Minister for Climate Change Senator Penny Wong said “We are building the low pollution economy of the future by putting a cost on carbon pollution and driving investment in renewable technologies like wind, solar and geothermal energy.”

The program allows for approximately $7,500 solar credit for anybody that wants to install new, small-scale renewable technologies in homes, businesses or community groups.

The solar credits will replace the current $8,000 solar rebate from 1 July 2009. However, the solar credits, unlike the rebate program, will not be means tested. The 50 per cent renewable remote power generation program will stay in place for off-grid installations.

Under the new arrangements, solar credits would provide multiple Renewable Energy Certificates (RECs) for new small generation units, including solar panels, small wind turbine and micro-hydro systems.

Until the 2012–13 year, five RECs will be paid for every megawatt hour (MWh) of electricity these micro-renewable energy systems produce. The multiplied RECs will apply only to the first 1.5 kilowatts of each system’s capacity and will be phased down to 2015–16.

The multiplier would decrease over time from five RECs for every MWh of deemed renewable energy for systems installed from 1 July 2009 through 30 June 2012, to one REC of every MWh of deemed renewable energy for systems installed from 1 July 2015 onwards.

RECs are currently issued with qualifying solar hot water, solar energy, wind power systems or solar panels and can be traded for cash. The value of a REC is dependent on market conditions. Federal Environment Minister Peter Garrett said that the purpose of the REC multiplier is to provide long term certainty for the industry to put itself on a “substantial footing” in the energy sector and build its growth over time.

“These new solar credits will help households, small businesses and community groups get assistance with the up-front cost of first-time new solar systems into the future. This will provide more Australian households with the opportunity to go solar, and the industry with a strong footing for long-term growth,” he said.

The program builds on the Solar Homes and Communities Plan, which will transition to solar credits this year. Mr Garrett said that the Government is continuing to meet demand in the Solar Homes and Communities Plan, and will work with industry to ensure a smooth transition to these new arrangements.

In response to the solar credits program Greens Senator Christine Milne said “The renewable energy sector is united behind the need for a price guarantee scheme - known as a feed-in tariff - which has delivered tremendous growth in jobs and investment everywhere it has been introduced around the world.

“The evidence is crystal clear that a feed-in tariff scheme is the best policy setting to supplement a strong renewable energy target. It gives the industry the long-term certainty it needs to invest in creating green-collar jobs and delivering a boom in zero emissions energy,” she said.

Pacific Hydro CEO Rob Grant said there are some new aspects to the RET policy, including the five REC per MWh solar credit program, that require further analysis. Mr Grant continued “We expect this may lead to the 20 per cent RET not being met.”

The Clean Energy Council welcomed the release of the draft legislation however, CEO Matthew Warren said the draft RET legislation has introduced a number of novel policy initiatives which have not been discussed with industry. The solar industry’s preferred position is the implementation of a national gross FIT. The solar multiplier may compromise the integrity of the GreenPower scheme because a REC will no longer be equal to one MWh of generation. “This draft legislation impacts on the future of the entire renewable energy industry. It is critical we get this legislation right to ensure the industry has the confidence to begin investing as soon as possible,” said Mr Warren.