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Networks target solar households to protect gold-plating

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Australian network operators are being accused by the solar industry of unfairly targeting Australia’s 2 million solar households to justify changes in tariff that are designed to protect the “gold plating” of the networks over the past decade.

They accuse the network lobby of seeking to use tariffs to justify the doubling of the cost of the grid in anticipation of an increase in demand that never occurred – and they say the networks intend to do this by demonising solar, now recognised as the biggest challenge to incumbents in more than a century.

Utility_poles_sunset_310_229The Energy Networks Association gained a lot of publicity in mainstream newspapers and on radio on Wednesday for their push to introduce so-called “demand” tariffs, which they said would be more cost reflective for consumers.

That is not at dispute. But what has shocked the solar industry – although not surprised it – is the claim by the ENA that “research” found that non-solar households would pay $655 in annual cross subsidies to solar households – by 2034.

“These are simplistic conclusions from a dodgy report,” said John Grimes, the head of the Australian Solar Council. He, like others in the industry, is concerned that proposed changes by the Australian Market Operator will give the network operators carte-blanche to splice and dice the tariffs.

“It is like putting the fox in charge of the hen house,” Grimes said. “This is a self-serving report aimed at preserving the profits of a few large power companies while pretending to act for consumers.”

The solar industry actually agrees with the concept of demand tariffs – which reflects the maximum usage of a consumer – as long as it is calibrated correctly and fairly. In fact, it is the solar industry which proposed them. But it is appalled with the ENA’s  branding of solar as the major problem, and disputes the numbers produced by the lobby group’s document.

The ENA push is typical of what is happening in the industry. AGL Energy has described solar tariffs as “a scam”, Origin Energy  describes solar households as “free-riders” on the network. Ironically, both companies are introducing initiatives to install solar, but want to do it under their rules, and not allow new competitors in the market. Tariffs are an important part of that control.

At the same, individual network operators recognise the impact and the benefits that solar will bring. Ergon Energy is now installing unsubsidised battery storage because it is cheaper than poles and wires and helps integrate locally produced solar. It envisages a series of solar-based micro-grids, as do network operators in WA and South Australia. Indeed, South Australia’s network owner has delivered an extraordinary forecast for the uptake of solar and storage.

Still, the network lobby is in for as much as it can get.

The Australian PV Institute (APVI) said it is pleased that the ENA agrees with its recommendations from over a year ago that network pricing should be cost-reflective, and that a tariff with a demand charge component is the best way to do this.
“Tariffs with a demand charge will reward the owners of PV systems for reducing peak demand, and will encourage households to have PV systems that face west and install battery storage to reduce demand peaks even further,” said Rob Passsey of the APVI, which is concluding a three-day conference at the UNSW on solar technologies. Solar’s disruptive influence on the networks was a major theme of the papers presented, and the discussions in the corridors.
“The APVI is concerned however that the ENA is implying that households that install PV systems are imposing costs on other customers,” Passey said.
“The costs the ENA refers to are due to reduced payment of network tariffs by owners of PV systems, but most distribution networks in Australia absorb these costs themselves and cannot pass them onto other customers.
“This higher absorbed cost is presumably why the ENA is targeting PV. Of course, this reduced payment of network tariffs is also caused by any other activity that reduces electricity use, including low flow shower heads, efficient lights and more efficient appliances.”
Passey noted that the ENA states that they want to be able to “assign customers making new connections or upgrading their existing connections to a cost-reflective network tariff”.
He said this meant that any household who installs a PV system will be required to move to such a tariff, however households who install air conditioning systems will not – despite both the ENA and the Productivity Commission identifying air conditioners as the main culprit for increased electricity prices.
Indeed, as we have noted before, the network lobby has not been fussed by cross-subsidies in the past, as long as it resulted in greater demand for electricity, higher peak generation prices, and an OK to build tens of billions of new and upgraded networks – as was the case with air-con.
Muriel Watt, a consultant with ITPower and former head of the APVI, said there were numerous cross subsidies within the grid – from city users to rural users, from daytime users to night-time users – that was the reason why it was built.
“They currently want PV to be doing all the work, and say it is coming in and wrecking the grid,” Watt told RenewEconomy at the conference. “They do not want to change the say they manage the grid, but they have to, because everything that is happening is changing the grid.
“This needs to be a discussion about how tariffs are set, and how the grid is managed. Things have changed. Tariffs have to be set fairly and in a technology-neutral way, so you don’t try and penalise PV.”
The submission by the ENA comes just a day before state energy ministers meet in Canberra as part of the COAG arrangements. Three states – Queensland, NSW and Western Australia own their grids and at last two of them are trying to sell them. So they are keen to protect the value and the investment.
The, of course, raises serious equity issues, and not just between solar and non solar households. The cost of delivery is now half the cost of electricity, and is encouraging the uptake of technologies such as solar and storage. Yet consumers get little say.
“The fact remains that small electricity consumers do not have a seat at the decision making table,” Grimes noted. “They find out about ‘electricity sector reform’ when they open their power bills each quarter.  And it is never a pleasant surprise.”

  

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  • lin

    The distributors already charge me well over a dollar a day to be connected to the grid, charge me $0.35 for every kWh I use, and pay me $0.08 cents for every kWh they get from me and sell to my neighbour for $0.35/kWh. I generate more than I use, and still pay nearly $1000 per year for the grid connection. How much more do the greedy bastards want from me? The time for telling them to get stuffed, and putting in batteries and a backup generator is getting closer and closer.

    • Miles Harding

      The RACWA magazine has an ad from a solar installer advertising a grid interactive lithium ion battery store (Samsung ESS). Small and feeble, but it’s coming to a meter box nearby.

      My tolerance for this sort of consumer gaming is very low and it wouldn’t take very much to make me willingly unplug and send the meter back.

    • Pied

      Currently with the recs a system to deliver say 20kwh a day is around $55k including a cheap generator. Assuming batteries come down to the cheap range you are probably still talking $45k. Batteries will need to be replaced, probably at $1k per year. The power electronics would have a life of 10 years, another $1k per year. The generator will have a 10 year life, another $500 a year. Service costs on the Genset.
      You will be with the grid for many years! There’s more too it than cheap batteries.

      • lin

        I can get a battery for <$5K with more than 5 days capacity for our house of 4 people, with a lifetime storage cost <$0.1 per kWh. Our PV system cost $6.5K, and provides more power than we use most days, even in winter. A decent quality small generator costs less than $1K. I think your numbers are a bit out of date.

        • Pied

          I have been in the batery/solar/ generator business for over 30 years and have forgotten more about this subject than you would ever hope too know. I DO know what I am talking about. I just did a week ago a costing for an off grid system that provides 20kwh a day. It was $55k using a cheap petrol generator. What you think is equipment to do the job is just all crap. A proper grid tie/ battery inverter alone is more than the $6500 you quote for the solar system. You don’t know what you are talking about but I forgive you your ignorance. If you really think you can do it properly for what you suggest I highly recommend you do it now, just give your details so I can contact you in a year or two too see how your going!

          • lin

            I don’t doubt that you have forgotten a lot, but you don’t seem to have learned much about recent advances in technology and the reduction in prices that have accompanied it. I forgive your arrogance, dismissiveness of others expertise and rudeness. Good luck being in business in 2 years with the quotes you are providing.

          • Pied

            Hilarious, its amazing how some refuse to admit their ignorance. As I said I have 30 years experience in this field and have high technical knowledge on most battery chemistries including the new breakthroughs in other chemistries currently coming through now. Your comment on the sub $1k generator demonstrates your lack of knowledge, A tip for you, the genset needs to provide enough power to charge the batteries through the inverter, (a typical off grid inverter is in the 5KW range) plus provide energy to the household at the same time. I have full design accreditation by the CEC, I do know what I am talking about, yes I am very rude, I just don’t like it when people comment thinking they know what they are talking about when clearly they don’t.

          • Enkidu

            Hi lin, Sorry to respond to you over here, but the Independent Australian blocked me (apparently substantive discussion is not their thing!). Anyway, I enjoyed our conversation, and thought I would post my response to you here, in case you were interested, even though it’s off topic to the above article.
            ***
            It is true that the highest exposures among the general population appeared in the so-called northwest corridor, up towards Fukushima City. Estimates for whole-body doses or people in this area tend to max out around 10 mSv, which is not associated with any type of demonstrated illness. Doses to the thyroid, however, are much higher, with some estimates going up to 100 mSv for an infant. That is a significant dose, but again, would not be associated with any illnesses other than a possible future increase in thyroid cancer, which appears (so far) to be within background.

            As for the sailors on the Reagan, the US Navy estimated their doses at 0.08 mSv, which is extremely low (and don’t forget that they have some of the best sensor technology in the world on that ship for the obvious reason that it’s a
            floating nuclear reactor). This estimate is actually lower than that for some other land-based personnel. You can check all this out and more at the Operation Tomodachi Registry.

            As for bio-accumulation, I don’t see that being a concern in Japan. First of all, the Japanese diet is highly varied, with Japan importing almost 50% of its food (as compared to the highly local food chain for populations around Chernobyl). In addition, there have been a number of market-based and duplicate-portion studies, which show extremely low levels of food contamination, in addition to tens of thousands of direct food tests, by both government and non-governmental
            groups. Greenpeace, for example, tried and failed to find any over-the-limit foods and ignominiously stopped their monitoring program (more interested in headlines than science, as ever).

            As for alpha and beta emitters, those would be more of a concern if we saw significant internal pathways for them, but we’re just not seeing that, whether in food or through the air. If you have data showing otherwise, please share.

            As for the first newspaper article, it’s talking about groundwater increases, not seawater. In fact, we would expect groundwater readings around the buildings to increase as the various countermeasures, including the impermeable wall, begin to take hold. These increasing levels are actually good news for the ocean, not bad.

            As for the second article, they’ve confused an ice-wall with an ice-plug. Although they sound similar, these are very different from an engineering perspective, as the ice-plug is trying to freeze surface water–a much more difficult proposition than freezing ground water. This is a very basic error, and a horribly written article. The article also says nothing about increasing radioactive flows into the sea.

            I’d be happy to talk at length about the ground water portion of the clean-up as it is closest to the work I was doing in the US. Just let me know.

          • Sam Gilman

            Commenting, as I follow you on Disqus: it’s shocking that they blocked you as well. You were, as always, nothing but a model of civility.

            Sometimes the Internet walled garden effect is caused by people naturally drawn to each other’s views and naturally avoiding those they don’t like. Sometimes it’s straightforward old-school censorship.

            I wonder if the people on that site are aware that commenters are getting blocked not for being rude or offensive, being libellous, trolling or threatening (all of which seems to go on there), but for posting against the party line.

            Anyway, I don’t mean to interrupt your conversation with Lin. (But by the by, I had a closer look at the 2006 Yablokov et al book; the sourcing and use of sourcing is problematic to say the least. I started, before I realised I had been blocked, doing a sample check of their sourcing for a wide range of elevated cancers – not a pretty sight.)

          • Enkidu

            Hi Sam,

            Thanks for the kind words. My assumption was that you must have been blocked as well, but it is good (maddening?) to have that confirmed. I find it frustrating that in an era of incredibly diverse opinions (and access to them), that many choose to shut themselves out from the conversation. As for the Yablokov book, you’re spot on.

          • lin

            Thanks for your detailed response. It is good to hear from someone who is local to the issues. WRT the US navy, many of the sailors dispute the official figures and claim a cover up.
            Has anyone got any idea where the melted fuel from 1,2 and 3 are yet? And has anyone determined if all of the fuel rods in SPF 3 are in the bottom of the pool? It doesn’t look like it would be as easy to remove them as the #4 ones. Full credit to those working on the site for getting all of the #4 rods out safety.

          • Enkidu

            Hi lin, I have a very hard time believing that the US Navy would cover this up. As mentioned before, the Reagan has incredibly good instrumentation for monitoring radiation, and, as it is a ship, it can always steam away from the affected area. Moreover, real time communications bear this out, with the Reagan first sailing into the plume, and then quickly changing course to be 100 miles off-plume. Finally, most damning of all is the language of the lawsuit itself, which is so technically unsophisticated that it will make your head spin.

            As for the melted fuel from reactors 1, 2 and 3, we actually have a very good idea where it is: at the bottom of the reactor buildings. The models that have been run indicate that the corium remains in the containment vessel, eating approximately 70 cm into the concrete at the bottom of the vessel. Even if the models are way off and the corium breached the containment vessel, it would still have to go through an additional 7.6 meters of concrete to break free of the reactor building. I have seen nothing to indicate that this would even be in the realm of possibility for these reactors.

            As for the fuel rods in SFP 3, is there any reason to believe that any would be missing? As for removing them, I would imagine they would use a similar process to that employed on SFP 4, except that there would be more debris to remove first.

          • Chris Murray

            Re your claim that 10 mSv is “not associated with any type of demonstrated illness”, the International Commission on Radiological Protection in “Radiation and Your Patient: A Guide for Medical Practitioners” advised doctors that “The higher dose diagnostic medical procedures (such a CT scan of the abdomen or pelvis) yield an effective dose of about 10 mSv. If there were a large population in which every person had 1 such scan, the theoretical lifetime risk of radiation induced fatal cancer would be about 1 in 2,000 (0.05%).”

            UNSCEAR 2010 also states that “Risk estimates vary with age, with younger people generally being more sensitive; studies of in utero radiation exposures show that the foetus is particularly sensitive, with elevated risk being detected at doses of 10 mSv and above.”

          • Enkidu

            Hi Chris, Sorry to hear that you have also been blocked in the past.

            Given that this conversation has moved homes, you may not have the benefit of the full context of the discussion above, but we are discussing illnesses appearing now in Japan and whether those should be diagnosed as related to radiation; not lifetime increases in cancer risk. I’m sure you can appreciate that these are two very different conversations, and I’m sorry for not reiterating this background in my comment above.

            I am also aware that radiation can have more pronounced affects on different populations, particularly children, which is why the thyroid does estimate I quoted above is for infants. The estimated dose for adults is much lower.

          • Chris Murray

            Fair enough, Enkidu, we’ll leave it at that. Thank you for your polite reply. Best wishes.

          • nakedChimp

            You’re talking SMA/Selectronic there – rolls royce category.
            And SMA has got big trouble already (4th quarter with red numbers) with all the more economic solutions from Asia..
            http://www.pv-tech.org/editors_blog/headaches_all_round_for_sma_solar

            So you might know what you’re talking about, but the prices you quote are blown up by 50% at least over what will be possible in a couple of months..
            For example.. a hybrid inverter sold in China FOB 1000 USD, in Australia you get it from the local distributor for 3000 AUD.. exactly the same machine!

            PS: I know what my local solar installer or electrician asks (material only, not labour) and what the prices are when I go buy the stuff myself from the distributor (privately) and there is more air in there as even those are inflated.

          • Pied

            Lets start out with an aggressive comment. You are wrong. First off I am talking about an off grid system. This is a UTILITY. It needs 99.999% uptime. If it fails it is catastrophic for your lifestyle and pocket. If it is a battery/grid tie and it fails well no big deal apart from the financial aspects. Next lets look at what an offgrid has to do. It has to handle the maximum load of the house in conjunction with the generator with a large surge capacity, it needs to be very good at charging the batteries, it needs to control the generator properly, it needs to interface with the solar, it needs to be VERY smart. It needs to monitor its own internal components and warn PRIOR to failure to replace. It needs to have large recharge capacity because of the larger battery banks and above all it needs to be very RELIABLE. Over the last 17 years I have personally imported many many millions of dollars of power electronics form most of the larger Asian manufacturers, have visited many factories and know their systems and management so feel qualified to comment on their products. In the off grid sector they make wonderful boat anchors. Because the offgrid market is small in comparison to grid tie they spend nothing on this type of product. If you think that buying a Selectronic inverter for offgrid is not worth paying a lot more for you a sadly very mistaken. Just the fact you want to entrust a very expensive battery bank to a US $1000 hybrid inverter, well contact me when you in the market for a new battery bank. Stop being a dilettante and take this advice before you waste your money.
            PS I have no personal interest in Selectronics but judge their product on purely technical grounds, it is several generations beyond any other product currently available.

  • Blair Donaldson

    Distribution and connection charges are little more than a rip-off. Retailers and distributors are signing the death warrant by trying to extort consumers who currently have little option but to remain connected to the grid. The sooner battery/storage options are developed, the better. I don’t understand why retailers are not recognising the fact that the future lies in servicing rather than supply.

    • Maurice Oldis

      Agree-Totally had a gutfull of poles and wires companies-monopolies who are a law unto themselves protected by the “Regulator” with no limit to the daily charges they can make for a connection(always approved by the said regulator)- and cannot wait to ditch their phoney game!!

      • Blair Donaldson

        I wonder if the ACCC can investigate these rip-offs? No company should be above the law or have the ability to extort consumers.

  • Colin Nicholson

    what is needed is some affordable microgrid technology. That is groups of houses can then become their own network/collective (much like some big housing estates do already).

  • drjas

    As I commented on “AGL’s solar scam” (http://reneweconomy.com.au/2014/agl-energy-describes-solar-household-tariffs-as-a-scam-36097), the pitch is right but the propaganda is wrong. Current tariff structures are not cost-reflecive, economically inefficient and riddled with real cross-subsidies. The solar examples cited by ENA all make the error of assuming a ‘representative’ consumer is just that – nowhere near as good a population approaches that are likely to show solar PV consumers currently pay cross-subsidies (ignoring FiTs) and would benefit from cost-reflective tariffs .

  • Engineer Malcolm

    The ENA has evolved from a logical ambassador for their industry to an embarrassing lobby group.
    The network companies are creating their own death spiral – driving customers off the grid.
    But to rub salt into the wounds, they now reckon they have to increase their WACC to overcome the problems they are creating.
    http://www.couriermail.com.au/news/queensland/big-spending-plans-under-fire-for-raising-cost-of-living-pain/story-fnn8dlfs-1227150370076?nk=aedba5860e526fb433462552dd40632c
    Surely the AER won’t fall for this one.

    • Chris Fraser

      There is more than a touch of desperation. I’m annoyed at individual DNSPs – which I’ve thought of as technology neutral – not having the wherewithall to campaign about this perceived problem themselves and give a warning. The spiral is real, now how to deal with nasty disruptive technologies … ? Ah get a lobbyist to make everything as before.Our worry should not be so much with AER, but price setting tribunals in each State. Short of the States legislating against fair consumption tariffs for solar, or removing STCs, I can’t see how ENA would be in a bargaining position.

  • Mark Roest

    There is a decisive way to kill this utility argument. They say it’s by 2034? Then set a target to pool the financing and coordinate the installers, for maximum efficiency, maybe with an Aussie version of the PACE program, and provide either solar on the roof or membership in a ‘solar garden’ (if the roof is not suitable) for everyone who cannot afford to pay for it out of pocket on the spot, by 2024 (half the time). The deal, of course, is no net negative cash flow, and after a reasonable cost-plus profit over and above repayment of principal, the solar system is legally attached to the home and the resident gets the full economic benefit from then on. The reason for doing this is to take the high ground, and say “the utilities already overcharge poor people, and want to rip off the solar owners, whose numbers will continue to increase anyway, but we’re on the side of the public!” Don’t forget to publicize it like a political campaign, because that’s what it is!

  • Macabre

    It is ironic indeed that a government that is so against “handouts” to the poor and unemployed is so beholden to the outdated electricity behemoths who are holding their hands out for money. This acquiescence is grubby in the extreme and is seriously damaging the Liberal brand.

    • Arjan Wilkie SSE

      Both mainstream parties have been completely captured by large vested interests who know the price of influence is low compared to the costs of better policies (look at the return they made on mining ads during the MRST debacle). “Corporate welfare” is OK it seems, but actually helping individuals who are struggling is not. Its even worse when you consider these same corporates avoid taxes wherever they can, so are effectively a “parasite class” in every sense of the word. The current owners and operators of the grid are ‘dead men walking’: it is so obvious. They need to go broke so that the assets can be sold at a discount to a new entrant and they can then set their charges at a lower rate to reflect the actual (re)new(able) world order. This will happen, but it is a question of when: how long will they be propped up by their ‘mates’ in power (read: corrupted, bought)…? How long will we let them get away with it…? The Liberals especially proclaim that they are the party who let ‘the invisible hand of the market’ do all the ‘lifting”, but they seem prepared to distort the market when paid to do so (either individually or through donations to party coffers). The Greens so far seem to have avoided selling-out to the big-end of town. Draw your own conclusions.

  • Jason

    It should be obvious by now the power networks are a common good… in fact they are the very definition of a common good…these networks should be held in the public hands , have independent boards, power to raise capital and be transparent and democratically elected ,. this would go in line with the reforms in financing where money would come into existence not as debt as is the case now but as positive money that the government then transfers into the economy in a myriad of ways …

    this is all based on the emerging reality of the total interconnectedness of humanity to everything… this is a new idea to our culture and is about the only thing that is going to avoid the total collapse of an infinite growth machine … seriously, do you really actually believe we are going to grow forever?

    when this becomes clear the choices facing humanity become either sliding down the hill uncontrolled or we begin to challenge the religion of individualism , capitalism and consumerism and re imagine what it will be like to live in a culture that realizes there is no “away” to throw our garbage, there is no unlimited sinks to dump waste, there are limits to how much fish can be taken, we have to cycle the tree harvests and leave large uncut areas for habitat, realize how we treat our weak, our old define us, that all humanity has a fundamental right to develop …

    we do this through a culture that see’s limits not as an affront to their individual rights to maximize their own personal wealth but as logical necessities that are accepted to ensure the next generation inherits the same bounty as we enjoyed…

    hence we are going to have to accept that some fundamental core things critical to the strong foundations of society have to be managed within limits…

    But there is enough to see every person gets a home, food, water, clothes,education, medical care, and a citizens’ income as fundamental human rights and we will discover through the application and acknowledgement of our connection with each other and all things our individual experience of reality is super charged!

    Every religion and spiritual philosophy in history has warned that the cultivation of one’s greed, envy and desire are roads to madness! Hence we have a culture at the moment doing just that, and we see madness everywhere…

    A culture that believes that exponential growth in consumption of natural resources can continue forever on a finite planet can only be believed by individuals who through that culture’s origin stories and myths result in the people having at their root a fundamental alienation and disconnection to the true state of affairs….

    this is the message of climate change… this is why our culture is having such a hard time and why the emissions are still increasing and accelerating

    there is no technical fix for cultural alienation from the true state of affairs….

    • nakedChimp

      Look how oligopolies fight for their piece of the cake.. what do you think will go down once this tries to ‘modify’ monopolies?
      I just hope for somewhere on this planet to develop such a society and being better at it (and survive), then maybe (that’s a very very big ‘maybe’) the remainder will convert by leading example.. but decades are small chump for a transition like that I guess.

  • Alan Baird

    Like I’ve always said, it’s like having to pay a standing daily charge just for having a petrol station in the neighbourhood every time you buy petrol. Worse, it ruins the price signal for being sensible with energy because it’s unrelated to usage. Gotcha either way! A “pollies” and wires tax = total market failure. Brought to you by both sides of parliament. Both quite Right. But incorrect.

  • john

    Looking at the price paid for power on the Eastern Grid
    it becomes very clear that there has been a downward trend in peak price.
    This is hurting the generators.
    One 30 minute period in Dec 2013 for NSW cost $86 million.
    So what?
    This was about 11% of the whole months cost for power.
    There must have been an outage at that time however this pails into comparison to the previous high cost of power on the Eastern Grid pre PV.
    Doing dodgy studies that are easy to refute by looking at the figures is a silly way to go.