NSW Premier Barry O'Farrell offers to implement the solar rebate cut starting from 50 or 55 cents and gradually falling in succeeding months to attain the proposed 20 cents reduction.

Moreover, the solar rebate scheme may not only include reduced payouts but also the scheme extended up to three years. The planned extension which targets to reach until 2018 or 2019 is part of an effort to persuade crossbench MPs to support it in the upper house.

Any deal that would come up, however, is sure to affect the government's aims of saving $470 million in the budget to help reduce the $1.9 billion cost of the scheme and reduce a $5.2 billion black hole.

According to reports, the government had deliberated the compromise deal with the Shooters and Christian Democrats and was set to present them with a steadier proposal this week.

The compromise comes amid threats some Coalition MPs could cross the floor if the government reduces the scheme to 40c. O'Farrell is considering a spool back after the MPs has received thousands of emails and calls from residents who have bought solar panels and are now upset.

The electric industry replied to the protests by stating that any compromise by the government would lead to higher household electricity bills.
Energy retailer AGL added that a kilowatt hour payment of 40 cents would still leave households better off.

The economic policy unit founded through a research it conducted that it was “incorrect” to state that trimming the tariff down to 40 cents would result in consumers being “out of pocket”.

It said research conducted by its economic policy unit found it was inappropriate to state that reducing the tariff to 40c would result in consumers being "out of pocket".

AGL claims that two years is the payback period for the installation of a 1.5kW system on the 60 cents rate. Meanwhile, reducing the rate to 40 cents would entail three years.

The research also showed that over the seven-year life of the tariff such a household would profit by $7500 on the 60 cents rate but solar powered households would still make $4000 under the proposed 40 cents rebate.

"In other words, the reduction in tariff simply reduces the transfer of wealth from households without solar panels to those with solar panels," AGL explained.