Ms LYLEA McMAHON (Shellharbour—Parliamentary Secretary) [10.05 a.m.], on behalf of Mr David Campbell: I move:

That this bill be now agreed to in principle.

The Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009 amends the Electricity Supply Act to establish a solar bonus scheme for New South Wales, broadening our commitment to creating viable renewable energy alternatives and investment in green skills and green jobs. In creating a solar bonus scheme the New South Wales Government has three objectives: it seeks to encourage and support those who want to generate renewable energy as a response to climate change; it seeks to develop jobs in the renewable energy sector by assisting renewable energy generation to compete with non-renewable energy generation; and it seeks to increase public exposure to renewable energy technology to encourage the whole community to respond to climate change. These objectives are clearly set out in the bill to establish the solar bonus scheme.

The New South Wales Government has long been a leader in promoting the uptake of renewable and sustainable energy practices. We have the best mix of sustainable energy, consumer protection and competitive energy market policies. The solar bonus scheme places New South Wales in a prime position to make a meaningful and significant contribution to our clean energy future and the expanded national renewable energy target. The solar bonus scheme will operate with a gross tariff. A gross tariff pays consumers for all the electricity they generate and feed in to the electricity grid. The scheme will be concentrated over seven years, giving customers greater certainty about scheme payments. Until now the Australian Capital Territory has been the only Australian jurisdiction offering a gross scheme.

Our scheme has the most generous feed-in tariff rate in Australia, making New South Wales a great place to invest in renewable energy and boosting green jobs at home. The scheme will pay a flat rate of 60¢ per kilowatt hour for all electricity fed back into the electricity grid from eligible solar photovoltaic [PV] systems up to 10 kilowatts in size. This is around three to four times the average price of electricity in New South Wales. I am delighted to advise that the scheme will also include micro-wind turbines up to 10 kilowatts in size. Including wind technology provides greater options for people thinking of installing renewable energy technology, particularly in rural areas. Our gross tariff scheme provides the right mix of incentives for people considering installing solar panels or wind turbines, and gives them an assurance on the rate of return on their investment.

The solar bonus scheme has been designed to complement the Australian Government's solar credits scheme that multiplies the number of renewable energy certificates that can be created for small-scale renewable energy generators and provides a discount on the purchase price of these systems. Overseas trends are quite conclusive on the benefits of a gross-tariff model. In Germany, when its scheme moved to a gross-tariff design, it is understood that the amount of electricity generated from renewable energy sources doubled, allowing Germany to increase its renewable energy targets. In September this year an Access Economics report, commissioned by the Victorian Electrical Trades Union, found that a national gross feed-in tariff could create over 22,000 jobs nationally in the next 10 years.

Industry participants in New South Wales already have indicated their intention to dramatically expand their operations as a result of this bill. The gross scheme will give households and businesses planning to invest in solar photovoltaic or micro-wind systems the benefit of being able to better plan for and understand what return they will get on their significant investment. We expect the scheme will reward participants with a standard solar panel system of 1.5 kilowatts with around $1,500 annually. Customers with a standard installation can expect to receive more than $10,000 during the course of the scheme. The scheme will be concentrated over 7 years. A 20-year scheme in today's rapidly changing environment is too long. It creates too many uncertainties for customers, places an unreasonable cost burden on electricity customers who will fund the costs of a longer scheme and it is unnecessary given that the price of renewable energy technology is widely anticipated to drop in time. Small retail customers including households, small businesses, community organisations and schools which use less than 160 megawatt hours per year will be eligible to participate in the scheme.

Under the bill, the tariff rate will be fixed at 60¢ per kilowatt hour for the term of the scheme. This reduces complexity for retailers and distributors administering the scheme, thereby keeping costs down for all energy consumers. In order to recognise the efforts of customers who have already chosen to install photovoltaic systems and connect these to the grid, existing photovoltaic systems that meet the scheme requirements will also be eligible to participate in the scheme from its commencement on 1 January 2010. Transition arrangements will be in place for those customers who have installed net metering. This will be welcome news for the early adopters of renewable energy technology with over 8,000 customers in New South Wales already feeding electricity into the grid from their own solar photovoltaic systems. The financial benefit to these customers will significantly increase over the seven-year life of the solar bonus scheme.

The bill sets reporting obligations on electricity distributors to ensure the scheme is stringently monitored. Two reports will be provided each year setting out the number of participants in the scheme, their location, generating capacity and the amount of electricity supplied to the network. The bill sets a review of the scheme in 2012 or when scheme capacity reaches 50 megawatts, whichever occurs first. The solar bonus scheme will be reviewed against its objectives. It is intended that the review will only impact on new entrants to the scheme. This will provide certainty to people who participate in the scheme prior to the review. Customers who are eligible to participate in the scheme have the right to be connected to the electricity network and this is provided for under the bill.

Clause 15A of the bill provides that distribution network service providers are to authorise the connection of eligible generators to their network, provided the generator complies with specified technical, metering and safety requirements. The bill places an initial liability on distribution network service providers to pay for the scheme. They will recover these costs from their broader customer base. Distribution network service providers are to record a credit against network charges payable by small retail customers for all electricity produced by a complying or eligible generator. Retail suppliers, which are responsible for billing customers, are to reduce the amount payable by the customers by an amount representing the amount of the credit. Subject to the regulations, cash payments may also be made.

The obligations on distribution network service providers and retail suppliers to implement the solar bonus scheme will be enforced through licence conditions. To ensure that the introduction of the scheme is as streamlined as possible for both consumers and businesses, the design of the solar bonus scheme was developed following a rigorous consultation process. The process included a dialogue with the community and industry, including the appointment of a taskforce that considered public submissions, investigated a range of options and their impact on consumers, and prepared a detailed public report. This was followed by a detailed eligibility review and public submission process, which has led to the inclusion of small-scale wind turbines in the scheme. The Government has worked to ensure that any changes to existing operations of businesses are minimised. This keeps costs down for all energy customers. The Solar Bonus Scheme is a demonstration of our commitment to supporting renewable energy. The scheme will include a review by the Auditor General on or after 1 July 2011. I commend the bill to the House.

Mr MIKE BAIRD (Manly) [10.13 a.m.]: I do not lead for the Opposition on this bill but while we wait for the shadow Minister, I will make my contribution. While the Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009 is a good start, it is only a beginning to utilising solar energy in New South Wales. We heard from the Parliamentary Secretary that this should encourage renewable energy, and indeed it should. Importantly, it encourages public participation, and the more public awareness and participation, the more chance we have of succeeding. This bill plays a key role in doing that. It is proactive as a climate change response, but it is short on vision. The community across New South Wales wants to see more vision and much more to be gained from solar energy. I am looking forward to outlining a framework that I strongly encourage the Government to consider if it wants to be a serious participant in the solar energy industry in this State rather than just making a token start. This will be important not only as a climate change response but also as a driver of the New South Wales economy. This is a big opportunity. The Government has started but it has not done enough.

The purpose of the bill is to establish a gross feed-in tariff that lasts for seven years. The shadow Minister, together with my colleague from Pittwater, will talk on this aspect but there are questions as to why it is such a short term. Anyone who comes into the scheme late will not be able to receive the benefit. It is clear the longer-term approach, whether it is up to 20 years, makes more sense. I am yet to understand from the Government why it has chosen the seven-year timeframe, but that is what it will be for small-scale solar photovoltaic panels and wind turbines, retrospective to 1 January 2009. The scheme will pay 60¢ per kilowatt hour for all electricity generated by systems of up to 10 kilowatts by residential, small business and community groups.

I note that the Government initially proposed a net feed-in tariff, which would have paid only for additional electricity fed into the grid after household consumption. Why, for so many months, did the Government criticise the Opposition proposal for a gross feed-in tariff, which is what we have in this bill? Why did the Government spend all those months criticising the Opposition when today it has adopted the Opposition's proposal? There should be an acknowledgment from the Government that it has adopted the Coalition's position, which was proposed in March this year, for a gross feed-in tariff. We are delighted the Government has taken up some good policy but it should acknowledge this was an idea from the Opposition. We refute any criticism and wonder why the Government spent so long criticising our policy when today it has said it is a marvellous thing. Certainly, we think it is a start.

Across the world, feed-in tariffs promote more investment in renewable energy, reduce costs through economies of scale and create jobs. There is proof of that from many world economies. I said it is only a start. It is important to look at the processes to get us to this point and to look at how will this bill take us further. Like all announcements from the Rees Labor Government, it is incomplete, because it is only a start. Dr David Mills is an Australian scientist and former University of Sydney academic, a world-renowned and well-respected expert on solar technology now based in California. He is convinced that solar technology is capable of large-scale electricity generation in Australia. He told the Sydney Morning Herald last month that solar energy could eventually supply base load power. That is a transformational thing should this technology be proven, but that is his considered opinion. He also told the news site Carbon and Environment Daily last month:

A vibrant solar industry could be the salvation of the Australian economy This is the future Australia could have, but governments will have to embrace that future and stop clinging to the past.

That is the challenge for the Government. It has started along this trek but where are we going? The people of New South Wales want to see that broader vision, and there is much more the Government could be doing right now to look at the potential for solar and put New South Wales at the heart of some of those developments. So, I provide some ideas. We regularly hear criticism from the Government about what sort of policy comes from the other side. We are happy in this context to outline a framework that I encourage the Government to pick up and run with.

Mr Richard Amery: We are hanging on every word.

Mr MIKE BAIRD: I am glad you are hanging on every word. I want to make five points. The first thing the Government should do is to undertake a comprehensive review of the existing New South Wales infrastructure to determine optimal localities for utility scale solar facilities. For the benefit of the member for Shellharbour I will give her the details of the review. The review should look at environmental planning and permitted requirements, including flora, fauna, water bodies and indigenous estates. It should look at available infrastructure, including transport—road and rail—population centres to operate and maintain facilities, water, natural gas and existing generation facilities. It should look at electricity transmission and identify transmission access points with capacity for additional generation.

In relation to solar resources, the Government should be identifying preferred localities based on currently available data, which is critical, and it also should look at proximity of generation sites to load centres, particularly in regional areas. The second point in relation to a comprehensive review is solar resource monitoring. That will involve the provision of solar weather monitoring stations at optimal locations to provide a consistent and bankable solar resource dataset for projects. The third point is that the review should also undertake consideration and selection of further incentives for solar energy development that provide an ongoing strategy for continued project development. The fourth point is that the review should ensure that solar energy complements and is therefore part of a broader policy vision.

The Government has made small announcements of gross feed-in tariffs and is trying to promote the benefits. However, there should be a broad vision. Solar energy must complement and be an integral part of the overall vision and objective for energy generation in New South Wales. It must complement other energy developments in coal, gas and broader renewable energy sources, and align with transmission developments to bring remote generation from wind, solar and geothermal sources to major load centres. That is the future. That is the direction in which we need to be going. How does this all fit in? It fits in, but the Government needs to finish the links and enable the community to understand where we are going with energy policy. The fifth point is that there should be support for industry by providing solar infrastructure developments.

The final point I make is that the Government should provide support for technology development to improve performance and efficiency in solar infrastructure development. That will involve research and development activities, energy storage for solar energy, which is critical as technology continues to improve. That is essential. We should support through research and development activities that further such development. Plans also should involve design for integration with other energy generation from wind, gas and geothermal sources.

If the Government is serious about trying to promote a renewable future, it should adopt the framework I have outlined. It should march forward and take the State forward, not only in terms of overall energy policy, but also, while the economy is in transition, towards a renewable energy future. I believe that solar power is integral to the future of New South Wales. It is essential for the Government to adopt the framework I have outlined and link its isolated energy policy to a broader vision. An opportunity has been presented to the Government to make significant headway. However, the Government has been very silent about its ability to tap into the Federal Solar Flagships Program. The Federal Government has outlined a program that is available for any State Government that has some vision, commitment and will, and which is genuinely committed to making solar energy an integral part of the economy.

The Federal Government has introduced incentives to support the development of solar power stations in Australia. The stated objective is to support thermal, solar and photovoltaic large-scale projects. A solar flagship project will be developed only if the risks of the project are low enough to attract equity and debt funding. Solar projects are being developed around the world. For a New South Wales project to attract funds, it needs to be competitive on a risk and return basis with other solar projects throughout the world, and clearly will need government support. The State Government should pick up incentives from the Federal Solar Flagships Program and work out how to facilitate attraction of equity and debt funding. The State Government also needs to work out how to obtain access to Federal Government funds that are available to support development of solar energy generation.

Western New South Wales is an ideal location for solar energy generation in terms of isolation, energy demand and potential for good connection, and is a good candidate for solar flagship funding. That may be proven by reference to various maps. A number of sites are available in western New South Wales, but in that context we should be pushing the suitability of western New South Wales and working towards implementing a solar flagship project in western New South Wales. If the Government wants to maximise opportunity, it should be looking for land that is suitable for solar project development. Obviously, dry desert conditions will work and will be critical to success, but a water source also will be required for cooling. The location should facilitate connection to the grid, or there should be an agreement to provide connection to the group.

There should also be a long-term purchase agreement, or at least some form of State Government involvement in a long-term power purchase agreement. That is how the Government will be able to access or tap into some of the funds that are available under the Federal Solar Flagships Program. If the Government is serious about solar energy development, it will take up funding and create conditions to ensure that New South Wales is proactive in relation to climate change. The Government's solar policy is merely about creating the impression that it is serious about climate change, but the truth is that solar policy can be much more than that. This is a transformational opportunity to take this State from the ho-hum approach currently adopted by the Government to an attitude of participating in a vibrant future.

[Interruption]

ACTING-SPEAKER (Mr Thomas George): Order! The Minister for Commerce will direct her comments through the Chair.

Mr MIKE BAIRD: I know the Minister and member for Newcastle is a strong supporter of solar energy, so I am sure she will support the concept I have outlined. That is what we need. We need a Government that is committed to not making small announcements that try to give an impression. The Government should focus less on trying to give the impression it is doing something and more on actually doing it. This legislation provides the Government with an opportunity to make a statement to the New South Wales community that the Government is not just trying to pursue small short-term political wins, but is trying to transform the State and ensure that the future of renewable energy is central to the State's economy as well as take us forward for the next 40 years, not just to the next election.

In conclusion, I reiterate that I support the measures outlined in the bill to boost current and future use of solar energy in New South Wales, but it is a very small start. There are concerns and questions about tenure, such as why we have chosen seven years in relation to the overall context of development. The industry is telling us that tenure should be much longer. There is a suspicion that the Government's approach is tuned solely towards trying to deliver a green credentials argument to the electorate, and I think the Government's approach should be much more serious than that. The Government's legislation does not go far enough. I urge the Rees Government to explore the full potential of solar in New South Wales, embrace its future, and transition the economy of the State to one that embraces renewable energy—or, indeed, has renewable energy at its core.

Ms NOREEN HAY (Wollongong) [10.26 a.m.]: The New South Wales Solar Bonus Scheme is a testament to the New South Wales Government's commitment to supporting the renewable energy industry and boosting green jobs in New South Wales. It will deliver the most generous feed-in tariff rate in Australia, making New South Wales the best place in which to invest in renewable energy technology and will provide a welcome reward for people who choose to participate. The Solar Bonus Scheme will commence on 1 January 2010 and run for seven years. The Government's goal for the Solar Bonus Scheme is to accelerate the deployment of at least 50 megawatts of capacity in distributed micro-renewable energy generation in New South Wales.

This will more than triple the existing capacity of small-scale solar photovoltaic [PV] systems in New South Wales. The New South Wales Government's ambitious goal of 50 megawatts capacity equates to approximately 33,000 new customers with average sized 1.5 kilowatt solar panels on their roofs. Over the past two decades, the cost of manufacturing and installing a solar photovoltaic system has decreased by about 20 per cent with every doubling of installed capacity. Solar photovoltaic costs are expected to continue to decrease. Solar photovoltaic cost reductions in excess of 50 per cent from 2007 levels have been predicted. Within three to seven years, solar energy's unsubsidised cost to consumers could approach the cost of conventional electricity in a number of markets. New technologies are more expensive than traditional technologies during early development. Over time, more efficient production and economies of scale result in new technologies becoming cheaper and prices converging with traditional technology prices.

During the life of the Solar Bonus Scheme, there will be potential for technological breakthroughs that could significantly reduce the cost of producing solar power, such as non-scale thin file technology, which is now on the horizon. The Government's goal for the Solar Bonus Scheme—tripling the current solar photovoltaic capacity—not only will support the renewable energy industry but also will drive innovation and reductions in costs across the industry. That will make renewable energy generators more affordable for the average home and business. Solar photovoltaic electricity generation will vary between any two individual installations, depending on various factors including cell and panel efficiency, inverter efficiency, system size, and angle and facing of installation.

In addition, electricity generated by two otherwise identical solar photovoltaic installations may vary from one place to another due to variation in factors such as daylight hours, cloud cover, altitude, and the seasonal angle of sunlight incidence. The Solar Bonus Scheme will operate with a gross tariff, paying a fixed rate of 60¢ per kilowatt hour for all electricity that is fed back into the grid from eligible solar photovoltaic or micro wind systems up to 10 kilowatts in size. This is around three to four times the average price of electricity in New South Wales. The amount a household or business receives under the scheme will depend on a number of factors, including the capacity or size of their solar photovoltaic system and the amount of sunlight.

A solar photovoltaic system with a capacity of 1.5 kilowatt generates approximately 2,500 kilowatt hours in a typical year. A customer with this size system is likely to receive a credit of around $1,500 each year through the Solar Bonus Scheme. That is up to $10,000 over the course of the scheme. The Solar Bonus Scheme will provide assistance to householders and businesses wanting to invest in the industry and will accelerate the reductions in costs of renewable technology over time. The Government has designed the Solar Bonus Scheme to give the best shot in the arm to the renewable energy industry. I commend the Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009 to the House and urge members to support it.

Ms PRU GOWARD (Goulburn) [10.31 a.m.]: I lead for the Opposition on the Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009 and state that the Opposition does not oppose the bill. In fact, it is a most sincere form of flattery to be so imitated, although we need to make it very clear that there are some serious differences between our proposal and this bill that gives cause for some concern. For that reason the Opposition welcomes the fact that the bill has a built-in review period, which will be the only opportunity to review and reform what is undoubtedly a very flawed piece of legislation. However, as the solar industry itself has said, it is better to have flawed legislation than no legislation at all. It certainly ticks the two public relations boxes that the Government is always so concerned with. It has the terms "solar gross feed-in tariff" and "$0.60".

As was stated in the other place, there are several significant limitations to the scheme because of the Government's persistence in pushing forward with the scheme when it has had years to properly consider, develop and model a scheme. The Opposition announced its support for the scheme last year and earlier this year it developed a detailed case, with some modelling attached for a gross feed-in tariff. The Government has had all that time to produce a comparable scheme, yet at the last minute rushes in a scheme that will be law in just under six weeks time. It is disappointing that the Government and particularly the Minister, who often parades her green credentials, have been so careless in the development of this scheme, which is really our best chance to develop a sustainable solar industry and to enable us to transition from coal to renewable energy in the most effective way.

Ms Lylea McMahon: We missed something overnight.

Ms PRU GOWARD: No, a year ago a woman was Minister.

ACTING-SPEAKER (Mr Thomas George): I can understand the member for Goulburn losing track of who has been a Minister.

Ms PRU GOWARD: A bloke is now Minister, as far as we know. Who knows who will be Minister in six weeks time? We trust that whoever it is, the scheme will be closely monitored because it has a number of serious flaws. The Opposition consulted widely on the scheme and the overwhelming view of the solar industry is that it is "one of the shortest, strangest and most oddly cobbled together schemes the world has seen", to quote the shadow Minister. The renewable energy industry that the Coalition has championed acknowledges that the bill is a step in the right direction but is poorly drafted.

I turn to the five key issues. The first key issue relates to duration. The Government's tariff is fixed at seven years. Many would argue that the period should be much longer if we are to see a sustainable industry that has a chance of making a significant difference to the production of energy in this State and for the longer term. There are some question marks over why it should be limited to a mere seven years. In addition, if one joins in the seventh year, one gets only one year of the gross feed-in tariff. The Coalition would prefer that all participants have a set number of years in which they could recoup their investment. That would ensure a phase-out that would avoid the boom and bust that could be created by an earlier excessive incentive.

The second issue of concern is the taper. The Government's tariff is set at 60¢. The Coalition prefers a tariff reducing annually, say at 5 per cent per annum, to encourage greater efficiencies and cost savings in the industry. The third concern is eligibility. The scheme is capped at systems of 10 kilowatts and only allows residential, community groups and small business with an energy use of up to 160 kilowatts per hour to access the scheme. The Coalition would prefer the inclusion of larger businesses and systems within the scheme. This is a very clear form of class prejudice because logically one will only get widespread adoption and use of solar power if it is extended to large industries and businesses that use a lot of power. Not to allow larger businesses and systems the same access to the scheme is a very disappointing reflection on the scheme itself and is code for the Government's expectation that this will not make much difference. The Government does not want the scheme to make much difference. If it did, it would have ensured that larger businesses had decent access to the scheme.

The fourth concern is that there is one tariff for all eligible systems. A number of systems can be used under the scheme but there is one tariff for all of them—one size fits all. The Coalition would prefer a different tariff for each technology type and size. This would reduce the costs of the scheme because obviously some systems will be more effective and cheaper than others. It seems unfair that they should enjoy the same benefit as those that have a greater capital cost. The restricted eligibility of the Government's scheme also limits the ability to differentiate the tariff.

Finally, costs will be a $1.90 to $7.47 per annum increase in household bills from a low to a high uptake. In other words, if there is little uptake, it will only cost an extra $1.90 for individual households but if there is a large uptake it will cost $7.47. The Opposition supports costs mitigated by displaced infrastructure and efficiency measures. The bill will provide a boost to the uptake of the panels, especially those smaller than three kilowatts, with a payback period as little as 2½ to 4 years, depending on system sizes and the price of renewable energy certificates. Compared with the net feed-in tariff that the Government adopted until its backflip, the Opposition would suggest that the scheme is certainly an improvement.

Having stated that, the concerns of industry have been voiced loudly and clearly. Although the Opposition does not oppose the bill, it urges the Government to conduct its review as quickly as possible. It asks the Government to acknowledge that there are inherent flaws in the bill that have inevitably occurred as a result of the indecent and inexplicable haste in drafting the bill, given the amount of time that the Government has had to do so. The Opposition believes that the Auditor-General should review the scheme after 12 months, that it should be tabled no longer than 1 March 2011, and that the review should report on take-up rates, costs and other issues. Such a review would be timely and would assist us to develop a better policy approach for the remainder of the scheme's life. Again we thank the Government for adopting our policy, but we are disappointed that there are some major differences that we believe will be to the detriment of the development and adoption of the solar power industry.

Mr PETER DRAPER (Tamworth) [10.40 a.m.]: I will make a brief contribution in support of the Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009. The scheme is a gross feed-in tariff model. A feed-in tariff provides payments for electricity produced by small-scale distributed sources, such as solar photovoltaic systems, when their output is fed back into the electricity grid. I am encouraged by the fact that the scheme will be available to small electricity customers, including households, as well as some small businesses, schools and community organisations. However, like the Opposition, I am concerned that an opportunity is being lost: if larger businesses were able to access the scheme they would be best positioned to make a true difference and contribute a great deal of electricity into our grid. That is a shortfall in the proposal.

I commend the work of the New South Wales Feed-in Tariff Taskforce, which invited submissions on the design of a feed-in tariff scheme for New South Wales. It has held stakeholder forums, and it considered submissions made to the Senate inquiry into the Renewable Energy (Electricity) Amendment (Feed-in Tariff) Bill. When I highlighted the call for submissions in the Tamworth electorate I received many phone calls and emails from constituents who were pleased that such a scheme was being proposed and who commented that it was about time such a scheme was introduced. A standard home produces on average 4,500 kilograms of greenhouse gasses each year. By installing solar power, a home's gas emissions can be reduced to an average of 2,500 kilograms.

Furthermore, each kilowatt hour of electricity produced by coal-fired power stations uses 2½ litres of water. By installing a one-kilowatt home solar panel system, customers can save the environment about 3,750 litres of water every year. The scheme has a double benefit for customers as their grid-connected electricity consumption is significantly lower than without a solar system as a result of the household consuming a portion of its electricity direct from the solar scheme. When so many people are concerned about the effects of greenhouse gases and the fact that coal-fired power stations are among the greatest offenders, it makes common sense to pay households and other small customers for the surplus electricity generated from roof-top solar photovoltaic panel systems that is then exported to the New South Wales electricity grid. The clean energy produced by solar panels does not contribute to climate change.

Apart from the production of the systems themselves, there is no subsequent pollution, noise or costly fuel bills. This should encourage more people to look at solar as an alternative power source. The New South Wales solar bonus scheme is one of the most generous schemes of any State that are currently on offer. It will boost the use of renewable energy in New South Wales and it should make solar power more affordable for people across New South Wales. I hope it will stimulate the solar power industry and, importantly, encourage energy efficiency. I hope it will drive efficiency, because the amount of power a customer returns to the grid will depend on how much energy is being consumed while the solar panels are generating power.

It will encourage customers to maximise their solar bonus by improving the energy efficiency of their home so that they can export more electricity to the grid, and it will be an incentive for these customers to reduce standby power consumption by shifting some tasks to the evening, minimising the use of air-conditioners, and other sensible activities. The Alternative Technology Association [ATA] applauded the solar bonus scheme. The ATA's Energy Policy Manager, Damien Moyse, said:

We welcome the decision to pay households for all the clean energy they contribute to the State's electricity supply. It is a win for families who are taking action on climate change and for green jobs in NSW.

There are a range of emerging and existing renewable energy generation technologies that need government support to assist in their further development and application. These technologies should play an important role in our transition to a sustainable energy economy. It would also be sensible to identify opportunities for government buildings and other community assets to be used in the production of clean energy. I am concerned about the seven-year fixed term for the scheme that the Government is proposing. It is a very short time frame, given the impetus that is building across our nation to reduce our reliance on coal-fired power. I share the concerns of the member for Goulburn that people who come into the scheme late will not get the full advantage.

Thought should be given to encouraging people, via an extension of the scheme, to ensure that they can participate fully. I hope that the solar bonus scheme can be expanded in the future to include other technologies such as micro wind generation or community-owned solar farms. However, this bill is a good start. The price of electricity is increasing massively in our State, and it will only increase further in the future. The price of solar systems is reducing, and I hope that that will continue into the future. I commend the Government for this initiative, and I commend the bill to the House.

Mr ROB STOKES (Pittwater) [10.45 a.m.]: The Electricity Supply Amendment (Solar Bonus Scheme) Bill 2009 amends the Electricity Supply Act to establish a solar bonus scheme for New South Wales. I note that this will establish a gross feed-in tariff for system owners lasting seven years for small-scale photovoltaic panels and wind turbines and other infrastructure commencing on 1 January 2010. While the Coalition fully supports a solar bonus scheme for New South Wales, the proposal put forward by the Government in this bill has disappointed me on two main fronts, and no doubt will raise concern with the people of New South Wales. First, the bill is yet another chapter in Labor's history of backflipping to support the policies introduced by the Coalition, repackaging them and then trying to sell them as its own. Secondly, the policy fails to hit the mark and hampers the potential benefits which could be provided to New South Wales.

The Minister in his second reading speech proudly declared that the New South Wales Government has long been a leader in promoting the uptake of renewable and sustainable energy practices. This is despite Queensland, Tasmania, South Australia, Victoria and the Australian Capital Territory already having introduced solar bonus schemes and despite the fact that this Government had to be dragged kicking and screaming to introduce a scheme. Indeed, the Coalition was first to announce its support for a solar bonus scheme in New South Wales, and it was the first to commit to a gross feed-in tariff. When the Government finally got around to announcing a solar bonus scheme in June this year the solar industry was deflated with the news that this would only involve a net feed-in tariff rather than a gross feed-in tariff. This decision was initially championed by the Government, which criticised the Coalition for its scheme because it involved gross feed-in tariffs. On 2 September 2009 the former Minister for Climate Change and the Environment said:

This is an example of what little attention the Coalition pays to serious policy development, what little attention it pays to the important issue of renewable energy, and how it would take renewable energy development in New South Wales backwards.

Yet just two months later, after coming under criticism from industry and environmental groups and smelling a political disaster, the Government did one of its trademark backflips by agreeing to support a gross feed-in tariff for New South Wales. This backflip has proven a number of things in relation to the Government's environmental credentials. First, it is a massive vote of confidence in the Coalition's policy development because, as with a number of policy areas, the Government eventually realised that the Coalition was on the right side of the argument. Secondly, and most importantly, it highlights the Government's utter incompetence to get things right and the impacts that this has had on families throughout New South Wales. Because the Government got this policy so wrong in the first place, many thousands of families installed in their homes meters that are compatible with a net feed-in tariff rather than a gross feed-in tariff. As a result, these families have been left out of pocket by the Government by having to replace those meters in order to take advantage of the revised scheme.

The Minister in his second reading speech also claimed that the scheme will be the most generous in the country. While I am sure that this claim is made on the basis of the 60¢ to be paid per kilowatt hour returned, I note that the seven-year duration of the scheme is paltry when considering that the schemes in Queensland, South Australia and the Australian Capital Territory have a span of 20 years and the Victorian scheme has a span of 15 years. In response to this, the Minister pointed out that a scheme duration of more than seven years is too long and creates too many uncertainties. On the contrary; it means that households, small businesses, community groups and schools must get in and make hay while the sun shines because in seven years time they will lose all of the certainty, guarantees and assurances that this bill talks about. Rather than promoting certainty, the bill promotes uncertainty.

It is for this reason that the bill is seen as likely to create a boom-and-bust scenario as investors, unclear about the Government's future commitments, diminish as the tariff enters its final years. Therefore, whilst the bill may be appealing at first glance, when one starts to strip it down one sees it is simply a hastily put together policy that aims at quick political point scoring at the expense of long-term benefits for New South Wales citizens. We have all heard of the seven-year itch. This scheme is setting up New South Wales for the seven-year scratching in relation to gross feed-in tariffs. No-one knows what lies ahead and whether the scheme will be extended, and therefore it is clear why such a short scheme may provide a disincentive for many investors into the future.

I also note that the Minister proudly highlighted an Access Economics report suggesting that a national gross feed-in tariff could create more than 22,000 jobs nationally over the next 10 years. Firstly I congratulate the Minister on acknowledging that these figures are in fact national—as this Government has a dubious record of claiming national figures as State figures. But, more seriously, what will happen to the New South Wales portion of these jobs in seven years time? The Minister spoke about providing certainty and assurances. But what will happen to all those workers employed during the boom period of the scheme who will then find they are laid off as the tariff approaches its final years? Because people do not have any certainty, they will be dissuaded from taking up the scheme.

The bill places a big question mark over 2017 and, unfortunately for those employed under the seeds of the scheme, perhaps also over the later years of the scheme, 2015 and 2016. What the solar industry in New South Wales wants is long-term, sustainable growth. Yet all the bill provides is something that is best described as temporary growth, which is unsatisfactory for many stakeholders. While speaking about time frames under the bill I note that under new section 194, which relates to a review of the solar bonus scheme by the Auditor-General, the review is conveniently scheduled to be undertaken as soon as practicable after 1 July 2011. In other words, the Auditor-General's review of the benefits of the scheme, the take-up of the scheme and the achievements under the scheme will be safely left until after the next State election, so that the Government will not be accountable to the electorate in terms of the success or otherwise of the scheme.

I also note that the scheme is restricted to small retail customers such as households, small businesses, community organisations and schools that use less than 160 megawatt hours per year and have a generating capacity of no more than 10 kilowatts. The first thing this does is exclude all the large businesses and organisations with both the financial ability and resources to make a sizeable contribution towards the success of solar schemes. Unfortunately, this is where this bill fails to reach its full potential; it blocks out a significant opportunity for New South Wales to see a real drop in our carbon dioxide emissions. Of real concern, however, is the fact that the scheme exempts those with a generating capacity of more than 10 kilowatts.

I cite the example of Pittwater High School, in my electorate. The school has a wonderful solar panel project that is led by Principal Ross Cussworth, local parents such as Bill and Chrissie Holland, local architect Linda Haefeli, Kolin Thumbadoo, and many others. The school has adopted the highly admirable goal of becoming the first fully sustainable high school in the world, not only meeting all its own energy needs but also sending surplus energy back into the electricity grid. Combined with a raft of energy efficient improvements to the school, more than 100 solar panels have already been installed on the school's roofs with an aim of increasing this number of panels to over 750. This is an incredible achievement, which often sees the school returning upwards of 100 kilowatt hours of energy back to the electricity grid each day.

Whilst Pittwater High School should be supported and rewarded by the Government for its efforts in reducing its carbon footprint and crediting the State's electricity grid, the bill appears to exclude the school from the emissions scheme as its generating capacity currently exceeds 10 kilowatts. Therefore, instead of the State Government rewarding and encouraging the school for its achievements in generating solar power, the bill at first glance effectively appears to punish the school for its overzealous efforts. I therefore ask that it be clarified whether a school, business or organisation that has a generating capacity of more than 10 kilowatts is excluded completely from the scheme, or is just enabled to claim a tariff up to the 10 kilowatt limit.

It seems ridiculous that the scheme could completely exclude those who only slightly exceed the 10 kilowatt limit. For example, does it mean that those who have a generating capacity of, say, 11 kilowatts miss out completely on any financial return or benefit? Should they be getting up on their roofs and ripping out panels so they fall under the generating capacity of 10 kilowatts? If this is the case, it is extremely disappointing that groups such as Pittwater High School who have made an incredible investment not only financially but also environmentally might miss out on the much-needed funding this scheme could provide. I certainly believe this is something that needs to be clarified. I received from the Minister's office a vague suggestion that this matter may be dealt with in regulations. However, I ask that the matter be addressed in reply.

As other members on this side of the House have already indicated, we will not oppose the bill as we have long been supportive of improved renewable energy practices for New South Wales. Whilst it is not exactly the type of scheme the Coalition would have introduced, and it is ultimately full of shortfalls, grey areas and missed opportunities, New South Wales needs a solar bonus scheme and it appears that this is the one we will be required to accept. Therefore, despite the opportunities that have been missed in this legislation and the numerous issues that I believe require urgent review, I certainly hope that the scheme assists New South Wales in cutting the amount of carbon dioxide emissions produced, facilitates employment in the solar energy sector, and relieves the pressure placed upon the State's electricity grid, which remains almost entirely reliant on non-renewable fossil fuels.

[Business interrupted.]