Rooftop solar saved the day, but households got paid a pittance

Solar power clearly played a major role in reducing stress on the grids in Queensland and New South Wales during the massive heatwave late last week, and keeping a cap on prices. But the owners off rooftop solar could ask the question: were they fairly rewarded for their contribution?

As we reported last week, coal and gas dependent Queensland (it has just one large scale solar plant and no big wind farms) has recorded more than 40 more high priced events in 2017 than renewables-rich South Australia so far this year.

According to Dylan McConnell at Melbourne’s Climate and Energy College, these spikes added more than $1 billion to the market. This compares with the $84 million coal and gas generators received from spikes in the wholesale market for the same period of time last year.

Let’s put that in a little perspective. Consumers spent more in one month for higher priced coal and gas generation than they have for the past 6 years on the state’s generous premium feed in tariff, which Energex estimates at a total of $957 million.

What is also certain is that this rooftop solar, now totalling 1.5GW in the state and nearly matching the biggest coal fired generator in capacity, if not output, is putting a dampener on prices. We know that because the CEO of Stanwell said so, suggesting a few years ago that it was killing the company’s profits.

It is only now, because of the need to burn more coal to liquify more gas for the export market, that the coal and gas fired generators are able to exercise their market power again – or may be they are getting in before nearly a dozen large scale solar plants are built, such as the 116MW plant by zinc refiner Sun Metals near Townsville because it is sick of the high wholesale prices.

McConnell says it is difficult to assess how much higher the wholesale costs would have been without rooftop solar, but here’s a graph that shows how solar is making its presence felt.

Note how the prices do not go up until after rooftop solar begins its decline, and the competition from 400,000 rooftop solar units is steadily removed, allowing the mostly government owned coal and gas generators to set their own price.

It is reasonable to assume that the difference in prices if there were little or no rooftop solar would have been substantial. And what do solar households in Queensland get for it? For most of them, little or nothing.

According to Energex, there was 543MW of rooftop solar getting the premium tariff of 44c/kWh in the heavily populated south east corner as at the end of January. The amount getting the voluntary tariff, ranging between zero and 8c/kWh is 534MW. In February, that number would have overtaken the premium tariff capacity.

The households on this “voluntary” tariff, as in other states, are supposed to be getting something that at least resembles the wholesale price of electricity, or the cost of coal. (All pricing regulators ignore the network, environmental and climate benefits of rooftop solar, although Victoria is making some move to address that).

And what have the wholesale prices been in Queensland this year? According to McConnell, based on Australian Energy Market Operator data, it has been $260/MWh, and the average weighted for the  solar is production- and when most demand occurs – has been $320/MWh.

In February so far, those prices have averaged $409/MWh and last Saturday those wholesale prices averaged more than $858/MWh, or 86c/kWh, or more than 10 times the maximum received by households relieving pressure on the network by exporting solar to the grid.

Even the futures price, which McConnell and his team have argued would be a fair way to pay the rooftop solar homes – has been averaging more than $200/MWh, or 20c/kWh.

Of course, there is some debate about how to maximise the production of solar. Some suggest battery storage, and the best way to incentivise that just might be to reduce the feed in tariff, or “pay out” the remaining obligation to the premium FiT beneficiaries and use it to invest in battery storage.

Encouraging more solar panels to face west could also be useful, ensuring that more solar is consumer and/or exported to the grid later in the afternoon and early evening peak.

Theses graphs illustrate how west facing panels could push rooftop solar production further into the evening. The first graph is the estimated output of rooftop solar arrays in Sydney, Brisbane and Canberra if they faced west – that pushes it further int the evening. Canberra is further west so provides more output at 7pm.

And this graph below illustrates the change the profile in Sydney, providing less at the midday peak and more at the network peak in the evening.

Addendum: It was surprising to see Andrew Probyn, the new political editor at ABC’s 7.30 Report, at work on energy policy again on Monday, choosing to focus on the dangers and high costs of “intermittent renewables” in South Australia, without ever mentioning the higher prices this year in coal-dependent Queensland and NSW.

We’ve already taken issue with Probyn for casually repeating Coalition talking points in his editorials. Just because the Coalition has ignored Queensland, doesn’t mean he has to as well. Surely this is a red flag to the program’s editors/producers? Kudos, though, for the program’s Matt Peacock for doing so – reporting on Queensland price surge – in a separate report.