Queensland may change solar tariffs to match peak demand

The Queensland government has asked the state’s Competition Authority to report on the potential benefits of introducing of time-of-use solar tariffs in the state over the next year, marking the latest move by the nation’s state governments to offer consumers a fairer price for their rooftop solar generation.

In a letter to QCA chair Roy Green, Queensland energy minister Mark Bailey asks the Authority to calculate spot wholesale electricity pool price values for different possible peak and off-peak combinations,  over the course of a day.

The data will then be used to compare peak and off-peak values, weighing up any potential cost savings to consumers, as well as to network owners – in this case, the Queensland government.

Bailey says he expects the Authority to “illustrate the impacts and outcomes of different peak and off-peak periods,” to inform rooftop solar consumer understanding.

“This must include presenting each of the potential peak and off-peak periods against a typical solar generation profile for a relevant location covered by the Ergon Energy network to allow solar customers to understand the timing of solar generation compared to the possible peak and off-peak periods,” the letter says.

Queensland currently has a feed in tariff of 6c-8c/kWh – which is voluntary in south east Queensland but ,andatory 6-8¢/kWh in regional areas where Ergon operates.

However, Queensland’s wholesale electricity prices have averaged more than 10c/kWh for the 2016/17 year, suggesting that solar households are being sold short, and average tariffs at afternoon peaks have been significantly higher.

The QCA is also expected to undertake public consultation on the timing of peak and off-peak periods, and report to government which times are preferred by consumers.

The move by the Palaszczuk government follows recent tariff changes in Victoria, where a premium for solar – because it produces during the day – was added to the existing feed-in tariff, along with avoided loss factors on transmission lines, and avoided costs of carbon, taking the tariff to a minimum 11.3c/kWh, up from a previous 5c/kWh.

As we reported at the time, the increase announced by the Essential Services Commission in February, was the result of a big rise in wholesale prices, and the Victoria Labor government’s instruction to include an implicit carbon price, network benefits and environmental benefits into the tariff.

The ESC has also been asked to set varying tariffs, depending on the network benefit for local grids. But it says it has set a flat rate for the first year to “allow sufficient time for consultation with energy retailers on the implementation of multi-rate feed-in tariffs in future years.”

A draft report from the Queensland Competition Authority is expected to be published by 9 June 2017, after which time the QCA will undertake public consultation on the timing of the peak and off-peak periods examined in the report.