THE State Government will increase the incentive for families installing solar panels by about $1500, overturning its cautious approach to supporting the technology.

In the process, it has broken ranks with every other state and turned its back on advice from the NSW Treasury.

The decision will buy the Premier, Nathan Rees, valuable support at this weekend's ALP state conference, since the move is supported by the Electrical Trades Union which is headed by the party's state president, Bernie Riordan. The union's Victorian branch released a study in September pushing for the generous subsidy.

After a review initiated by Mr Rees, the cabinet yesterday decided that households with solar energy systems will be paid for all of the electricity they generate, receiving the so-called ''gross'' feed-in tariff and not just the smaller ''net'' amount for surplus electricity they actually sell into the power grid.

This also means all other electricity users will pay the electricity bill of families with solar panels. Only the ACT has this generous gross feed-in tariff, with all states supporting a net tariff to limit the cost.