Until recently, Australian federal renewable energy tradable quota policy support mechanisms were modest and failed to differentiate between technologies at different stages of industry development. Subsequent changes to federal tradable quota schemes and the development of a number of state-based feed-in tariffs (FiTs) have attempted to overcome recent deficiencies. This research discusses the relationships between federal and state-based support policies, small wind turbine (SWT) system installed capacity, and the intricacies of developing instruments that sustain the renewable energy industry over time. The research found the lack of due diligence in policy mechanism development generated poor outcomes for the small-scale renewable energy industry and a higher level of political risk. Australian state-based FiTs were generally poorly designed with respect to known risks, and are unlikely to promote sustainable industry development for small-scale grid-connected renewable energy systems, including SWT systems. The research suggests detailed independent and collaborative policy development is necessary (prior to policy implementation) that considers a range of technology types, the influence of other cross-jurisdictional support mechanisms, and regionally-specific system technical performance and project development costs. The recent 'mixed bag' of Australian support mechanisms have resulted in fluctuating private costs for small-scale systems, which has lead to disruptive industry expansion and contraction with ironically unsustainable regularity. (C) 2012 Elsevier Ltd. All rights reserved.