A recent policy recommendation by Australia’s consumer watchdog to abolish the Small-scale Renewable Energy Scheme (SRES) nearly a decade ahead of schedule has reignited debate over the federal government’s subsidies for renewables. In June, the Australian Competition and Consumer Commission (ACCC) called for the termination of the SRES by 2021, describing the case for a subsidy as “weak” in light of ongoing price declines. The recommendation has triggered an impassioned response, exposing divisions within the solar industry.
But another unrelated development this year serves as a potent reminder of the gripes that some industry participants have about the scheme, which provides rebates starting from 30% for rooftop PV installations, and further incentivizes deployment by creating a market for small-scale technology certificates (STCs). News that the parent of Euro Solar, one of the country’s largest PV retailers, had entered the liquidation phase of its insolvency proceedings underscored long-simmering claims that the industry has been hijacked by disreputable retailers and installers intent on grabbing the up-front rebate by pushing shoddy equipment to consumers.
This year, the value of STCs ranges from about AU$550 (US$395) in Victoria and Tasmania to roughly AU$650 (US$465) in all other state capitals, on expectations of 13 years of generation, according to Tristan Edis, Director of Analysis & Advisory Services at Green Energy Markets in Melbourne. He says that 5-6 kW residential PV systems are now selling for a post-rebate price of about A$1,000/kW (US$720), give or take A$250 depending on the equipment and the state. “If the customer isn’t very switched on and can be led astray about ‘quality,’ then this figure can blow out considerably,” Edis acknowledges. The focus has now shifted to how the government of Prime Minister Scott Morrison might respond to the ACCC recommendation. But the outcry from those who support the SRES has been swift. Advocacy group Solar Citizens, for example, has already started collecting signatures for a letter urging Energy Minister Angus Taylor to ignore the ACCC recommendation. Other industry bodies have also chimed in.
“The Smart Energy Council (SEC) calls on the new Morrison government to immediately reject any proposals to axe the SRES,” says John Grimes, Chief Executive of the SEC. “If the SRES is axed, the cost of solar will skyrocket, families will continue to suffer from soaring power bills, and thousands of jobs will be lost.”
The SEC says initiatives such as its Positive Quality scheme and Master Installer program are helping to address issues related to best practice. But other new developments also point to progress on several areas of industry concern.
At All Energy Australia in October, the Clean Energy Regulator’s (CER’s) Solar Panel Validation Initiative will move from pilot phase to a full industry roll-out. The voluntary project, which verifies serial numbers on modules, is part of a CER “crackdown” on panels that do not pass muster, along with its new SRES Smart online tool to support greater accountability in the subsidy scheme.
The Clean Energy Council (CEC), meanwhile, has earned praise for whittling its list of approved panel models down from about 26,000 to 2,600 over the past few years. This year alone, it delisted 380 models for non-compliance, in addition to inverters from six manufacturers.
“The purpose is to target the bottom end of the market, particularly regarding any complaints we’ve had about quality or business practices,” says Sandy Pulsford, Technical Assessor for Product Testing and Compliance at the CEC.
However, a number of retailers have thrived for years at the bottom end, including ‘phoenix’ companies, that have emerged from the ashes of failed businesses under new names, selling the same low-quality systems while continuing to work with unqualified installers. The most widely vilified of these operators, P & N Pty Ltd – the company behind Euro Solar – appointed a liquidator in July. But P & N has registered several business names and has long been suspected of operating under many others. It has been on the radar of the authorities and vigilant consumers for years, at least dating back to a 2013 CER decision requiring it to relinquish more than 15,000 STCs it had claimed for non-compliant PV installations. A year later, P & N was hit by a Federal Court fine for promoting fake customer testimonials and pushing Chinese solar kits as “Made in Australia.” And last year, the CER forced affiliate P & N NSW Pty Ltd to give up STCs or replace non-compliant modules it had sold.
Online forums are rife with colorful consumer complaints about Euro Solar, but the P & N group is indicative of a larger problem that has been allowed to fester for years, critics claim. “There are a lot of dodgy solar companies selling really crap equipment that is dumped here from China for ridiculously low prices,” says Joe Springer, Sales Director for Brisbane-based retailer Springers Solar. “The equipment doesn’t last.”
Springer acknowledges that awareness is growing. Consumer advocacy group Choice, for example, has written extensively about homeowners left hanging with failing PV systems after their suppliers and installers have disappeared. Nonetheless, dishonest operators continue to do business throughout the country. Yet the CER has only launched enforceable undertakings against three solar companies for various violations this year, and just a handful of others dating back to 2013.
Tip of the iceberg
Yet such companies are “only the tip of the iceberg,” insists Markus Lambert, General Manager of Solar & Energy for LG Electronics Australia, estimating that as many as 600,000 residential PV systems throughout the country have been orphaned by retailers and installers without viable warranties. The South Korean manufacturer – which recently filed a lawsuit against a retailer that had defrauded consumers by adopting a name similar to its own – maintains a list of more than 600 installation companies that have gone out of business, many of them to avoid responsibility for product warranties.
Lambert wants the SRES to be reviewed because it provides system rebates up front on the expectation that arrays will generate electricity for 15 years. “It’s in the design of the scheme that the mistake lies,” he explains. “If your system dies within three or four years and you put it in landfill, there are no consequences.”
He believes that low quality PV systems account for about half of the residential capacity that has been installed in Australia. “When something is for free, it attracts certain operators,” Lambert says. Their modus operandi is predictable, he explains, often involving panels and inverters that might be barely within the range of technical acceptability, that are cheaply installed by unqualified workers. Such jobs are typically signed for by a single, certified installer pretending to have handled the entire project. “The irony is that the rebate scheme is currently designed so that if you sell cheap crap and it fails, you can go to that same house and put another system on three years later,” Lambert complains. “That’s the model for the companies that are very, very cheap.”
Lambert warns that the industry needs to launch a module recycling program, as well as more random tests of panels pulled from the market. He would also like the CER’s Solar Panel Validation program to be mandatory, to help put an end to the problem of mislabeled, low quality panels. But therein lies another potential point of deception, according to Lambert. Some disreputable retailers, for example, promote panels to homeowners as
“tier-1” –which is a measure of bankability for utility-scale projects, but not an indicator of how a small-scale system will perform: “Tier-1 has nothing to do with build quality,” Lambert observes, adding that some companies also attempt to deceive customers by mischaracterizing warranties and advertising 270 W panels as “high efficiency” offerings. “The performance warranty is sold as a 25 year warranty, which most customers read as a product warranty – which it is not.” Lambert explains. “But it’s really the product warranty that counts.”
As the country’s new Prime Minister faced parliament for the first time in the second week of September, people on both sides of the SRES debate started to intensify their message. The SEC, for example, has been emphasizing the effectiveness of its programs in the effort to clean up the industry, while claiming that thousands of jobs are potentially at stake.
But it remains to be seen whether Morrison will act on the ACCC’s recommendation. Lambert, for his part, is cautiously skeptical of immediate change, partly because it’s debatable whether there is much appetite for further legislative tweaks, given that years of now-buried partisan wrangling over the Renewable Energy Target (RET) still remain fresh in the minds of policymakers.
“There is no harmony or consensus,” Lambert laments, expressing concern that disreputable companies will continue to dupe consumers. “It will pop up one day as a big scandal, that 7 billion dollars of extra cost on electricity prices only achieved moderate CO2 abatement – due to the landfill solar scams.”