From a consumer point of view, the current feed-in-tariffs for rooftop solar across the nation, with a few temporary exceptions, is unjust and unjustifiable. The value to the network is enormous and growing ,and the power exported for next to nothing is a cash cow for the energy providers.
The retailers, who have to pay full network costs and wholesale margins for all power sold, do not benefit as much. This makes a 1:1 credit, as some have proposed, on exported energy unsustainable, as there is no allowance for use of the network or retailer and wholesaler margins.
But there is no doubt that there needs to be a mechanism which supports the rooftop solar consumer at a realistic level, but also enables the use and upkeep of the network.
The electricity retailers are caught by the fact they are required to pay network charges (about 50 per cent of a power bill) as though the exported power was being sent across hundreds of kilometres of power lines and sub-stations, when in fact it may be going to a neighbour. How to measure the proportion of distributed energy from nearby premises as a component of power sold to an individual household is very difficult.
A mechanism available to the network providers is to determine an overall benefit to the network, reduce the network charges accordingly, and then raise the FiT by the same amount under a mandated arrangement. This will only happen when the Terms of Reference for the pricing review spells out this as a review requirement.
Another possible solution would be for the retailers to be able to receive a partial credit of network and wholesale costs from the network providers for exported power, which could then be passed on as an increase in the FiT.
For example, a household with nett metered PV imports 1000kWh of power during a billing period and exports 300kWh during the same period. If the network and wholesale charge component for the 1000kWh was $180 (18¢/kWh) and the real use of the network for the exported power was only 20% of a centralised energy model, then the real network cost would be 3¢/kWh and the consumer should receive a credit (ie FiT) of 15¢/kWh for the exported power ($45) and the retailer should be able to recover this as a credit against the network provider.
A third solution to this problem would be to institute ‘peer to peer billing’ as recently explained by our SEIA NSW Chairman, Geoff Bragg. Under this model, power is exported and the amount recorded by the retailer. Another consumer registers for buying that exported power at an agreed price, and the retailer or the network act as power brokers between customers for a percentage of the sale. Once again, an overhaul and restructure of the relationship between network operators and the retailers would be needed to make such a sensible proposal possible.
The proposal by SEIA (Solar Energy Industries Association Inc) is that:
• The billing arrangements between the network providers and the retailers be restructured
This would be to allow flexibility in developing pricing models for a FiT.
• The FiT be set at a percentage of unit billing rather than a fixed rate
The rate would depend on the deemed benefit to the network and reduced network use. Allowing for retail margins and reduced network costs, the FiT could be say 75% of unit billing price. The FiT payment would be automatically adjusted with any change to the cost of power.
• The FiT be mandated across all jurisdictions
Retailers have shown a reluctance to offer anything near a fair FiT unless they were required to do so.
• Any credit accrued in a single billing period cannot exceed the costs contained in the bill
This is to ensure that solar PV systems are not over-sized and are installed primarily to cover self- consumption, and are not there as a money maker for the well heeled. Any credit will not accrue as a liability on retailer balance sheets. It will prevent the solar PV market overheating as has happened with some of the previous ill thought out schemes which have plagued the solar industry.
• That the service availability or supply charges be justified.
Some States are charging $500/year for what is in effect a meter reading and billing charge which are standard business costs normally covered by the retail margin. Other States are playing catch up.
Are these charges double dipping? Should these charges be a component of retailer margin and not separated as an extra charge?
Whilst they remain unjustified then any credits earned through a realistic FiT should be able to be credited against those fixed charges as well as the energy charges
The popular uptake of solar PV and solar hot water has contributed to a fall in the wholesale price of electricity over the last few years and the trend looked certain to continue. The Federal Government has spoken loudly about the high cost of electricity and how they will assist to bring it down, then turn around and try to cut nearly all of the drivers that are doing exactly that. This is political hypocrisy at it’s best.
Because of the way business models for electric power have been developed in this country, corporations and State Governments receive massive profits from the generation and transmission of electricity and they are doing their best to ensure that their income streams are not reduced in any way. They are doing all they can to minimise the popularity and uptake of solar while at the same time pretending to support it. Meanwhile, people are having more and more difficulty in meeting their electricity bills.
It seems that the lobbying by the fossil fuel sector, and State Governments which benefit from coal-fired power generation and transmission, are those that can call the tune. Where is the long-term vision of the Government, State or Federal? Why are they backing a dinosaur rather than being an instrument in creating a new future for us all.
Many countries around the world know that the future is a renewable future and are working to make it happen. Will we ever have a Government who has the vision and the action to grow such a crucial industry for our future.
Brian England is National Chairman of the Solar Energy Industries Association
