Solar industry cool on rebate cut

Businesses in the residential solar energy sector face the prospect of falling revenue and staff cuts following a Federal Government decision to restrict access to an $8000 solar panel rebate.

Treasurer Wayne Swan announced as part of Tuesday’s budget that a means test will now apply to the rebate home owners receive when they install solar panels on their homes, restricting it to households with an income below $100,000.

For small and medium sized businesses in the sector, the announcement has had an immediate and devastating impact. Russel Mourney, director of national solar panel installer The Solar Shop Australia, says: “On Wednesday morning we started getting calls from people signed up in the last few weeks and with applications not sent through, so we had lots of cancellations. We had at least 90 in the pipeline and now I think 60% to 70% will not go through, and we think we will see a drop of about 60% from the 2000 systems we would have expected to install this year.”

The doubling of the solar rebate to $8000 last year triggered a boom in the residential solar energy industry, doubling the number of panels installed and fuelling rapid growth for many small businesses in the sector.

But Mourney says that growth is likely to come to a rapid halt following the budget cut and could result in job losses in the sector.

“We grew very quickly last year – we’ve been doing this for about nine years and last year we went from 15 to 100 staff, but it’s pretty obvious what’s going to happen on that front unless there is some other reason for staff numbers to be maintained,” he says.

The relatively low $100,000 household threshold set for the means test – compared to $150,000 for the baby bonus and family tax benefit B – will exacerbate the damage inflicted by the change.

Mourney says the core demographic for solar energy system purchases are households with additional discretionary income.

“It’s unrealistic to think people on low incomes, if they’re battling to pay for food or petrol, will go for a solar hot water system,” Mourney says. “It’s people with some discretionary income who are early adopters and have supported the industry to this stage.”

The future for many businesses in the sector is now uncertain. For The Solar Shop Australia it’s not all doom and gloom – for example, the Federal Government’s Solar Schools program kicks off later this year – but growth plans will definitely have to be revised.

“We had plans to start manufacturing in Australia based on the numbers we were doing, which would have created jobs here and pushed costs down, but it is unlikely we will be able to go ahead with that now the knife has been taken to the industry,” Mourney says.