Finding The Right FIT

As this issue goes to press, thousands of protestors are reportedly swarming downtown Sydney, Australia, to fight recently announced changes to solar feed-in tariffs (FITs) in Sydney and the rest of the state of New South Wales (NSW).

Under a May 13 ruling by Premier Barry O'Farrell, not only is the solar FIT program for NSW – Australia's most populous state – now closed, but existing participants at the AUD $0.60/kWh tier also face a payment reduction to AUD $0.40/kWh. The Australian Solar Energy Society has called the move a breach of contract, adding that 5,400 solar jobs are at risk and 20,000 NSW residents are ‘stranded’ as the government reviews the frozen FIT.

(As the conflict unfolds in NSW, solar credit multiplier reductions have taken effect across the country as part of revisions to Australia's Small-Scale Renewable Energy Scheme.)

The story of Australia's FIT controversy is being retold here as an example of yet another successful solar incentive program that becomes too expensive or unwieldy in the eyes of the government.

Far away in Italy, government officials finally unveiled the latest Conto Energia, which determines solar FIT levels, last month. (See Policy Watch on page 22.) Industry assessments range from cautiously optimistic to bleak.

Some worrisome preliminary global market metrics have already emerged. PV module prices entered a freefall following the sudden shutoff of the demand spigot in Italy, according to a report from IMS Research, and effects were felt before the new Conto Energia was even officially announced.

Similar stories will undoubtedly continue to unfold in solar markets around the world, introducing some thorny questions that should be thoughtfully considered by both governments and the solar sector.

Are FIT adjustments, reductions and reconsiderations – even those that are considered to be in line with growth patterns and new installation cost models – detrimental to the momentum of an industry that is just finally starting to truly take off?

Or are they temporarily difficult, but necessary and inevitable – the equivalent to removing the training wheels from a child's bicycle, allowing her to either coast along or fall according to her own actions?

Some market analysts suggest the latter characterization is more appropriate. When France's FIT adjustments were announced in March,

Markus Hoehner of EuPD Research warned in a report that French projects faced a difficult road, but emphasized that the FIT reductions are ‘ambitious but nonetheless necessary for the long-term remedy of PV price divergences in various national markets.’Â Â Â Â

This Sun Dial column was originally published in the June 2011 issue of Solar Industry.


Editor's note: To submit your own contribution to Viewpoints, email Jessica Lillian at jlillian@solarindustrymag.com.

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