Queensland axes 8c/kWh solar feed-in tariff

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Qld removes 8c/kWh rooftop solar tariff, leaving households to negotiate with retailers. Industry says move will encourage households to install battery storage.

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Queensland’s Newman government has continued its “war on solar”, confirming it will axe the state’s 8c/kWh rooftop solar feed-in tariff at the end of June, leaving solar households with the challenge of negotiating a tariff with their electricity retailer.

The move by the government – which will affect 40,000 households, and any new rooftop solar adopters – was expected, and was justified by claims it would “lift the cost burden” from electricity network businesses and put “downward pressure” on electricity prices for all Queenslanders.

In a refrain taken straight from the Campbell Newman songbook, Queensland energy minister Mark McArdle said in a media release on Thursday that the carbon tax and renewable energy targets had driven electricity prices “much higher than they should be.” No mention of the soaring cost of the government-owned networks.

“Left unchecked, the 8 cent feed-in tariff would cost Queensland households and businesses an extra $110 million on their power bills over the next six years,” McArdle said. Presumably, he was expecting the number of Queensland households to increase dramatically, because the current 40,000 households on the 8c/kWh tariff would need to export nearly all their generation to meet that figure.

Critics say the changes – announced as part of a series of reforms to the state’s Solar Bonus Scheme – mean that the 40,000 solar households in Queensland will be left at the mercy of the state’s electricity retailers, who will assume responsibility for setting and offering solar energy tariffs.

“This is incredibly unfair,” said Lindsay Soutar, from Solar Citizens. “It is obvious that it will be difficult for individual households to get a good deal from their power company. They simply don’t have the negotiating power. When retailers set the rules, solar owners lose.”

As one solar industry expert pointed out, the Queensland government was unable to win its fight with retailers over pricing, so what chance would an individual household have? Victoria, WA, and South Australia all have mandated minimum tariffs. NSW is the only state that doesn’t, and even IPART found that customers were not getting a good deal – most well below the recommended rate. Many households are offered nothing.

Rhys Clay from Local Energy Solar said that while he disagreed with the Newman government’s approach to limiting the solar feed-in tariff, the changes would at least help encourage customers to install energy storage, and save their surplus solar energy for use later in the night.

“It is our hope that the QLD goverment reforms electricity pricing to accurately reflect the true cost of electricity (higher prices at peak times) as this will help facilitate a shift energy efficiency and storage which in turn will benefit the network,” Clay said.

The Queensland government said customers of Energex would no longer have a government regulated rate, but will be able to negotiate a tariff with their retailer. Ergon Energy customers, meanwhile, will continue to be paid a tariff set by the Queensland Competition Authority until “there is enough retail competition in regional areas to make solar more self-sufficient.”

“These reforms will mean electricity retailers will pay any newly negotiated solar tariff direct to users,” McArdle said. “These are common-sense decisions that will produce a positive outcome for existing customers on the 8 cent rate, as well as new solar owners.”

This latest solar tariff cut follows the slashing of the 44c/kWh net tariff in 2012, when Campbell Newman’s decision to provide a month-long window to take advantage of the 44c rate inadvertently sparked a massive rush for rooftop solar in Queensland.

Today, McArdle said the 44c/kWh solar feed-in tariff would be kept in place for the around 284,000 Queensland households who signed up to it before it was closed.

The solar industry has argued that government support for rooftop solar adds a negligible amount to the average household electricity bill, with more than two-thirds of price rises caused by factors completely unrelated to any green schemes, such as soaring generation costs, network costs, and increased costs from retailers and billing centres.

Price-breakdown-of-average-home-power-bill
Price breakdown of average Australian household electricity bill

Last year, a Queensland Competition Authority report recommended a 13.5 per cent increase in solar tariffs from July 1, 2014, and predicted that the impact of the carbon price, even if not repealed, would actually go down, as would any impact from renewable energy schemes.

In an interview with the Courier Mail, McArdle said axing the 8c FiT in the state’s southeast would foster competition ahead of the removal of regulated prices in July 2015.

“I don’t think (retailers) will abandon solar customers, because paying the feed-in tariff is part of their market strategy to attract customers to their contracts,” he said.

“Customers can then start to play retailers off against each other to get a better deal, and we may well find that the feed-in tariff increases with competition.’’

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36 Comments
  1. Andrew Thaler 6 years ago

    Nasty nasty nasty & miserable. NSW next?

  2. Beat Odermatt 6 years ago

    If the Liberals start acting like this, they will lose a lot of goodwill and certainly the next election. People know that solar rooftop installations keep prices down for all and they vote.

  3. Chris Fraser 6 years ago

    Open for coal business – and the dredging business !

    • NorskeDiv 5 years ago

      Another good point. Mandatory purchase of solar and wind power will first offset the most expensive peaking sources: natural gas. It’s already happening in Germany where coal plants remain running 24/7 and gas plants are used for peaking. if wind and solar actually do make a dent in coal power usage it’s even worse, because the coal plants are never shut down, instead they are run cooler with lower load which means lower efficiency and a more dirty burn.

      • Charlie Moll 5 years ago

        Run cooler at low loads? Wrong. At all loads the turbine inlet temperature remains constant, so therefore the boiler steam outlet temperature must remain constant. At low loads the boilers burn less coal. Yes the boiler is slightly less efficient. Also some units are shut down during low demand.
        Gas turbines are used for peak demand periods because they can be run up and shut down quickly.

  4. Farmer Dave 6 years ago

    I can see actions like these having entirely the opposite effect to what was said to be intended – the reduction of retail electricity prices. If the tariff for electricity exported to the grid falls further, PV owners are likely to try harder to use all the energy they generate, or may even depart the grid altogether. Ether way, the retailers will see a further drop in demand, and while the guaranteed return on investment for the poles and wires companies remains in place, reductions in demand bring higher retail prices.

    In short, the Newman Government may have just done their bit to speed up the electricity utility death spiral in Queensland.

    • Chris Marshalk 6 years ago

      Fine, I’ll just invest in battery storage to completely go off the grid. 🙂

      • NorskeDiv 5 years ago

        Exactly! That’s what you SHOULD do. Using the gird as a huge battery doesn’t actually offset CO2 emissions and does not save other consumers any money at all. instead coal plants are simply run at a lower load and reduced efficiency, waiting to ramp up after the few hours of peak solar production drops off every day. Each person adding solar panels to their house makes electricity more expensive for other users, doubly so if they are paying for your feed in tariffs.

        What does save other consumers money and actually helps the environment is permanently shedding demand, which is what going off the grid is. When people go off the grid they no longer need to be accounted for as part of peak demand. If enough people do it, some power plants can actually be shut down! Paying people to remain tied into the grid is sheer environmental lunacy…

  5. Ben Courtice 6 years ago

    What will happen when electricity prices do not fall after they cut the carbon price, the FiT, and perhaps even the RET? What BS and scapegoating will they dream up then to distract us?

    • Miles Harding 6 years ago

      Don’t you worry about that! (isn’t that what Joh used to say?)

      Newman’s not looking out the front; it’s all about keeping their backsides off the ground *today*. Of course, it’ll be fun to hear the replacement lies to explain the null outcome.

      Batteries and off-grid are looking just that bit more attractive now.

  6. madankerr 6 years ago

    What FITs do QLD electricity retailers currently offer? Here’s what their websites say…

    Origin Energy 6c
    Lumo Energy 6c
    Powerdirect 6c
    AGL 8c
    Click Energy 10c

    The Queensland Competition Authority recommended that 7.55c/kWh was a fair FIT in 2012-13 based solely on the value to retailers of the electricity exported.

    I don’t see ‘market forces’ producing a fair FIT. The big retailers will pay as little as they can get away with.

    • Warwick 6 years ago

      Sounds like an advertisement for Click Energy…it’s probably a good idea to check your energy rates to make sure that Click isn’t simply increasing other charges to bait PV owners into signing up.

      • madankerr 6 years ago

        Warwick, I’m not a Click customer or worker. I’m just reporting the published rates. Click is attempting to lure customers and as they are an online-only company, their costs are likely lower. I dk whether it is a ‘bait’ tactic and in any case the QCA (and QLD govt) have not been shy in quoting the 10c FIT as a reason for not having a mandated minimum retailer FIT.

        The QLD govt thinks that this is the mechanism by which market competition will lead to ‘fair’ FITs. My point in showing this data is that there isn’t much indication that this mechanism is working so far. Click’s 10c FIT has been around for more than a year – at least since the QCA’s Solar Review that was published March 2013.

  7. Globi56 6 years ago

    Can we think of a scenario where a brighter than average electricity retailer offers 10c tariff to solar-enabled customers in an effort to get them to switch from the economically retarded electricity retailers offering 0c?
    The retailer gets to on-sell this cheap energy to non solar customers at a markup.
    Then possibly some other brighter than average electricity retailer offers 11c FIT to encourage solar-enabled customers to come do business with them instead?

    I sure as heck would consider switching on this sort of competitive basis.

    • madankerr 6 years ago

      It’s already happening. Click Energy has offered a FIT of 10c for nearly a year. It hasn’t had any impact on the 6c tariffs offered by the major retailers.

  8. Alen 6 years ago

    The Redcliff by-election was a clear indication for the government on how unsatisfied the voters currently are, and what do they do to at least partially try and make up some ground? They get rid of the 8c FiT, alienating 40,000. I wonder at the common sense in this party, or lack of!

  9. JohnRD 6 years ago

    The Qld Competition Authority (QCA) came up with “fair” FTI of 8 cents/kWh by finding excuses to ignore all the benefits of of rooftop solar. The QCA was quite open about being concerned with fairness to the retailers (For comments on the QCA report see: http://pragmatusj.blogspot.com.au/2013/12/comments-on-qca-report-on-feed-in.html)
    The interesting thing is that 40,000 people have installed solar in Qld since the price cut. (Admitedly installations have been much smaller than before the FIT cut since the justification is now reducing the power bill rather than selling power at a profit.)
    It is worth keeping in mind that people who are employed in the solar business are also voters.
    Ditto the general unease with a perception that the government is quite happy to dishonour anything connected to renewables.

    • taiyoo 6 years ago

      Exactly – “fair” to the retailers, not the solar voters. This is the same in every state – the government sets the terms of reference (eg Campbell Newman) for the government agency (eg QCA) to negotiate with itself (the government owned retailers). No wonder the common-folk get shafted every time.

  10. RobS 6 years ago

    With nearly 30% of Queensland rooftops now having solar solar households are in an incredibly strong position to negotiate, whoever offers the worst rate is likely lose 30%+ of their customers overnight, something that would cripple them. This move may well result in an increase in the FiT as utilities compete for the business of the nearly majority and growing number of solar consumers.

    • taiyoo 6 years ago

      NSW has a voluntary FiT. Consumers are presented with a take it or leave it choice – there is no negotiation. Some retailers do actually pay something for the electricity they would otherwise get for nothing and sell to your neighbour at full price. This is between 6 and 8c/kWh in accordance with IPART’s recommended tariff (which the retailers are lobbying heavily to remove – ie no recommendation so they don’t like like b*st*rds when they change their tariffs and give you nothing – “we’re just following IPART, they said we don’t have to…”).

  11. Le Clair 6 years ago

    In the Ergon area we have no alternative to the regulated 8c FiT. No AGL, no Origin, no Click, so we don’t feel like we have lost anything really. Our customers have all gone to storage. For around $500 on top of the PV only price, you can store up to 10kWh usable per day giving you an effective 20c/kWh FiT and no-one can take it away from you, ever.

    • Diego Matter 6 years ago

      Where can I buy this storage solution for $500 for 10kWh per day?

      If that’s true I will be your customer tomorrow.

    • Chris Fraser 6 years ago

      I’m with Diego … I’d love 10 kWh LiFeSO4 for $500.

    • RhysC 6 years ago

      Im pretty sure this person means add $5000 on top.

  12. Colin Nicholson 6 years ago

    What are the technical aspects of taking a grid tie setup and converting to storage? Obviously there are several ways. One would be to leave the GT inverter on the grid and dump all the output via a 230v battery charger into storage which in turn runs a conventional inverter. Or replace the inverter with a solar/charger/inverter. What are the QA and paperwork aspects?

    • taiyoo 6 years ago

      There are a number of different configurations and technologies available for on grid storage – AC coupled, DC coupled, before the main switchboard, after the main switchboard, exporting, non-exporting etc but very little in the way of paperwork. Depending on the configuration the existing inverter may be fine for a retrofit with storage, but others may need to be changed.
      The Australian Standards for off-grid storage are woefully out of date and non-existent for on-grid storage. There are not yet any specific Network Service Provider network connection application forms or processes, as far as I know. While there is an off-grid certification from the CEC this does not cover on-grid energy storage, and as it’s an existing system (assuming you don’t add any more PV panels) you won’t be claiming STC so you don’t even need CEC certification. However, if its my house I’d still be sure the designer and installer have both grid connect and off grid CEC certifications.

  13. Alex 6 years ago

    Not long now and we will have affordable ways to store the energy generated by solar PV:

    http://business.financialpost.com/2014/02/28/tesla-motors-inc-musk-renewables/?__lsa=c55f-e2f8

  14. donna sutherland 6 years ago

    is anyone interesting in starting a non profit buying group for battery storage so we can all head to off the grid supply, and not be held to ransom by politicians and big business

  15. Ronald Brakels 6 years ago

    I would like to point out that market forces do not operate in in the Australian retail electricity market. Before I put a sign up with a picture of a dog saying go away, I used to get a lot of electricity retailers knocking on my door and not one of them could tell me the actual figure I would be paying per kilowatt-hour with them. They flat out lied. Before I cottoned on that Australians could not be trusted I signed up with a couple of retailers and then cancelled the agreement after I read through the information they had left me and discovered they were lying. I still can’t tell if my current retailer is my best option or not. All I can be sure of is it doesn’t appear to be the worst. So if I can’t tell which retailer is offering the best deal on electricity, how on earth can I be expected to tell which is offering the best overall deal when it comes to feed-in tariffs?

  16. Diego Matter 6 years ago

    Read the Greens Leader Christine Milne’s speech on where the axing of the FIT in QLD will lead to.

    https://reneweconomy.com.au/2014/milne-regulatory-protection-last-refuge-incumbent-utilities-22010

  17. Erik van der Neut 5 years ago

    To have your feed-in rate cut nearly in _half_ within about half a year after investing $9K in rooftop solar for the home is a _very_ unpleasant surprise, to say the least. Not happy about that at all. I didn’t install the solar for economical reasons, but the 8c drop is painful.

    • Marion Herriot 4 years ago

      I know exactly what you mean. Invested $10,000 which I had worked out would take me 7 – 8 years to re-coup. Within 15 months started getting bills again. NOT HAPPY!!!!!!! – but Campbell Newman got his just desserts. I would advise DO NOT INVEST IN SOLAR, I feel that AGL has made a laughing stock of me, they would be rubbing their hands together with glee as they do up my bill every 3 months. Do I invest more for battery storage or just call it quits and accept that I have been totally ripped off.

      • Erik van der Neut 4 years ago

        Just checked my original invoice. I spent $10K on it as well. I remembered it was $9K, but that was the remaining balance after my 10% deposit. And despite these solar panels I still pay the energy company about $150/month for electricity on average.

  18. Keith 5 years ago

    One point mentioned to me and not often considered is the positive effect of Solar Energy production in the reduced critical need for further power stations, which if calculated as above, would have a greater upward pressure on electricity prices than the solar feed-in tariff?

  19. Engr. Mishuk Hasan 2 years ago

    Awesome !!! It is really working with me.

  20. Engr. Mishuk Hasan 2 years ago

    I have aim !!! Your post has fulfilled this. Thank you.

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