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Queensland, Victoria look to reverse falls in solar feed-in tariffs

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The sharp cuts in solar feed-in tariffs that have marked the Australian household solar landscape in recent years may be about to be reversed.

Both the Queensland and the Victorian governments have been pushing to have the benefits of the technology reflected in payments in reviews to try and discover the “fair price” of solar.

Queensland energy minister Mark Bailey said this would include an estimate of the benefits of solar PV to the grid, and on the “public and consumer benefits” of solar PV.

“This is the first time a price of solar will go beyond what it’s worth to electricity retailers,” Bailey told the Disruption and the Energy Industry conference hosted by RenewEconomy in Sydney this week.

Indeed, pricing regulators across Australia have followed a similar pattern of estimating only the wholesale price value of solar PV, and none of its potential benefits to the grid – where it is shifting and reducing the peaks – and its social and environmental benefits.

That has resulted in feed-in tariffs that are only a fraction of the retail price. This affects solar households, which on average export more than half of their output back to the grid.

This is in contrast to the US, where regulators in some states include network and environmental benefits, and in some cases suggest that the value of rooftop solar is greater than grid power.

This is despite some intense lobbying from some utilities and fossil fuel lobby groups, as this video shows.

Bailey was particularly critical of the recent decision by the Independent Pricing and Regulatory Tribunal (IPART) in NSW, which recommended a cut in the feed-in tariffs – which are voluntary anyway – to just 4.8c/kWh.

IPART justified this on the fall in wholesale market prices (ironically partly driven by the growth in solar PV) and suggested that if households were unhappy with exporting electricity back to the grid at that price, then they could install battery storage.

“We think the IPART reasoning on battery uptake is a little premature,” Bailey said. He said there would be no return in Queensland to premium tariffs of before, but “we think we can do better” than the current offering, which he said was based on a very narrow economic view, and only the costs, not the benefits of solar.

“You have got to look at the bigger picture … previously the perspective has been too narrowly economic.”

Regulators and utilities have been playing a risky game by driving down solar feed-in tariffs at the same time as jacking up fixed charges, and seeking to load extra network costs on solar households.

As Vector’s Simon Mackenzie indicated at the same conference, too many incumbents and regulators think they can resist change.

Some analysts fear that such attitudes will simply force many consumers to not just take up battery storage, but to leave the grid altogether. Getting the balance right on tariffs is a critical issue for all states, and for all networks.

Bailey’s government has promised to more than double the number of solar households in the state to one million (there are 450,000 now), which means doubling the installed capacity to 3GW from 1.45GW.

But the latest data shows that the take-up of rooftop solar is slowly declining, possibly due to a combination of the fact that many of the easy houses have already been installed, and that declining tariffs and rising fixed charges is making solar less attractive.

Bailey says it is essential for policy makers and regulatory to understand what it is they are trying to achieve.

“Do we want to encourage homes to have solar PV that feeds into the grid, or be consumed at home? Do we want a smart grid with multiple generation points, or do we want less interconnection or even disconnection? Does solar PV help or hinder the cost of energy?

Bailey said the evidence suggested that renewable and decentralized energy will deliver long term benefits to consumers, and pointed to the various battery storage initiatives being undertaken in the Ergon network, including the virtual power plant trials.

But he said also that in the absence of federal leadership, states needed to run their own race.

Queensland has flagged a 50 per cent renewable energy target for 2030, but wants to hold a public inquiry into how this can be achieved. Bailey says an expert panel will be named in the next few months to undertake this.

“It would be nice to see federal leadership,” Bailey said. “I find it astonishing that there is an ideological divide over this issue.

“Germany has a conservative leader – and is pushing ahead with renewables. They see where future lies. Yet here we are in Australia, dragging the chain, with 20th century thinking by Abbott government. They need to get with the program. At the moment it is costing the country.”

Victoria’s new Labor government is also launching an inquiry into the “fair price” of solar, which follows the decision by that state’s energy regulator to slash the feed in tariff to just 5c/kWh, again on the basis on falling wholesale prices.

The government has also announced new legislation that will prevent electricity retailers from refusing discounts to households with rooftop solar arrays, and to address “unfair discrimination” where retailers sought to hit solar households with additional supply charges.


Energy minister Lily D’Ambrosio says the uptake of battery storage will benefit consumers, particularly those with rooftop solar PV. “Energy storage provides significant business opportunities for the Victorian economy,” she told the conference, particularly in the potential manufacture of storage and smart metering and other software.

D’Ambrosio says the government is also working on a “new energy technologies” discussion paper, to be issued shortly, which will look ate how the state can ensure that the state can capture its share of the market.

D’Ambrosio says the government will shortly announce details of the review into solar tariffs.

“Technological change can be very rapid, and we need to be prepared … and we need to able to encourage and facilitate the uptake of new technologies.” Consumers don’t necessarily respond to conventional economic theory. “We want to make sure we can scope all the opportunities available for energy storage,” she said.  

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  • Nathan M

    haha, the intentional misrepresentation in that ad is so subtle it would take paragraphs to explain it, and by then everyone would be bored. Nice work ProsperHQ

    • Jacob

      The ad makes no sense.

      Nobody gets free sprinkles.

      Net metering would be, the guy making his own ice cream while the sun is up and selling excess ice cream to the market.

      And buying ice cream from the market/truck after sunset.

      • Alastair Leith

        Mathew Wright had a good analogy, it’s like Coles and Woolies buying the excess vegetables you grow in your own back yard for $1 a kilo and going next door to your neighbours and selling them for $5 a kilo (or whatever prices he used).

        –except they’d probably be sending you next door cause we pay for the grid not the gentailers 🙂

  • Hendo

    With rising grid power charges – especially the daily charge of around $430 p.a., the relatively low cost of solar and now the likelihood of cost effective storage the networks are concerned many will jump off the grid.To date, policies and actions by suppliers and governments have resulted in a considerable fund of resentment by consumers/voters who probably feel powerless to moderate grid charges. And when policies are tilted against solar based mitigation some governments are starting to see some huge potential for back lash. Hence a possible re-think of their policies. About time.

    • Alastair Leith

      They are going to have to offer long term ‘no-price-adjustment’ promises at some point or people will pay a premium to be free of the yoke. They probably will do so only at such point in time that it’s completely apparent to their investors that their commercial survival is in serious jeopardy. In the mean time other providers may have already disrupted their business model.

  • JohnRD

    We should be talking about reverse auctioning systems with automatic bidding to set the price. Coupling this with gross feed in tariffs gets around the need to punish pensioners as collateral damage from attempts to get at solar owners.

    • nakedChimp

      Pretty sure something like that could solve a lot of problems, but then it might actually be fair and all that and you know how the ones who don’t profit from that might have something against it 😉

  • Reality Bites

    Stupid video. But the truth is that PV owners want it all and don’t want to pay diddly squat. The reality is that the grid exists and users should pay. Personally if QLD Labor want to offer a new FIT, I will be filling my boots thanks.

    • Ken Dyer

      PV owners do not want it all, just a fair shake. They have paid thousands of dollars out of their own pockets to install solar and all they get is 6 cents feed in tariff, and then have to pay fixed and usage charges just like everyone else. Then the gentailers put a premium on using green energy when it costs them much less at wholesale prices. Everybody who wants to use green energy is being ripped off.

      • Andrew_Nichols

        Use it yourself.

        • Wolfgang Loescher

          that is exactly what people will do when battery storage becomes affordable soon.
          Then there are less people to pay for the upkeep of the grid and people without solar will have to put there hands even deeper in there pockets.

        • Barri Mundee

          Self consumption is a smart approach but on sunny days PV owners will often consume less than they generate. They are entitled to a reasonable return for that. In the longer term we will have battery storage and retailers may have to “go forth and multiply” if they continue to try to resist change.

        • Chris Fraser

          I dare say network operators will one day be able to use special inverters and remote switching to stop PV export from rooftops at times to suit them. Or maybe they’re just dreamin’ …

    • nakedChimp

      Most humans with a lack of social and environmental skill ‘want it all and don’t want to pay anything’..
      I’m pretty sure the kind of PV owner you have in your mind make up the minority of the people who have got a solar system on their roof, but keep touting that line, makes you look really good.

    • lin

      PV owners pay the daily grid connection fee plus the same cost per kWh for power used as everyone else. Plus they put power into the grid that the distributors on-sell at a significant mark-up. How is this “diddly squat”?

    • Barri Mundee

      Straw man, RB! If you casually read some of the comments here you will quickly conclude that PV owners are realistic about their investment in PV. They want a fair price for what they send back into the grid.

  • Ray Miller

    The add is misleading, the utilities have been “partying with fee topping” for some time now with the customer paying and they have not been held to account.
    The customer now with the embedded generation is competing at the “retail” price end of the system not the wholesale and at the point of lowest transmission losses, off setting the need to invest in more capital works on thicker wires and larger substations. I’m effectively paying as a customer now $0.70 per kWh not the 3-5 cents wholesale.
    Any product with such extreme margins and inefficiency is doomed to lose business to anyone who can provide the same service cheaper!

    PV and renewables has always been about lowering carbon emissions to correct the imbalance we (the people of this planet) have created since the industrial revolution. The end customers know it, and due to lack of action on this front by the energy industry they the energy industry have been encouraging more customer “defections”.

  • lin

    A positive step and a potential big vote winner by Qld and Vic governments.
    A system that is fair for everyone must be the driving principle of such an essential service. Governments must resist enabling a system whose most notable efficiency is ripping money out of consumers pockets for the benefit of governments and tax dodging multinationals. It must also ensure that the system does not reward owners of existing power generation and distribution assets for being technologically lazy and backward looking.

  • Andrew_Nichols

    No. Writing as a solar consultant increasing or even retaining the FIT is a daft idea. Exported energy is usually of hopeless quality and most of it isn’t produced when the network could do with it at the beginning and end of the day. Far better to massively ramp up subsidies to install for households and business to use the energy from Grid connect or move to battery hybrid/off grid.

    • nakedChimp

      ..most of it isn’t produced when the network could do with it at the beginning and end of the day..

      Uh?
      Every graph on the influence of solar PV on the grid and energy production/usage shows that PV is producing EXACTLY where most is being used, during daylight. Now that this peak is being chopped there ‘appear’ new peaks in the morning and afternoon, where the sun doesn’t shine but people do use energy.. next step is to get battery storage into the mix and chop off those peaks as well – either before or behind the meter, but that decision lays in the hands of the incumbents.

      • john

        You are correct exactly as I outlined.
        Duck curve demand now.

    • Wolfgang Loescher

      This is not quite correct. Most energy is consumed during the day as businesses running all of their equipment. It is true that most households use that pattern but not the majority of business.
      Battery storage will help smooth this over and it is coming sooner then people think.

      • john

        Correct we used to have a bell curve.
        Now it is a duck.
        Evening is now the new peak.
        And shortly with battery back up the evening is going to go so the morning will be the new peak

        • nakedChimp

          You think people will get batteries that last the evening usage only?
          Why is that?

          • john

            More than likely the size of battery will only meet most of the evening demand so they still may need power in the morning.

          • Wolfgang Loescher

            From what i see batteries will be capable to help to replace the grid as we know it today.
            A new business model needs to be worked out for the energy sector.
            Have a look on YouTube and search for Tony Seba. He will you some inside of what is possible in the near future.

          • Tinman_au

            Exactly.

            Batteries will mean the new business model should mean the energy sector will/should become the grid sector. Much like Uber and AirBNB, they will become the facilitators of another share economy, that of the new energy market.

          • Wolfgang Loescher

            There is whole heap of changes coming in the energy sector and batteries is only one of them. Most people aren’t even aware how brittle our grid is and can you imagine what would happen if the power goes out for a day or even a week?
            Batteries will be cheap enough within the next 5 years that you could store a weeks worth in it

          • Calamity_Jean

            “Batteries will be cheap enough within the next 5 years that you could store a weeks worth in it.”

            That would certainly make life interesting. I hope you’re right.

          • Mike Dill

            Initially I need just a few KWH to smack down the evening peak, less than $1000.00. Then I charge that battery with the grid at night between 2 and 5 to smack down the morning peak.

            It is not until the next winter and there is a outage that I see the need for more than 1 day of storage. Then the daily rate goes up and I start thinking about adding more solar and having 3 days of storage so that I can go off grid.

            I think it takes 2 or 3 years for someone to get their head around the concept of going off-grid.

  • john

    Because of the moving market situation it is very confusing to set out one set of guidelines that will be current.
    The installation of PV has got rid of the bell curve power demand which used to happen during the day now we have the duck curve which is high in the morning hollows out during the day and is highest in the evening.
    The logical way to fix this is to utilise a backup battery system.
    BIG problem a grid has been built to meet that old bell curve and charges have been put in place to pay for it.
    So if a high utilisation of battery backup is put in place then this will even more make the situation worse for connection charges.
    So a rational middle course has to be found.
    Low usage customers should not be penalised that is logical.
    A moving FIT as situations change as more connections are made is the best kind of solution.
    Payment should be made that equates to the savings in upgrades and the savings in network transmission losses then the cost of buying the replaced power.
    Setting some price on this in a moving price structure is very difficult only a few figures are stable the grid costs the transmission loss the actual buying price varies all the time however a mean average could be struck to equate to this.
    The sad fact is I can see quiet a few just leaving the grid, which is not good for those left.

    • nakedChimp

      The problem there is that those who own the assets seek rent..

      • john

        well yes
        The capital expend on the balance sheets should be written down.
        However when you have a captive market you can recover the bad business decision.
        The unfortunate outcome is the lower user pays more which is not exactly a good outcome from a fair and decent view.
        The end outcome is a disrupted society

      • Wolfgang Loescher

        correct and have to make a profit. profit means less money spend on maintenance

        • john

          please look at Eastern Grid Demand graph I posted

    • Wolfgang Loescher

      the bell curve and the duck curve are used to show household consumption and not what the grid uses from everyone like factories, offices and other businesses.

      • john

        Cripes I have it wrong?

      • john

        Copy of Eastern gird power.
        Shows a ramp up then slow then peak evening I would think.

        • Wolfgang Loescher

          thanks for the map.i don’t disagree with you about being a peak in the afternoon. The point i tried to make was solar will help demand during the day and it is very useful.
          Battery storage will help the demand side once they become cheaper and from all i see it won’t be very long.

          • john

            Well looking at the offering from a battery supplier in the media today it seems very possible that the cost point is here.
            Copy and paste.
            The energy storage technology behind SimpliPhi has a rather long backstory

          • Wolfgang Loescher

            I’m waiting for a quote of some batteries from the US with a warranty over 15 to 20 years with over 5000 full discharge on every cycle.
            we are not far off the time for it to happen

          • john

            You will get it.
            Just follow the article today about SimpliPhi.

          • Wolfgang Loescher

            That who I contacted lol

        • john

          graph copy

    • Alastair Leith

      another +Logical+ way to fix it is more wind generation to diversify generation sources that peak when solar stops. And distributed thermal storage would get pretty cheap compared with households loaded up with LithIon/LiFPh/Pb batteries.