Rooftop solar subsidies – ACCC calls for axe.

Rooftop solar subsidies should be completely removed and the solar feed-in tariffs should be managed at a state rather than a federal level, according to recommendations from the competition watchdog.

Rooftop solar subsidies in Australia

The Australian Competition & Consumer Commission’s electricity affordability report, which was released this week, highlights the cost of our National Energy Market, which include the large-scale renewable energy target, the small-scale renewable energy scheme and solar feed-in tariffs.

The ACCC said the cost of the LRET are expected to fall in the years after 2020, and were happy to leave the scheme to wind up on its 2030 end date. They said that the SRES, however, cost $130 million in 2016-17, and should be wound down and abolished by 2021, almost ten years ahead of schedule, to reduce costs for all consumers – not just those with solar installed.

The report, according to the Australian, found that households with solar panels installed earn $538 per year via feed-in tariffs, which doesn’t count the fact that they pay less for electricity as well:

“Meanwhile, non-solar households and businesses have faced the burden of the cost of premium solar feed-in tariff schemes and the SRES,” the ACCC said.

“While premium solar schemes are closed to new consumers, the costs of these schemes are ­enduring.”

With the New South Wales solar feed-in tariff to drop by 44% this financial year, the glory days of feed-in tariffs could be behind us. But at what point do we stop to count the social cost (i.e. the environmental displacement)? 

Rooftop solar subsidies in Australia - Opposition Leader Bill Shorten
Rooftop solar subsidies in Australia – Opposition Leader Bill Shorten (source: Wikipedia)

The 398 page report has ‘produced vital ammunition to reform energy’, has been ‘hijacked by zealots’ and doesn’t justify the building of new coal-fired power stations, depending on who you ask. About an hour ago Bill Shorten admitted he hasn’t read the ACCC report yet so it’ll be interesting to see what his thoughts are. Certainly just early days for this conversation, but it’s good to see Australia talking about our energy future and trying to come up with a plan. Watch this space! 

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New South Wales solar feed-in tariff to drop by 44%

The New South Wales solar feed-in tariff is set to drop by 44% after IPART, the state pricing regulator, confirmed previously drafted cuts to the state’s feed-in tariff benchmark for 2018/19.

New South Wales solar feed-in tariff

New South Wales solar feed-in tariff IPART
Click to view New South Wales solar feed-in tariff changes via IPART (source: IPART.NSW.GOV.AU)

The regulator, IPART (Independent Pricing and Regulator Tribunal for NSW) advised in May that they will be recommending heavy drops in the tariff with the release of a draft publication entitled ‘Solar feed-in tariffs: the value of electricity from small-scale solar panels in 2018-19. 

It looks like the solar feed-in tariff drops will be going ahead – so let’s take a look at what this means for people with solar, and people without:

As per Renew Economy, IPART justified their slashing of the prices in advising that all customers would be affected if they didn’t act.

“We set the benchmark range based on our forecast of the average price that retailers would pay for solar exports across the day (weighted by solar output) if they were buying this electricity on the wholesale spot market,” the report, released yesterday, said.

“We consider that this is reasonable, and that a higher benchmark would lead to unacceptable outcomes.

“Specifically, if retailers were required to pay more than this for solar exports, they would be paying more than they pay for wholesale electricity on the NEM.

“As a result, retail prices for all customers would need to be higher to recover the difference,” the report continued.

Those who have already invested in solar are a little less magnanimous about the changes – with Shani Tager from Solar Citizens conveying her opinon via email to RenewEconomy: 

“The decision to cut the feed-in tariff punishes solar owners, it’s like getting a pay cut for working overtime,”

That particular analogy might be a bit of a stretch but it’s interesting IPART aaren’t considering the ‘social price’ of carbon like Victoria are currently doing. This has raised the ire of the Greens as well:

“If the NSW government are serious about supporting renewable energy then they should be change the criteria to assess solar feed-in tariffs to recognise the multitude of benefits solar energy brings,” Greens MP Tamara Smith said.

To sign off, IPART gave us a hint of things to come and how they plan to deal with the situation in the future:

“We consider that solar customers should be treated like any other generator in the competitive electricity market, which means that they take or pay the market price – and are not otherwise compensated or penalised for their impact on these prices,” the report said.

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NSW solar feed-in tariff halved for 18/19.

The NSW solar feed-in tariff is set to halve in 2018/19 as the New South Wales regulator (IPART) has flagged changes to its price guide, citing lower wholesale prices as the main catalyst.

NSW solar feed-in tariff

NSW Solar feed-in tariff 2018
NSW Solar feed-in tariff 2018 (source: ipart.nsw.gov.au)

IPART (Independent Pricing and Regulatory Tribunal for NSW) released a draft publication entitled ‘Solar feed-in tariffs: the value of electricity from small-scale solar panels in 2018-19‘ on Tuesday. It sets the benchmark for exported solar back into the grid for 7.5c/kW rather than the 11.9-15c/kWh range we saw in 2016/17.

It’s important to note that this is merely a benchmark and supply/demand will continue to define how much solar export it worth. With the wholesale prices currently falling and tipped to continue in 2018/19, it makes sense to see the FiTs adjusted accordingly.

IPART justified their decisions by explaining retail prices would rise if they didn’t slow down the FiT given the rapidly sinking wholesale prices (the most recent forward contract wholesale price from the ASX is 7.4c/kWh):

“We set the draft benchmark for the all-day solar feed-in tariffs based on our forecast of the average price that retailers would pay for solar exports across the day (weighted by solar output) if they were buying them on the wholesale market,” the report advises.

“For 2018-19, our draft all-day benchmark is 7.5c/kWh. We consider this benchmark is reasonable, and that setting a higher benchmark would lead to unacceptable outcomes.

“In particular, if retailers were required to pay more for these solar exports than they would pay for wholesale electricity on the NEM, retail prices for all customers would need to be higher to recover the difference,” the IPART report continues.

We’ve written previously about the NSW solar tariffs with regards to retail purchase or electricity – there’s a large disparity between offers and we expect that to continue. Whether you are feeding back into the grid or not, it’s important to be across the solar deals so you’re getting maximum return from your investment / paying as little as possible for your electricity.

Any questions? Please ask below!

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UNSW Solar – uni to go fully solar powered

UNSW Solar has taken another huge step forward – the University of New South Wales has signed a 15-year corporate PPA (Power Purchase Agreement) with Maoneng Australia and Origin Energy to become 100% solar powered, thanks to Maoneng‘s Sunraysia solar plant.

UNSW Solar 

The Sunraysia solar farm, which will be Australia’s biggest solar farm, is planned to commence construction in April or May of this year, at a cost of $275 million. It will generate at least 530,000 megawatt hours of electricity each year, of which UNSW will purchase 124,000 – almost a quarter. They signed an agreement on December 14, 2017, which will run for 15 years. A three year ‘retail firming’ contract was also signed with Origin, as the electricity retailer. This will help manage intermittency of solar production.

UNSW Solar - UNSW President Ian Jacobs (source: newsroom.unsw.edu.au)
UNSW Solar – UNSW President Ian Jacobs (source: newsroom.unsw.edu.au)

UNSW president and vice chancellor Ian Jacobs discussed the partnership with Fairfax, advising that it would comprise a key part of making UNSW’s entire operation energy carbon neutral by 2020.

“Over the past six months, UNSW has collaborated with our contract partners Maoneng and Origin, to develop a Solar PPA model that leads the way in renewable energy procurement and reflects our commitment to global impact outlined in our 2025 strategy,” he said.

Mr Jacobs wouldn’t provide specifics on pricing, but did note that it will be helpful to UNSW in a financial sense:

“It’s a highly competitive agreement financially,” he said.

“The Solar PPA arrangement will allow UNSW to secure carbon emission-free electricity supplies at a cost which is economically and environmentally attractive when compared to fossil fuel-sourced supplies.”

Energy Action, a company who assisted during the tender by with energy market analysis, noted that the PPA would help UNSW have greater clarity on their future electricity spends and not be as vulnerable to electricity price fluctuations:

“This agreement provides UNSW with a direct line of sight over the source of renewables supply, reduced emissions, and greater certainty around prices over the next 15 years,” Energy Action chief executive Ivan Slavich said.

Kelly Davies, Senior Consultant at Norton Rose Fulbright, was quoted on the university press release as saying: “UNSW is a true leader of innovation. The PPA market has been extremely dynamic in the last 12 months and deals like UNSW’s have been critical in driving real change in the way universities and other users procure energy.”

UNSW have also been the recipient of a few solar grants from ARENA over the past years so the idea of them using renewable energy to research and upgrade renewable energy is certainly a palatable one and it’s amazing to see so much energy from the Sunraysia Solar Plant already accounted for! 

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2017 NSW Tariff-Tracking Report released.

The St Vincent de Paul society has released its fifth NSW Tariff-Tracking report and it shows the huge disparity between deals the retailers are offering – with the best offers saving almost $840 p.a. compared to those on the worst plans. In regional NSW this range is even worse, with the difference reported by the SMH as up to $1230. Australian solar power plans are in need of a shake-up and this week the government have taken the retailers to task by asking them to change the way they deal with discounts and rolling over plans.

2017 NSW Tariff-Tracking Project Report Vinnies
2017 NSW Tariff-Tracking Project Report (source:vinnies.org.au)

NSW Tariff-Tracking

Despite ballooning wholesale energy costs, retailer AGL reported a net profit of $539m for the 2016/17 financial year. The profits of energy retailers have been in the crosshairs of the government over the past few months as their dubious tactics of offering short term discounts and then rolling customers onto more expensive plans without the discounts have been examined.

On Wednesday the government met with eight power companies (Energy Australia, Momentum Energy, Simply Energy, Alinta Energy, Origin Energy, AGL, Australian Energy Council and Snowy Hydro) to discuss the rapidly increasing prices and come up with a solution to the murky short-term ‘discount’ based business model they are employing. After the meeting Prime Minister Malcolm Turnbull discussed the issue and the government’s fix, saying  “They are on … discounted plans that have run out, and they are now on a standard offer and paying too much for their electricity. The retailers have agreed that they will write to their customers who have reached the end of a discounted plan and outline, in plain English, alternative offers that are available,”

Given that the Energy Market Commission found 50% of households haven’t changed retailer or plan in the last 5 years, there’s a lot of money being left on the table. According to Energy Minister Josh Frydenberg the Australian Energy Regulator (AER) have told the government households could save over $1,000 per year by changing retailer/plan.

In terms of the power companies, they were mostly happy to agree to Turnbull’s plan, but there was ongoing discussion about Canberra’s dilly dallying with regards to the Clean Energy Target. Origin Energy’s chief exec, Frank Calabria, was quoted by the SMH as saying that “to deliver a genuine reduction in prices for Australians, we must also find a way through on energy policy, including a Clean Energy Target. This is necessary to unlock investment in much-needed new supply to replace our ageing coal-fired power stations, and transition us to a cleaner, more modern energy system”.

Click here to view the full report directly from the Vinnies website.

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