NSW Distributed Network Service Provider (DNSP) Endeavour Energy is introducing two-way tariffs for solar owners starting next month. Find out how this will work and also about Endeavour’s new free “solar soak” tariff.
Endeavour Energy is one of three DNSPs in New South Wales; providing electricity for 2.7 million people in Sydney’s Greater West, the Blue Mountains, Southern Highlands, the Illawarra and South Coast.
Network costs (poles and wires) are an element of an electricity bill, and a fairly substantial component too – around 27% of an average residential bill and 24% for small businesses. Last month, the Australian Energy Regulator (AER) approved increases in Endeavour-related charges for the new financial year. Both residential and small business customers will pay a bit more over FY24/25 – $29 more for the former and $48 for the latter on average1 according to Endeavour.
Also approved are two new network tariffs retailers can offer residential and small business customers; both related to solar energy.
New “Solar Soak” Time Of Use Tariff
A new solar soak tariff could be made available to all customers, whether they have solar panels or not. And the really interesting thing is it will be free of charge between the hours of 10am and 2pm each day. Why make it free? To soak up excess solar energy in the grid during that timeframe, which can reach a level that it creates grid management headaches and potentially threatens network stability.
“This is the cheapest distribution network tariff we’ve ever offered,” said Endeavour last month. “We are encouraging retailers to pass on this cost saving to all their customers.”
It doesn’t get cheaper than free, but it will be interesting to see how retailers integrate it into their time-of-use plans. And on that, Endeavour says it expects 71% of its customers to be on cost-reflective tariffs such as time-of-use by 2029, up from just 8% in 2022.
Two-Way Solar Tariff
As with Ausgrid, Endeavour’s two-way solar export tariff has a carrot and stick aspect. It is separate to the feed in tariff offered by retailers, but will affect it. The idea is by levying a charge for solar exports during the middle of the day and providing a reward for exports during peak (late afternoons and evenings), solar owners will respond by changing how they consume their self-generated solar electricity.
Endeavour Energy’s announcement didn’t mention pricing, but its annual pricing proposal from May that the AER signed off on indicates (N61 tariff):
- A charge of 1.75c per kilowatt-hour exported during the middle of the day (assumed to be 10am – 2pm), 7 days a week.
- A reward of 11.0357c/kWh for exports during peak (4 – 8pm) on weekdays during the “high season” (1 November to 31 March).
- A reward of 3.2695c/kWh for exports during peak on weekdays in the “low season” (1 April to 31 October).
Furthermore, there will be a 2,920 kWh per annum charge-free threshold for electricity exports, which works out to 8 kWh a day. It was originally going to be a significantly lower threshold, but the AER stepped in and encouraged Endeavour to up it.
“Up to 290,000 solar customers in the Endeavour Energy network could benefit from this tariff if offered by their retailer,” says Endeavour.
But depending on their energy consumption habits, not all may benefit – particularly among those households without a solar battery. And like the solar soak tariff, it remains to be seen how two-way pricing will be integrated by electricity retailers.
Existing customers will be able to opt-in to the N61 tariff if it’s offered to them from July 1. But from July next year, new and upgrading customers who export electricity back to the grid would be moved onto two-way pricing by default – however, they will be able to then opt-out if they choose.
Footnotes
- The AER estimates the average impact for customers on the most common tariffs to be $81.94 higher for residential customers and $456.00 higher for small business customers. That’s a big difference. But when the AER refers to network costs it also includes transmission (TransGrid) and government scheme costs. ↩
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My house has solar but my house only has a non-smart digital meter (ie someone has to come out and read the meter every 3 months for billing).
Would a time based two way tariff be applicable to my scenario?
I believe that this arrangement is only available to digital meters that are communications enabled.
Unlikely, since you have 3 month billing which means the meter is a accumulative meter, not an interval meter. Interval meters are required for time of use billing and can be billed monthly. Even though the meter is digital, it does not automatically mean it’s an interval meter. The digital meter makes it easier for the meter reader as it uses an optical receiver to collect the reads. However, interval meters that are smart meters can be read remotely and no physical site reading is required.
The other advantage of interval billing/monthly billing, you can switch retailers very quickly (usually between 3-10 business days, I switched 5 times last year with ease to chase the best plans which saved me over $1000). Whereas accumulative meters, you have to wait till the next billing period to switch, meaning you must switch at least 10 business days before the end of the 3 month billing, otherwise, you will be stuck for another billing period.
You’re also more likely to have a controlled load for Hot water heating. If you do go ToU, ditch the controlled load tariff and shift your hot water heating during the day when solar production is at its highest. That way, you virtually get free hot water heating and avoid the daily surcharge for controlled load tariffs.
As for ToU, all depends on how much you use during peak periods as this would be the most expensive time to use electricity unless you can shift as much as possible to shoulder/off peak.
Interval metering has far better advantages as one can check their bills every month to ensure the right plans are chosen. Nothing worse to find out 3 months later, the wrong plan is chosen.
Seems like more encouragement for folk to simply go off-grid. 10am-2am is when most of the solar power is generated so they’re targeting the biggest export window – at this time of year practically the only productive time.
By my guesstimate the charge would cost me about $150 per year, and I’m already losing something similar via the drop in FiT come July. Instead of earning enough for an overseas holiday each year as in the good old days, FiTs had dropped to slightly below the break even point. Now it’s a definite loss.
Going offgrid means saving supply charges which would be half to a third the cost of a ‘basic’ battery system, though offgrid would likely require a slightly larger system ‘just in case’. And of course there’s the generator issue for those rare events where solar output is so low you can’t recharge your batteries – once every few years?
If connection fees rise much more, usage charges increase much more, and\or real FiTs drop much more, how many will simply opt out of the grid? And what happens if large parts of particular neighbourhoods, or towns, simply go offgrid?
If a significant number of people go off-grid I can see the day coming when a mandatory availability charge will apply to everyone with grid power in their street whether it is connected and used or not. This is already the case with our water supply.
OK… I’ve just tried it out for my January period on Endeavour’s tariff
Assumptions is that the retailer FiT is on top of the Endeavour’s 2 way tariff
So, for the export charge during 10am-2pm and normal retailer FiT is 8c/kWh
Retailer FiT = 8c/kWh, then with export charge, effectively brings it down to 6.25c/kWh
Then for the 4pm-8pm, period
Retailer FiT = 8c + 11.0357c = 19.0357c/kWh
If this is correct, then for my January solar exports and aligning the exports during the appropriate period
1. $60.25 for exports during 10am-2pm all of January
2. $56.26 for exports during weekdays 4pm-8pm in January
Total exports earned = $116.52
Without 2-way pricing at the flat FiT rate of 8c, exports would have earned $66.12.
I would be over $50 better off with 2 way export pricing. And that was just for January alone.
So, what’s all the fuss about then for this so called “sun tax”?