Queensland lifts solar feed-in tariff by 17% in response to surging gas prices

Households in regional Queensland will get a more than 17 per cent boost to their rooftop solar feed-in tariff come July, in response to rising electricity prices driven by the high cost of gas power in the state.

In its final report on what regional customers should be paid for the solar energy they export to the grid, the Queensland Competition Authority (QCA) has set the tariff at 7.4 cents per kilowatt hour for 2016-17 – a 17.3 per cent increase on last year’s tariff of 6.3c/kWh.

QCA chair Roy Green said the raise in the tariff was “mainly due to an increase in wholesale energy costs,” driven by increased demand from Queensland-based LNG plants and higher fuel costs for gas-fired generation.

“The QCA’s approach ensures customers with solar panels, receive a fair return for the energy they export to the grid. The QCA calculates the true market value of the energy,” he said.

But while the increased tariff is an improvement – particularly when most solar tariffs the country are going down – the new rate still fails to reflect the added benefits distributed solar offers the network in avoided infrastructure costs, the customer in lower power prices, and the environment, and other potential benefits.

These benefits were confirmed recently in a study by Victorian utility Ausnet, which found that the value of solar and storage was about equal to both consumers (who save money) and the networks (who avoid upgrades).

Victoria’s Energy Services Commission, in response to the state government’s push for a “fair value on solar” has also recommended climate benefits be factored into the solar tariff. An investigation into network benefits will be released later this year.

The Queensland government is also commissioning the local Productivity Commission to investigate the “fair price” of solar, but its early considerations on the issue have not been heartening.

It rejected the idea that solar households should be rewarded for any network benefits, such as reducing peaks and deferring investment, and for pulling down the price of wholesale electricity, or any other social benefits.

This is in contrast to a study commissioned by the US government and published by the National Renewable Energy Laboratory (NREL) found that solar could deliver $US400 billion in environmental and public health benefits in the US alone, by 2050.

Another study by the Brookings Institute found that a “net tariff” – one that pays the same price as the retail price for solar exports, rather than one fourth or one third in Australia – would have net benefits for all consumers, not just solar households.

QCA’s Professor Green said the QCA did acknowledge, in its ruling, that when retailers bought energy from customers with solar panels, they avoided some of their normal business costs.

“They do not buy wholesale energy from generators and they avoid certain fees levied by the Australian Energy Market Operator and the costs of energy losses associated with transporting electricity over long distances across transmission and distribution networks,” he said.

But Green and the QCA seem to believe that these savings are cancelled out by the retailers “normal business costs,” including retail operating costs and transmission and distribution charges.