Solar shocker - the network defence against solar PV | RenewEconomy

Solar shocker – the network defence against solar PV

A church in Queensland recently installed a 22kW solar system and was shocked to find its next electricity bill was 15% higher, even though its consumption had fallen by one third. Welcome to the murky world of network tariff regimes, and why battery storage will take off.


Phil was in a state of shock earlier this month when he received his electricity bill from hit electricity utility – the first since a 22kW rooftop solar system had been installed at a local church in Buderim, Queensland, where he works.

Everything seemed OK. The addition of solar meant that the church’s energy use fell by one third from the previous month, as it was supposed to do. With the help of LED lighting the church had installed in previous months, the total energy use for September was around one half of the same month a year earlier.

But there was a catch. And it was a nasty one. The electricity bill had not fallen as Phil had expected, but had actually jumped by nearly 13 per cent. While his energy consumption fell, his network charges soared by more than 50 per cent – from $1,089 a month to $1,589, taking his total bill to $2,499 from $2,223 a month earlier.

“It was a bit of a shock,” says Phil, who in the interests of the church does not want to publish his family name.  “You try to do the right thing to minimise energy use, and then we got this,” .

The explanation from the retailer was vague and unhelpful – something about moving to a different tariff regime. It wasn’t until RenewEconomy investigated the case that the problem became clear.

The installation of a new meter along with the solar array triggered an automatic “upgrade” of the church’s status from small business user to large business user.

That meant very low energy costs, and very high fixed charges in the form of network tariffs.  The church paid the retailer 9.5c/kwh at peak times and 6.3c/kWh at off peak times for every kilowatt hour consumed.

What did change was the network component: the charge for energy usage on the local network dropped from 12c/kWh (or $961 for the month) to just 1.3c/kWh, or just $5.62 for the month.

But the “fixed” charge for the network also jumped from 55c/day to $4.50 a day.

And the coup-de-grace was a new “demand” charge of 22.3c/kW, or a total of $1,227. The demand charge is calculated on the heaviest usage in any one 30 minute period in a month. In this case it was a Sunday morning at 10.30, when church activities were in full swing and it just happened to be a cloudy and wet day.

The monthly electricity bill before solar was installed …

church no solar


And the monthly electricity bill after solar was installed …

church solar

As it turns out, the church was fortunate, because the addition of LED lighting and solar means that it will fall below the 100/MWh threshold of annual consumption that defines a large user, and can once again be considered as a small business user. That puts it back into a bracket where reduced consumption does benefit.

But the issue highlights some of the bizarre tariffs in the Australian market. The utilities argue that these are “cost reflective” and fair, many consumers and the solar industry argue that it is just the opposite. One particular tariff that has horrified consumers is the $500/day fixed charge for very large business users in regional Queensland. It only applies to less than 50 companies, but it is the principle that counts.

Advocates say that these tariff regimes underline the case for battery storage in many instances. The Buderim church, as is now commonly required by the networks, had to install a device that prevents it from exporting any excess solar back to the grid – so it is motivated to consume all its output on-site.

Had it remained on the large business users tariff, it would have made sense for the Buderim church to install battery storage, just to manage those peaks like the cloudy Sunday morning.

This point was underlined by Andrew Simpson, of Brisbane-based Verdant Energy, in this piece on Why storage already makes commercial sense in Australia.

Simpson say says this is particularly the case for business customers, particularly those on demand charges whose bill is influenced less by how much power they use, and more by the level of their maximum demand. Battery storage can help shave those demand peaks, and businesses are now waking up to that opportunity.

As one network insider explained:

“Solar makes sense for small business customers because panels generate kilowatt-hours, so it’s a straight reduction off the kilowatt-hours drawn from the grid and hence a reduction in the network charges.

“Above the threshold, we switch the customer to demand pricing. We change the meter to an electronic, remote read one that measures average demand every 1/2 hour. The energy (kWh) component of the network bill falls to almost zero, and is replaced by a charge that is calculated on the maximum of all the 1/2 hour demand measurements taken in the month.

“Solar really does not assist a large customer’s network bill, unless it can be certain that the sun is shining bright when the peak demand at the customer’s premises is occurring so that the solar is offsetting the actual demand in that same 1/2 hour.

“This is where I advocate smarter control systems, where the solar can ‘block’ some energy-hungry devices is the sun is not shining – for instance, air-conditioning is set to economy mode, compressor set points are wound back, motor start parameters are adjusted when the sun is not out.”

Or, by putting in battery storage.

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  1. patb2009 6 years ago

    going to LED lighting is going to drive a lot of changes.

  2. Geoff Bragg - SEIA 6 years ago

    Uncanny how the request for half-hourly interval data from the energy retailer seems to trigger some assessment of the tariff structure a commercial customer is on. I have seen cases where the commercial customer has been on a bundled no-demand tariff for decades, who suddenly ends up on a demand tariff, before we’ve even made the case to go solar.
    I’m told the energy retailer is under an obligation to change tariffs and notify?? the DNSP if they become aware of energy users on the incorrect tariff – i.e. using >100MWh or >160MWh / year. I recently lost an almost certain 100kWp job recently because of this: <4 year payback became 6.9 yrs , even after account for reduce peak demand charges.

    You jump one hurdle and they put another one in front of you…..

    • Ian 6 years ago

      As a commercial solar installer you are going to have to provide an energy management plan and strategy for your clients. Namely, load management, peak load reduction, energy generation and storage, use of heat and ice storage, load outsourcing. For example, a company that uses 150MWH a year of electricity, could save 20MWH with insulation and LED lighting and self consume 40MWH of solar electricity from a 30 to 35 KWp array. They could then move from a large business electricity consumer , with no incentive to conserve to a small business consumer with every incentive to do so.

  3. Ricardo_62 6 years ago

    If these companies haven’t heard of “the death spiral” this is an excellent way for them to find out. As for charging based on “demand” at 10:30 on a Sunday morning……

  4. Chris Fraser 6 years ago

    It appears to be another case of retailers not being exactly up front about charges likely to be incurred by a certain class of user. How would any moron (even if there was one at the retailer or the QCA) expect any person fitting 22kW to the roof, using less imported energy, migrate from a small business user a large business user ? It isn’t true in the spirit of the matter, or of the fact.The truth of it probably is the retailer is just bungin’ it on. Maybe they believe amazingly, that this 22kW investment, and straight after it this energy bill, would not be noticed. I can think of a couple of retailers that would love to try that situation on.

  5. News Views 6 years ago

    Another case of talk with your retailer before you make decisions like this that impact your consumption. Problem is the church is not considered a big enough customer and retailers hide behind their call centres. The other option would have been to look at Energex’s web site and seek advice as they are the network owner and operator.

  6. howardpatr 6 years ago

    Be nice to see “The Minnow’, Greg Hunt asked to explain this in Parliament.

    No doubt we would hear a “load of old cobblers” while he defended the fossil fuel electricity generators.

  7. Jon 6 years ago

    Networks have traditionally charged for consumption rather than demand because historically that was all that the meters measured. However demand is a much more relevant measure of the cost of providing a connection to a premises. As meters become smarter, you can expect to see the tariffs change and any potential investor in their own generator should consider this when making their investment decision. Whether this ultimately results in customers leaving the network in significant numbers remains to be seen, but one thing you can guarantee is that the networks will always respond in their own best interests.

  8. Robert Johnston 6 years ago

    a classic example of the Regulator being totally asleep at the wheel or worse, far too close to the utilities and happy to see consumers getting ripped off.

  9. Jason 6 years ago

    We have to take ownership of the grid. Directly democratically elected board accountable to us the community. Take it away from private business and governments …

  10. phred01 6 years ago

    The time bomb is ticking for retailers & distributors. All it takes battery storage to fall to an affordable criteria Solar will take off in a big way. Even @ the current penatration if everyone when off grid overnite the system would hemorrhage. The power grid will go back to high peak and over capacity @ nite.

  11. Ben Courtice 6 years ago

    This is just a microcosm (not so micro!) of the consumer economy broadly. Under a thin veneer of “user pays” rhetoric, everything we do is increasingly subject to extortionate “because we can” fees and charges. From the outrageous charge of anything up to 10% when you withdraw money from the bank, to stories like this.

  12. Stuart Paterson Evans 6 years ago

    Sorry Giles. I couldn’t make myself read past the sentence which implied that 1589 is more than one and a half times 1089

  13. Ronald Brakels 6 years ago

    Using fossil fuels kills people. While apart from direct and serious accidents it’s not possible to point at bodies and say, “Fossil fuels killed them!” in a stochastic way, the use of fossil fuels clearly results in a very large number of deaths. For a power company to deny this is like an armed robber denying he knew that bullets could kill people. That is, not in the slightest bit believable. When electricity distributers require, as in this case, that point of use solar power not export clean and basically free electricity and so result in more fossil fuels being burned it is evil as this constributes to people dying. And it is not a matter of the grid being unable to handle the input for if the grid voltage goes too high the point of use solar system will simply cut out as does every other grid tied rooftop solar installation. We, as a society as a whole, should strive to be less evil and this would be a good place to start.

  14. Alan Baird 6 years ago

    TINA: There Is No Alternative is what this mob of poltroons would like us to think but eventually when storage is solved completely there WILL be an alternative and the
    quitting of the grid will be done without a backward glance… or a pensive moment in doing so. It will be the ultimate market failure. These price gouges indicate the first signs.

  15. Peter_61 6 years ago

    It is unclear to me if the demand charge is calculated from the maximum recorded “half hourly average demand” (as the article suggests) or the “maximum instantaneous demand” at any time within the billing period. We are looking to install lag timers to stop all AC’s starting at the same time as we are facing significant demand-based charges on our electricity bills. If the invoicing is upon half hour averaged demand, we may be wasting money.

    • Michael 6 years ago

      it is the average consumption used during the 30 minute period ie
      Total kVAh ÷ 0.5h = Peak kVA
      Instantaneous Peak powers such as motors starting only count to the extent that they increase the apparent energy and not to the actual peak reached. Your fears are well founded, whether the motors start together or are staggered will have very little influence on the price you pay though it is good to do this where it can easily and cheaply be implemented.

      If everyone whispers Death Spiral together, it will form a shout that the DNSP’s will hear and fear.

  16. Rob G 6 years ago

    Not long now Batteries really are just about here. How will they change you we you aren’t connected to the grid anymore? I’m sure they’ll try….

  17. lin 6 years ago

    Way to go, energy retailers! How to piss off hundreds of customers with one stupid, petty, greedy decision. This sort of attitude will see lots of people exit the grid sooner than could be justified on purely financial terms. So go ahead. Keep making your customers angry. Unfortunately for us all, they have complicit government and regulators on their side.

  18. Ian 6 years ago

    Whats to stop a large company from outsourcing certain loads such as heating or refrigeration. This could reduce the company’s electricity demand to less than 100MWH per year. The provider of heat or airconditioning could also qualify for a small business tariff and both companies could install as much solar as they liked. The company providing the heat or airconditioning service could be owned by an employee trust or a charity. An example could be a large shopping centre. They could rent out roof space to an airconditioning supplier who would install solar panels and refrigeration equipment sufficient to cover the needs of the shopping centre. This would be a reasonable commercial arrangement and would not attract the ire of any regulator. Process heating is another load that could be outsourced. A private hospital could rent out part of its building to a second company for autoclaving and other sterilisation services.

  19. Genevo 6 years ago

    Great piece Giles, a very clear demonstration that the pain really is in the power! The shining light in all of this I believe, is that the ongoing network charge bloat to residential consumers and demand charge increases to the C&I sector are fuelling mainstream awareness of more sustainable alternatives, which will in turn, more rapidly drive pricing down as solar+storage scales. The astounding fact, for me, is how slowly the generators/utilities/energy retailers are reacting to this inevitability, opting it would seem to the well worn ‘cattle prod’ approach rather than seeking viable long term solutions. The problem for them now is that their stockyards have a gapping big hole!

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