Solar and storage boost? NSW households face 5c/kWh price rise

The continuing surge in New South Wales wholesale electricity costs – and in other states for that matter – is likely to add even more incentive for households and business to turn to rooftop solar and battery storage.

NSW baseload futures prices for 2018 have jumped another $10/MWh to $115/MWh in the last two weeks, meaning that a rooftop solar system is cheaper than the wholesale price of the coal-fired grid, let alone retail prices which are more than twice as high.

Analysts at Morgan Stanley say that if the wholesale price increase was to be fully captured by energy retailers, then the retail price would need to rise by around 5c/kWh, or about 20-25 per cent.

This scale of rise, shocking as it would be, is unlikely to happen because most retailers will have a rolling hedge book that will mitigate part of the cost increase.

Still, Morgan Stanley expects that retail prices will still have to increase around 10 per cent from July 1, which would add at least 2c/kWh on to energy costs, which are currently 21c/kWh to 24c/kWh, not including hefty network charges of up to $1.50/day.

This should be yet another incentive for NSW households to invest in rooftop solar. The state trails most other states on solar penetration, with around 15 per cent of homes, compared to nearly 30 per cent in Queensland and South Australia.

And the fact that NSW retailers offer such a small amount on solar exports (most at around 6c/8c/kWh, with a couple of outliers on 12c/kWh) this should increase the attraction of battery storage.

NSW is already seen as the best state for battery storage because of the recent expiry of premium feed-in tariffs.