DIICCSRTE) in March 2013, a single PIR was completed by DIICCSRTE in June 2013 for these three amendments, and was assessed as compliant by the OBPR. The PIR was updated in December 2014 by the Department of the Environment, after responsibility for the RET was transferred to Environment in September 2013. The purpose of the PIR was to assess the efficiency and effectiveness of bringing forward the phase-out of Solar Credits. The PIR found that the amendments had widespread benefits for electricity users by reducing the upward pressure in electricity prices. However, these benefits were modest in absolute terms and their effect was difficult to separate from the effect of the simultaneous wind back of state and territory feed-in tariffs schemes. Moreover the benefits to electricity users were offset by reduced support for households and businesses purchasing solar PV systems, and reduced revenue for system suppliers as a result of lower demand for PV systems.