NSW’s Independent Pricing and Regulatory Tribunal is preparing its approach for calculating solar feed-in tariff rates in the years ahead and is calling on solar owners in the state to share their views and experiences.
NSW feed-in tariff rates are set by IPART annually. The benchmark range it provides isn’t mandatory, but most electricity retailers offer a feed-in tariff and some well above the benchmark.
For example, the “all-day” solar feed-in tariff benchmark range in New South Wales for 2020-21 is 6.0 to 7.3 c/kWh, but quite a few retailers are offering FiTs in the 9.5c – 22c range. Solar owners should keep in mind the highest feed-in tariff doesn’t necessarily represent the best overall deal. The best electricity plan offers a balance of high feed-in-tariffs, low usage tariffs and low daily charges.
When IPART calculates the benchmark range, it’s based only on the market price of wholesale electricity at the times solar is exporting to the grid. Elsewhere in Australia, other factors may come into play. For example, in Victoria avoided transmission and distribution losses and avoided social and human health costs of carbon are also considered.
Given wholesale electricity costs continue to fall thanks to renewables, IPART has signalled another cut is on the cards for 2021/22. But again, IPART’s rates are only a benchmark – electricity retailers are free to offer as little or as much as they like.
Consultation On FiT Calculation And Other Issues
IPART has released an Issues Paper focusing on how it should calculate the value of solar energy when it sets the benchmark. Additionally, IPART is wanting input on other issues, including:
- Whether there is enough information for customers to decide whether to invest in solar, how much solar to install, and the electricity retailer offer they should select.
- Whether there are new retailer offers being made available that can assist solar households optimise the times their self-generated energy is used, exported, or stored.
- Any barriers to installing solar batteries.
- Any problems in customers getting paid for their solar exports and other export related issues.
Solar owners interested in providing feedback on any or all of these issues can register to participate in an online public hearing on 9 March 2021, and IPART is also accepting written submissions until 15 March 2021. Further information is available here.
The new benchmark rates for 2021/22 will be released by IPART in June. If the new rates are lower and retailers decide to reduce what they offer, solar power will remain a great investment. It will just mean maximising self-consumption of solar energy will become even more attractive as the retail rate households pay for mains grid electricity is far higher than what is received for solar exports.
The FiT benchmark rate drop for 2020/21 certainly didn’t discourage solar uptake in the state, with IPART noting an 18% increase in the number of NSW households with solar panels over the past year.
Even at the low end of the 2020/21 range – and as mentioned, a bunch of electricity retailers offer well above this – a 6.6kW solar system installed in Sydney can achieve a simple payback in around 6 years.
To gauge the potential financial benefits of installing solar panels in your situation, try the SolarQuotes solar calculator – it’s really easy to use. You can also compare electricity plans for solar owners here, but note it has been around 4 months since plan data was updated.
Related: Why Solar Feed-in Tariffs Won’t Vanish Any Time Soon — Or Ever
About Michael Bloch
RSS - Posts
This is a double-edge sword proposition.
Of course everyone wants higher FiTs but this will come at a cost of driving up retail prices, not wholesale prices. This is where people get confused that there is no direct relationship between FiTs and retail pricing and simply
Distribution pricing will not be affected by changes in wholesale and FiT pricing as this is an independent pricing determined by each the distribution area.
A lot of people make the mistake accusing retailers “ripping” off customers when it comes to FiT and usage charges. They are not related. Retailers have no control what the distributors charge, so FiT will never cover what distributors charge.
FiT is one cost that is roughly governed by wholesale pricing and the generosity of the retailers. The distributors in most cases don’t influence the FiT rate, they don’t care where the source of electricity comes from, they still charge a fixed usage rate (adjustable every 12 months and approved by AER)(and not to be confused with daily supply charge).
So, we will never get 1:1 FiT. Not possible given the various market players involved in the electricity market where the majority don’t care about the FiT rate since they are not paying for it. FiT comes from wholesale prices and some retailer margin (which would be extracted from higher kWh usage rate). High FiTs === higher kWh rate. Except of course where state mandated FiTs are implemented then this would be a levy on the whole state’s electricity users as part of government green initiatives.
Yes, I’m for lower kWh usage rates but I realise this means lower FiTs offered voluntarily by retailers. This would be an incentive to use battery systems and more effort in self consumption of domestic rooftop PV energy.
Lower FiT = self consume more solar power and use batteries heavily.
Higher FiT = export more solar power and less incentive to use battery storage.
Of course this is very simplistic and different import usage rates have different effects on savings/payback.
I’m on 26c off peak/43c peak – SToU – Seasonal Time of Use Tariff, there is no shoulder period, use to have it but the local distributor removed it from their plans as being obsolete tariff. I think this was a strategic move in an effort to see if I can use more off peak. The peak period has been reduced from 1pm-8pm to 4pm-8pm M-F, else it’s all off peak for the rest of time. But with a battery, this is not an issue anyway. Even with 20hrs of off-peak M-F and all weekends, doesn’t make any difference with battery/solar. I will only notice it for 3 months in Winter where I do the bulk of the grid import for heating.
I’m on 21c FiT til the end of the year. It pays me to export as much as I can but I also have a battery and this affects the payback period. Regardless, I still self consume as much as I can. My total grid usage for the last 3 months is 68kWh to date and I exported over 2500kWh. The rest was direct self use from daytime solar and nighttime battery (about 900kWh total self-powered). Don’t know what the FiT will be like in January 2022. Be interesting how it pans out $$ wise but that’s a secondary goal. Primary goal is to avoid fossil fuel power generation.
Good overall summary. I believe that the benchmark FiT should reflect wholesale prices form a purely fairness principle, so that probably means falling benchmark FiTs YonY moving forward.
Also, FiTs should be designed to motivate people to change their consumption habits to maximise self consumption. This again provides the fairest solution to all energy users (including the solar “have nots”) whilst maintaining the highest overall system stability.
I had a look at the feedback option. It’s hardly a user friendly process. There’s one 90-min online session within which you have no idea if your feedback will be heard or not. What’s the point of that? Who on earth will bother?
The request for written submissions are gloriously vague.
What a pointless request for feedback. This is how you do it as a way to not actually get any feedback but give the appearance you have.
If you don’t mind me asking, what battery setup are you using?
@Jonathan,
If you are asking me about the first post, I’m using a Tesla Powerwall2 (with full house backup) coupled with 3 solar systems (1.5kW, 3.25kW and 6.6kW of various vintages, oldest is 10 years and newest is 2 years old). I’m really surprised that all 3 systems work together without a hitch given that they have different AS4777 standards applied.