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Campbell Newman’s solar tap-dance gives power to the people

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Campbell Newman just cannot seem to get his mind around what to do about solar PV.

First Newman brought the state’s net feed-in tariff to a screeching halt, but did it in such a way that he sparked a mini solar boom that even the industry is struggling to keep up with. Then, his government toyed with the idea of “gross” feed-in tariffs, only to pull back quickly, and last week got slapped down in quick time when the Queensland Competitive Authority raised the prospect of imposing a significant fixed charge on households with rooftop solar.

The manner in which the public responded to the idea of a fixed charge would have sent ripples of alarm through the government and its state-owned utilities, which are struggling to come to terms with the changing dynamics of the industry, as well as how to get a return from their massive over-investment in infrastructure, how to retain value in the portfolio of (state-owned) generation assets (some of which have already had to be closed), and how to keep on side with the consumer.

The response to this latter effort has proved to be unexpectedly vocal. Previous changes to tariff structures would be met with glazed eyes and a shrug of the shoulders – now the pricing of electricity is a hot issue with voters. And the installation of rooftop solar has turned these consumers into “pro-sumers”, with a keen sense of what they consider to be a fair deal in the electricity market.

To get an idea, check out the response when the Courier Mail first reported last week on the QCA’s proposal to impose the standing charges. Even the commercial TV current affairs shows jumped on the story. Within 24 hours, the idea was dumped by the Queensland government.

As one installer noted, careful to keep his identity quiet because they still have to do business with the local utilities, there are now 200,000 homes in Queensland with solar PV and another 50,000 actively considering it. That represents about 500,000 adults, or about 20 per cent of the voting public. “I think the penny must have dropped. You just can’t piss this many people off and get away with it.”

It is not the first time that the QCA has tried to hobble solar with punitive tariff regimes. Earlier this year, it considered imposing a gross feed-in tariff on rooftop solar. This would have meant that householders would not only get paid just 6c-8c for excess energy exported to the grid, they would be required to sell all their energy at that price to the retailers, and then buy it back at the prevailing retail price, around 25c/kWh.

That didn’t get very far into the public arena, but it drew a savage response from the industry, and a stark warning from energy retailers such as EnergyAustralia, which said it could cause a pushback against the industry.

“Under the proposed changes, households would be required to ‘sell’ energy to the grid at the cost of energy, and then ‘purchase’ energy for their own use, at up to three times the price,” it wrote in its submission. It said this would be confusing and “may create the perception that electricity retailers are benefiting at the consumer’s expense.”

But it seems that the public still thinks that the retailers are benefiting at their expense. The QCA argued that a fixed charge was needed because solar PV was not addressing peak demand, and was imposing costs on the network, which were being passed on to other non-solar consumers.

The industry hotly disputes this. It was fascinating to see what happened last week when Queensland experienced temperatures up around the 40°C mark. Peak demand fell some 500MW below the peaks in similar situations just two years ago. That bears a striking resemblance to the amount of solar PV that has been installed in the state since then (it totals around 700MW), although a variety of factors would have played a role.

The off-grid option appears to becoming increasingly appealing to people, as problematic as it might be for those living in the city. “If this comes into place I will be getting the panels disconnected and arrange for someone to connect them to batteries and run the house off them and I’m sure many others will too,” wrote one aggrieved customer.

It is certainly appealing to commercial-scale users, where tariffs in Queensland, and in parts of NSW, have been changed to include large standing charges and a modest per kW charge, to reduce the attraction of solar PV.

Utilities have previously scoffed at the idea of customers moving off-grid, and of the economics of storage. But then they once scoffed at the idea that solar PV would ever reach “socket parity”, which it plainly has in some areas in Australia.

Dane Muldoon, the commercial director for Solar Guys, one of the long-standing installers in Queensland, is rolling out a new battery storage product that offers varying levels of autonomy. He says the economics don’t quite make it, but the emotion does. “People get very angry when you explain the tariff structure, and why they are selling electricity back into the grid and then buying it back as a multiple,” he says. “They are expressing a lot of interest in the product.” That interest jumped sharply last week when the standing charges were mooted.

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  • Warwick

    There seems to be a persistent issue of confusion here.. “But it seems that the public still thinks that the retailers are benefiting at their expense. The QCA argued that a fixed charge was needed because solar PV was not addressing peak demand, and was imposing costs on the network, which were being passed on to other non-solar consumers.”

    The retailers do not own the network businesses so the issue of network charges is simply a pass-through cost. What is the evidence of “massive over investment in infrastucture”? Are we getting a little carried away in retailer and/or network bashing?…just 10 years ago Energex was using garden sprinklers on overheating transformers in the heat of summer due to lack of investment.

    What seems to be overlooked is that the network is effectively a public good and the charging for that is a compromise between equity and efficiency. Much of the existing charges are kWh related so if enough consumers change their use pattern (i.e through PV for example) the network revenue will fall even through the network costs are unchanged. They are simply endeavouring to shore up revenues under a pricing regime which is changing. If the standing charges don’t increase, either an additional demand charge or increased charges per kWh will be the likely outcomes.

    • Paul

      @ Warwick, garden sprinklers on transformers??? Are you crazy? Any evidence for this, I mean everyone has a camera on their mobile phone these days, or are you working for Energex?

      • Warwick

        No, I’m not crazy but I don’t work in networks, so you won’t see me using a cherrypicker.

        Don’t be too surprised about this kind of practice. I know of a sprinkler being run to cool the inlet air of an open cycle gas turbine to eek out an extra 400kW, which when the price was $10,000/MWh equates to $4,000/hr..well above the cost of the water.

        Not official business practice but they have been done..

        Using garden hoses to cool transformers a common practice in NSW, says Energy Minister Frank Sartor

        First 1 of 1 paragraphs shown Using a garden hose to cool power transformers at city substations was common practice on hot days, said NSW Energy Minister Frank Sartor, according to The Daily Telegraph (18/10/2004). It followed a recent report that electricity workers rigged up the $20 garden lawn soaker at a North Sydney substation to drip water over crucial transformers. “It’s not uncommon practice on peak hot days to assist reducing the temperature of transformer with a hose,” Sartor said. Water cooling was used last week when a transformer at a North Sydney substation failed. EnergyAustralia said using water to cool transformers was only an added precaution. .

    • suthnsun

      “Much of the existing charges are kWh related”

      Warwick, the proportion of standing charges has risen dramatically. The justification for raising standing charges is additional network investment. The additional network is largely around peaks, which appear to be substantially less than anticipated, so at the very least the forward expectations of demand were poor – I grant that ‘the people’ do still have to pay for them.

      On the other hand, ‘PV was not addressing peak demand’ seems like a poor assessment from a professional, my pv panels are producing well over 50% of peak after 5pm on a hot day, so it defies common sense that widespread installation of PV panels won’t address some measurable demand reduction response at peaks. Additionally, there is scope to address peaks further by collaboration with installers/owners about the need for orientations which more closely match local demand. e.g. there has been debate about orienting more panels westerly.

      If I grant that the “the network is effectively a public good and the charging for that is a compromise between equity and efficiency.” , will you grant that there is a defensiveness demonstrated about the network by the operators which has the appearance of not being about the public good at all – rather about manipulating a public asset for routine milking. The minimising of pollution into the commons is part of the equation, so a more collaborative approach in that regard would shore up the credentials of your statement ‘the network is effectively a public good’.
      I assume you accept that energy from PV panels is dramatically lower polluting than coal or gas generation?a

      • Warwick

        Suthnsun, the whole network is built to accommodate the anticipated maxima within the networks. It may be true that standing charges have increased proportionately more but the kWh charge is still significant in consumer bills (and hence exists a motivation to go to net metering PV). The capital cost of the network relates to capacity not kWh so in the absence of a kW demand charge, the network standing charge may well be increased more to allow for falling consumption. That said, networks need to make decisions on the scale of decades not years and although demand has eased in the last 3-4 years, it may well increase its growth in future with increased population.

        I’ve no reason to doubt the QCA on the issue of professionalism that you raise but some in these fora like to criticise regulators as vested interests of government. I’d assume they’d look at the bulk supply point data across Ergon and Energex network areas. You’ve provided your anecdote or commonsense which may well be accurate in your situation but not necessarily reflective of the aggregate of PV customers, and if it’s not coincident with network peak demand it ain’t worth a brass razoo. You may be able to re-orient your panels for the network but then you’ll get less energy generated.

        Notwithstanding possible issues of “gold-plating”, network businesses may well be slow to change practices but they operate within the constraints of a regulated business model i.e. they need changes to methodology and rates to be approved by a regulator because they are a natural monopoly.

        Rooftop PV and other renewables are definitely better than grid electricity because they are non-polluting but they are already compensated for this through Renewable Energy Certificates. If enough people change the way that they consume power it will change the way it is charged…some will be better off and some will be worse off.

        • Jonathan Maddox

          Warwick writes : “If it’s not coincident with network peak demand it ain’t worth a brass razoo”

          Network peak demand is consumer demand LESS embedded generation, isn’t it? So (with high embedded PV penetration) solar PV generation CAN’T coincide with network demand, effectively by definition.

          Distributed solar PV fundamentally changes the shape of the network demand curve on sunny days. It turns the midday shoulder into a trough and the mid-afternoon peak into a modest shoulder.

          Peak network demand can only occur if the sun isn’t shining.

          • Warwick

            Jonathan, don’t take my word for it or any other contributor. I’d suggest you read a few submissions by the networks about how little reduction in the peak demand occurs at the network feeders due to PV. None of them mention material positive impacts and some actually highlight costs due to voltage and variability issues.

  • Ben Elliston

    A problem for politicians is that PV system owners now span the full political spectrum. They can’t mess with PV policy without upsetting their own constituents.

  • Nick

    Politicians of all persuasions please take note, Solar P.V. is now mainstream, and is no longer just for the rabid ‘Greenies’ you find so easy to despise – so mess with it at your peril.

    The (Solar) market has spoken, and its wisdom has prevailed, – at least until the next time . . .

    And Electorates, – don’t vote LNP if you like getting paid for your contribution to the grid.

  • http://www.windsolarenergy.com.au Mick

    I agree with Nick 100%
    The Libs have killed off FIT in NSW and now QLD….
    God help us when they get in Federally
    Maybe we should start a “solar” party…if we had 20% of the voters onside,surely the mainstream pollies would think twice about energy policies and their impact.

    • http://energy4all.co.uk Energy Security Campaigner

      Peak demand on hot days occurs at around 3pm – solar is IDEAL to combat this. 7pm peak demand on cooler days is much lower.

  • “Peak demand fell some 500MW below the peaks in similar situations just two years ago. That bears a striking resemblance to the amount of solar PV that has been installed in the state since then”

    Oh for crying out loud – peak demand is at 7pm at NIGHT – solar doesn’t contribute anything to peak demand!!!

    • Jenny

      “Oh for crying out loud – peak demand is at 7pm at NIGHT – solar doesn’t contribute anything to peak demand!!!”

      This is soooo twentieth century

      The major peak demands are now in summer not in winter and are driven by air conditioners generating peaks from noon into the afternoon when rooftop PV is still generating plenty of power on sunny summer days.

    • suthnsun

      I’m looking at this pdf from Energex – its telling me that peak demand has shifted to summer and (the way I am reading it) around 4 -5 pm. Solar is still quite active then.

    • Oliver

      That was 20 years ago. There is no longer an electric stove or oven doing meat and 3 vege every night in a house full of incandescent bulbs. We live differently now. The biggest energy user in houses is an aircon going flat out in the middle of hot summer days. Fortunately this is also when rooftop solar is working hardest to reduce peak demand.

  • Chris Fraser

    Sure, i am one that considers the QCA to be a vested interest of the Government (or at least this QLD Government). They being the ones who are allegedly experts on competition. Does it take a cartload of bean-counters to not understand that 500 MW of PV has reduced the peak generation from utilities on hot days in the last two years ? Then they should go back to bean-counter school and learn about negawatts, which somehow seem to disappear from their balance sheets on sunny summer days. Shame.

  • Concerned

    For goodness sake look at the facts.Easily accessed by anyone.That includes Suthsun. Peak does not stop at 5pm.

    http://www.aemo.com.au/Electricity/Data/Price-and-Demand/Price-and-Demand-Graphs/Current-Trading-Interval-Price-and-Demand-Graph-QLD

    • http://ronaldbrak.blogspot.com.au/ Ronald Brak

      Do you live in Queensland, Concerned?

    • suthnsun

      Concerned, thanks for that link. I can’t see historical data anywhere, the subject of interest is the ‘peaky’ peaks not relatively ‘normal’ days, so I looked on BOM and found that 4th December was the hot day. It would be good to know how the demand curve looked on that day. (I don’t turn on air conditioning unless more than 33 deg or so – but not in Qld)

      I also looked at PVOUT.org to see how typical generation declined into the evening. I had also forgotten you are not on daylight saving. Putting it all together, it looked like generation from PV was dropping from around 40% of peak at 4pm to around 30% of peak at 5pm Qld time.

      So the back of the envelope calc. tells me that 700Mw additional PV is attenuating demand at that time around 200 to 300 Mw (on a sunny day). Do you agree with that notion (and Warwick)

      • http://ronaldbrak.blogspot.com.au/ Ronald Brak

        Suthnsun, peak electricity use in Queensland was during the day yesterday. While the demand graph shows a peak in the evening about the same as the daytime peak, it doesn’t take into account electricity produced by rooftop solar.

        Queensland’s demand was below average for this time of year, as it was pleasently cool for most Queenslanders yesterday. All the other states in the NEM had clear grid demand peaks during the day, which is normal for summer.

        • suthnsun

          Ronald, do you know what the demand peak and time of day was on December 4, that is the recent day that looked like it might have a representative ‘high’ peak for the day.

          • http://ronaldbrak.blogspot.com.au/ Ronald Brak

            At 15:05 on the 4th Queensland grid demand was 8,446 megawatts and may have gone higher. Demand was about 14% below the January 2010 heatwave. I’ve read that Queensland’s rooftop solar may have been supplying about 150 megawatts at this time.

          • Warwick

            I’d hate to ruin the party guys but the AEMO “demand” data is actually the half-hourly average of the 5-minute sum of the generation dispatch targets in each region. More importantly it doesn’t really relate to the network data as almost all transmission point data and the distribution data is currently not in the public domain. This is because large users who use most or all of a specific connection point’s energy may be concerned that rivals can determine their consumption which is relevant to some businesses such as smelters etc.

            The data relating to distribution loads will be held by the distributors, whilst the transmission point consumption data will be known by the distributor, the transmission company and the default host retailer for use in settlements (and AEMO of course).

            The closest thing you can get an idea of the distribution loads is potentially the NSLP which is available publicly but that only captures unmetered customers (principally below 100MWh/pa) i.e. representative of domestic loads and SME’s but does not include half-hourly metered customers so it is only analogous to a suburban area as it is smoothed over the whole distribution network which is sometimes the whole state, such as SA. That said, you’re still inherently ignoring the larger customers in the distribution network who may contribute to peak demand so the NSLP is only of limited use.

            So, be as it may the distribution businesses are the ones who have the data on network loading and are therefore best able to comment on peak demand and the effect of PV. Comparing your own personal impression of your PV production or taking the regional “demand” statistics are only educated guesses at best. Read their submissions…

  • http://ronaldbrak.blogspot.com.au/ Ronald Brak

    Thanks for that, Warwick. You’re not ruining the party, you’re making it better.

    • suthnsun

      Thanks for your figures Ronald. At 8846 and 14% less than 2010 heatwave that implies 1400Mw less, far more than Giles has indicated.
      In any case my rough calculation is not shown to be out of order.
      The only relevant information I have found from the distribution businesses is the Energex pdf I linked above (from 2009), which supports the idea that peak loads have migrated to summer hot day afternoon, i.e RTS is quite active and relevant to diminishing net demand.

      • Warwick

        To give everyone a better understanding from the people who actually run the networks, read the Energex submission to the QCA (http://www.qca.org.au/files/ER-ELTD-IssuesPaper-RevSolarFeedinQLD-0912.pdf). In their executive summary they write “In general the export of electricity from small scale residential solar PV to the network is unlikely to provide any significant benefits in terms of deferred network investment. However, there is the potential for increased investment costs in order to accommodate exported electricity arising from incentive arrangements, while maintaining service delivery standards.”