Raw Deal For New NT Solar Owners And Installers

The Northern Territory’s distinction as having the hands-down best solar feed in tariff has been lost for new system owners. Installing solar will still be worth it, but payback will be significantly extended.

Up until Sunday, the NT had the most generous feed-in tariff (FiT) in Australia, with a rate equivalent to that of electricity supply – around 24c per kilowatt-hour. On the weekend, the Gunner Government announced a new standard feed-in tariff of 8.3 cents per kWh will apply to all new business and residential solar installations up to 30kW capacity.

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Update April 11. Jacana Energy says the premium Feed-In-Tariff rate will be applied to ANY application (including modifications to existing systems) if the solar installer can demonstrate the works were committed to, in writing, prior to 5th April 2020. Applications will need to be submitted to Power and Water Corporation by midnight 14 April 2020. Further details here.
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Existing solar owners currently receiving what’s now known as the “Premium” one-for-one FiT will continue to do so, but will lose it if they upgrade system capacity, move premises or take advantage of a new battery subsidy – more on that in a minute. Those who had already submitted an application to Power Water will also be eligible for the premium feed-in tariff.

It’s very disappointing news – the major challenge of going solar in the Territory is it is pricier than elsewhere in the country, in part due to the tyranny of distance – so the one-for-one FiT was very helpful in accelerating payback.

Is Solar Still Worth It In The NT?

Yes, but simple payback will be significantly extended. A good quality 6.6kW solar power system elsewhere in Australia costs around $6,600 installed after the “solar rebate“. In the NT, it’s much more – around $9,000 after the subsidy.

Using the SolarQuotes solar calculator and adjusting system pricing to $9,000,  a 6.6kW solar system installation in Darwin under the “premium” one-for-one feed-in tariff shows a simple payback of around 3 year, 5 months. Using the feed in tariff rate for new installations, it’s now around 6 years, 4 months.

Impact On The NT Solar Industry

Here’s SQ’s Ronald’s take on the change:

“The point of the high feed-in tariff is to get the industry started, not to get it started and then destroy it like a kid knocking down a sand castle.”

It’s no secret that NT’s state-owned electricity retailer Jacana is in a spot of bother financially speaking. But this decision to slash the feed-in tariff in one fell swoop without warning has also put solar companies in jeopardy. We’ve seen a report where a reputable solar installer with dozens of installations in the pipeline saw all these evaporate after the announcement. So much for “more local jobs”.

A staged reduction with some heads-up would have softened the blow.

So, what’s the money that will be saved on the feed-in tariff going towards? Battery subsidies.

Household and Business Battery Scheme (HBBS)

A $6000 grant is to be made available from April 14 to households and businesses for the purchase and installation of solar PV systems with eligible batteries and inverters, or to install a battery to an existing PV system (but bear in mind those systems will then lose the Premium FiT).

An initial allocation of $800,000 is to be provided for the scheme, which the government states will fund grants for around just 130 batteries. Whether more funding will be released remains to be seen.

Batteries And Blended Payback

“These batteries significantly reduce costs for households and businesses by reducing the amount of power that has to be purchased from the grid,” says the NT Government’s release.

Solar-only provides the best bang for buck in this regard, not solar + batteries.

Let’s look at some numbers, again using the SQ solar calculator. Adding a Tesla Powerwall to the system mentioned above and with the battery subsidy included would work out to around. ~$18,350 for the full PV + storage system; possibly more as installing a Powerwall may be pricier in NT.

Aside from 18.3k being a big chunk of cash to have available, simple payback is extended to around 9.5 years. But this is “blended payback“. The solar aspect is the heavy lifter, with battery payback on its own around 18-19 years – and the Powerwall warranty is only 10 years.

• Solar savings in the first year: $1,345 (approx.)
• Battery savings in the first year: $419 (approx.)

Those savings approximations are based on a 8c feed-in tariff as the calculator doesn’t support fractions of a cent. There’s also the potential for Virtual Power Plant (VPP) programs to kick off in the NT that may greatly improve battery economics, but don’t hold your breath at this point.

However, the NT Government points out the minimum battery size eligible is 7kWh capacity (Powerwall is 13.5kWh), so there will be cheaper energy storage options available. Regardless, buyers will still need to find some extra cash at a time when that may be particularly challenging. There may also be some devil in the detail of the subsidy yet to be revealed.

It’s true batteries can help with grid stability and reduce power system costs by replacing demand for gas fired generation during evening peaks with solar energy generated during the day as the NT government states. And while supporting storage is a nice move, the way this has been approached seems pretty crap.