The federal government said it would reduce generous subsidies for home solar electricity panels, in response to the escalating demand for solar electricity panels on Australia's rooftops.

The demand for solar panels has even attracted China-based LIGHTWAY New Green Energy Company to enter the Australian market and launch LIGHTWAY Australia Pty Ltd.

Climate Change Minister Greg Combet stated government rebates would be cut by A$1,000 and will be further reduced faster than previously planned. He added subsidies for rooftop solar panels would end in mid-2013, a year earlier than promised. The subsidy is currently at A$3,700, down from the initial A$8,000 offered by the Labor government in 2007.

Mr. Combet said that the cut is necessary as the subsidy has contributed to soaring energy prices. He said the gaining demand for solar panels was pushing up power prices and cutting demand for other clean energy technology. Under the feed-in tariff introduced by the former Labor government, households with solar panels are paid for the electricity they feed back into the grid. Mr. Combet said the move should cut soaring power prices by up to $35 a household a year.

Industry players have lauded the government's latest move, as this would provide certainty to the solar industry.
Matthew Warren, chief executive of the Clean Energy Council, the peak body for the clean energy sector, said, "We acknowledge a reduction in the solar credits multiplier for next year will help create longer-term certainty for the industry."