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AEMC backs down on rooftop “solar tax” proposal

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A proposal mulled by Australia’s chief energy market rule maker to charge a “solar tax” to households exporting their excess rooftop PV generation back into the grid has been dropped, after it prompted a major backlash from solar households and advocacy groups.

rooftop solar

As we reported here, the controversial rule change was canvassed in the Australian Energy Market Commission’s draft report on the Distribution Market Model, based on the argument that there was no other way for networks to recoup their costs from grid-connected solar households.

Essentially, the AEMC was concerned that rooftop solar was getting a “free ride”, by not paying for the use of the grid when solar power was exported – and because solar households tend to use less electricity from the grid.

Currently, clause 6.1.4 of the NER prohibits a DNSP from charging a distribution network user (such as an owner of a distributed energy resource) distribution use of system charges for the export of electricity by that user to the distribution network.

There may be cause to revisit this clause if DNSPs incur costs (and benefits) due to the export of energy from distributed energy resources (or passive solar PV systems) that are not appropriately reflected in connection charges and where these costs (and benefits) increase (albeit not necessarily proportionately) with the volume of injections.

The Commission therefore considers that there may be benefits in exploring the deletion of clause 6.1.4 of the NER, and what possible alternatives there are.

But now it apparently is willing to consider the benefits, rather than just the cost, of rooftop solar.

In the AEMC’s final report on the Distribution Market Model, published on Tuesday, the rule maker appears have to conceded that the idea was an unpopular one, and that further work was needed to balance the many benefits against any costs to networks of distributed solar PV.

“The issues of access and connection charging received the most comment from stakeholders,” the report notes.

“Further work is needed to understand whether distributed energy resources create benefits, or impose costs on the distribution network,” it says.

The report adds that further work is also needed to understand what consumers want, bearing in mind that the loss of open grid access or the imposition of charges for export of energy from solar households could adversely affect networks, by “prompting a death spiral.”

The report also noted that charging solar households for exporting to the grid could be seen to be unfair, considering large generators currently did not pay for grid access, “beyond a shallow connection charge.”

Solar Citizens, a community-based solar advocacy group that campaigned strongly against the rule change, described the back-down from the AEMC as a big win for consumers who had invested in solar to regain some control over the size of their power bills.

“It was an outrageous proposal to begin with and has been rightly taken off the table,” said Solar Citizens campaigner, Shani Tager in emailed comments to RE.

“This is the second time that the AEMC have tried to introduce similar charges and have been forced to back down in the face of opposition by solar owners.

Tager said that some 2,500 solar owners across Australia had “made it very clear to the AEMC” that an extra charge for solar exports was an “unacceptable approach.”

“Rooftop solar delivers clear benefits across the community and solar owners should not be charged for their clean, renewable power,” she said.

“The big power stations don’t have to pay to export the energy they generate to the grid and solar households shouldn’t have to pay either.”  

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  • Chris Fraser

    Much credit goes to Solar Citizens among other groups. Without them solar owners are merely individuals and appear much less influential to automatons – and probably puppets – like AEMC.

  • solarguy

    We already pay for networks costs anyway and with their parasitic gold plating they can pay any costs associated with solar, if the want to stay relevant.

  • George Darroch

    Great work by Solar Citizens and everyone else who fought this.

  • DevMac

    It depends on what the AEMC goals were with this seemingly ridiculous proposal.
    If they’d gone through with it, it would have given the home-battery movement
    unstoppable momentum, and one of the end results of the home-battery movement is disconnection from the grid. A big ratchet to the electricity grid’s death spiral.

    However, if there are costs associated with rooftop solar power being injected into the grid, why has my provider increased my feed-in rebate by 60%?

    Sounds as if the AEMC was under political pressure, but found the populace pressure outweighed it. Thankfully.

    • Alastair Leith

      The number of responses via the Solar Citz campaign underlined that likelihood of grid defection ASAP I’m sure.

  • john

    The network owners see the problem as this as solar export takes more of their business away because during daylight hours some 20% of power is not being delivered by them from distant generators but coming from up the street they are seeing a drop in their bottom line.
    Worse still the self consumption means the bottom line figure is going down they see it each year.
    This just goes to underline the fundamental ideological mistake in selling the network, and regarding electricity as not a community delivery obligation, but a method to profit.

    • MaxG

      Spot on… what I have saying for decades… but then, why not publicise… by the time this idea will get traction it will be too late.

  • Marc Talloen

    A sincere thanks to Solar Citizens!

  • Joe

    ‘Solar Tax’ and ‘The Battery Bunker’ are two of the dumbiest ideas. Okay, we got rid of the ‘Solar Tax’…. now for ‘The Bunker’ !

    • Roger Franklin

      Joe – the Energy Companies have deep pockets to fund Lobbyists so my guess is that the “dumb ideas” have only just begun!

      • Joe

        I am not a systems expert so maybe someone can help me out with this one. There is this initial barrier to the size of rooftop solar…5kW… that can be installed. If you want to go more than 5kW you need special permission and if approved you need to go 3 phase. Is there a compelling need for this arrangement ?

        • Alastair Leith

          ~5KW export but you can oversize the PV array(s) so that you’re exporting at peak capacity all day if you want to. East facing, north, west and even south facing panels for late afternoon exporting into the peak saving the networks on some gold plating.

          • Greg Hudson

            I wondered the same thing but never asked the question. However, I assume you would need 3 inverters, and 3 x 5kW PV arrays (one for each phase). Then you have to hope the exports actually match up to what you are exporting, and that you get paid the correct amount (11c/kWh in Vic).

          • Phil Shield

            In QLD the maximum inverter size allowed for a single phase system is 5kW. You can oversize the PV array by up to 33% – above this you cannot claim RECs. If you go above a 5kW inverter, it has to be 3 phase – you get one 3 phase inverter rather than 3 single phase inverters. As the size of the system increases there are different tests for approval by the network authority and above 5kW inverter size, it is not automatically granted, or can be granted conditionally. I believe above 30kW there is usually a requirement for a zero export device to prevent you from exporting to the grid. All the power has to be used on site or curtailed.

          • Hettie

            Panels with microinverters avoid this issue.

          • Greg Hudson

            Hmmm. Had not considered microinverters. Not sure how they would fit in a 3 phase system (if 3 phase is even required). If the rules in Vic allow any sized PV array, but with a 5kW export, (I assume that is a continuous rate), then any extra would have to go somewhere else. (Battery, water heater, under floor heating… etc.)

        • nakedChimp

          5kW is the limit for ‘no questions asked, no objection raised’ – at least in QLD.
          If you got hybrid inverters or islanding systems, you can do whatever you want if you don’t exceed the 5kW export limit.

          PS: devices that can do all that at once in a neat little package, with a universal DC battery connection.. and using the grid as a backup feed into your premises aren’t on the market yet, at least not for a fair price.
          The need is there though, so the tech will come.
          Just a matter of the inverter system manufacturers offering this and not blocking each other with IP and other crap by producing incompatible stuff..

  • phred01

    Currently, clause 6.1.4 of the NER prohibits a DNSP from charging a distribution network user The incumbents would love this to be ditched as another road block to roof top solar. If this is revisited later the grid desertion would go into full swing

  • MaxG

    AEMC = Australian Energy Morons Collective

  • Peter Fagan

    This is an important victory. Well done Solar Citizens.

    Giles, I would be interested to listen if you had representative from Solar Citizens as a guest on your podcast.

    Also when you reference such a worthwhile organisation in your articles, I suggest you hyperlink its name, thus giving them a bit of well deserved publicity.