Here’s an example of what can happen if owners of solar power systems don’t find the best electricity plan for their situation.
I was reading an article elsewhere yesterday on renewable energy in South Australia and in the comments below was a fellow unhappy with solar feed-in tariffs, which aren’t as generous as they used to be. He mentioned in the last quarter he exported 2,900 kilowatt-hours to the grid, consumed 350 kilowatt-hours of mains grid electricity and still got a bill (how much wasn’t mentioned).
Perhaps he hasn’t compared electricity retailer plans for solar owners. Assuming he lives in Adelaide, I took a look at a plan from major retailer servicing Adelaide that offers a comparatively high feed-in tariff, but not the lowest consumption and daily charge rates:
- Consumption tariff (flat rate): 38.27¢/kWh
- Feed-in tariff: 10¢/kWh
- Daily charge: 94.82c a day
Based on that:
- Exports: 2,900 kWh x 10c = $290 credit
- Consumption: 350 kWh x 38.27c = $133.95 debit
- Daily charge: 92 x 94.82c = $87.24 debit
So, $290 – $133.95 – $87.24 = $68.81 credit. While that isn’t exactly a fistful of cash, it’s certainly better than a bill. And if this solar owner isn’t on the best plan for his circumstances, it could translate to a significant chunk of change over an extended period.
But what if this person isn’t in Adelaide, or even in South Australia? For example, if he’s in Perth, he likely would have wound up with a small bill given the stingy feed-in tariff and lack of retailer choice over there. However, the bill he received was for the last quarter – likely covering the worst time of year for solar energy production. And what we don’t know is how much money this system owner saved through self-consumption.
Comparing Electricity Plans Made Simple
The above exercise from go to whoa took just a few minutes thanks largely to the recently revamped SolarQuotes electricity plan comparison tool, which is geared towards owners of solar power systems. You simply enter your postcode, hit the button and a list of plan summaries will be generated you can then sort and filter.
When using the tool, bear in mind the highest feed-in tariff won’t always result in the lowest overall electricity bill as differences between consumption and daily charges need to be considered. There can also be gotchas in retailer plans to be wary of or conditions that will exclude participation. For example, there is a retailer offering a higher feed-in tariff in Adelaide, but clicking through to the plan detail page revealed you also needed a solar battery to participate – it was a Virtual Power Plant (VPP) offer.
Once a better plan has been identified, it shouldn’t be hard to switch retailers if required assuming you’re not currently locked into a term contract. Check out this guide to switching electricity plans to help ensure you have your ducks lined up.
Better Feed-In Tariffs On The Horizon
As mentioned, solar feed-in tariffs aren’t as generous as they once were. The high rates of old were to encourage uptake of solar panels – and that certainly worked. But current rates could get better for a bit in some states as the cost of electricity increases.
But regardless of which way feed-in tariffs go, the real value in having solar panels will remain in maximising solar energy self-consumption.
About Michael Bloch
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I am in the same situation at the as the person you are posting about.
I used 145kWh and i exported 620kWh and i am still paying a small bill, and that is exporting more then 4 X what i am using.
Having just checked the plans on your website i am getting a higher FIT then any of them in Brisbane (12c)
it wasnt that long ago i was getting $600+ in credits a year, it looks like the electricity companies are slowly turning the screws in their direction
I would hate to be without solar at this time.
James, I’m in an even more extreme situation. Last month I purchased\imported about a third more power, exported about double, and almost certainly didn’t cover my costs – I can’t currently see my billing data because of a system upgrade or something.
According to SQ “… current (FiT) rates could get better … as the cost of electricity increases”. According to assorted news articles power is likely to rise 20% by Christmas, and another 30% next (financial?) year.
On a whim I glanced at WATTever to see how the rates were going and was shocked to see a FiT drop, yes a drop. Thinking it had to be a mistake I checked on the company site and lo and behold it’s correct – 2c off the top FiT. The daily supply charge is down about 11.5c, but rose 17c this year so a net loss, while the usage charge is down 0.25c after a roughly 3.4c rise this year. All in all power’s continuing to get more expensive, and FiTs are continuing to drop. Barring government control of FiTs I don’t see this situation changing.
Based on current figures it’ll take close to a decade for the solar system to pay off, whereupon the inverter will come due for replacement. If we’re paying solar companies instead of power companies, are we actually saving any money???
The government will never control FiT at the federal level.
It has to be at the state level, even then if it was, this becomes a mandated FiT paid by all retailers in that state. This will be recovered by levies or other schemes that will be paid by all electricity users in the state whether or not they have solar installed. A bit unfair for non-solar owners. This is a socialised cost for mandated FiT.
So, voluntary FiT is governed by free market wholesale prices – the generation costs. Retailers pay this and when they pay FiT, it’s simply substituting payment to the generators in the NEM and instead paid direct to the solar customer. But retailers still have to pay all the other charges and these are passed through to the customer, not avoidable.
For FiT to be mandated, it will mean everyone will pay a levy of some kind on their bills to be collected by the government and disbursed to retailers to pay solar onwers for their exports. I don’t think this is a fair way to get higher FiTs just because wholesale prices are low.
If a retailer has to contribute towards mandated FiT, then they simply won’t offer solar plans and that will force solar owners to look at other retailers. Have to be careful there. This is free market. Retailers can offer or not offer whatever they like, they are not obliged to offer all tariffs that the distributors offer. It’s the distributors/transmissions that have to submit their pricing proposal each year to the AER. Even then, they do not engage in FiT. That’s the retailer’s job.
If you want to blame FiTs dropping, blame it on the success of the solar and wind farms as they are the ones forcing the FF generation to bid negative prices and make them run at a loss. But don’t blame it on the distributors or retailers for low FiTs. FiT is a generation issue subject to wholesale prices.
Amber Electric is one such retailer that passes through wholesale costs but it’s there one will see why FiT will be low.
Graham, I never considered federal control of FiTs. The problem is state governments used to own the entire electricity sector, then Labor decided to sell it off and you now have dozens of retailers plus the entities owning the powerplants, plus the wires. That’s seen electricity costs rise ever upward – companies want to recoup their expenditure, plus the whole renewable energy burden for them.
For FiTs to be mandated you simply need state control of the system, as is the case like the Ergon you mention. They offer one of the best FiTs in the country, and don’t appear to have all the limits and restrictions most other companies impose for their high rates e.g. exports capped to 5 kWh per day, maximum of a 5kW inverter etc.
Electricity rates are predicted to rise 50% over the next year or so. Based on that, any household with enough spare change, or space on their credit cards, will be looking at pure battery options because grid power will be too expensive ~39c per kWh. That shifts the burden of paying for power generation to those who can least afford it.
George Kaplan,
“The problem is state governments used to own the entire electricity sector, then Labor decided to sell it off and you now have dozens of retailers plus the entities owning the powerplants, plus the wires.”
Not just Labor, George. The LNP also sold off state-owned electricity assets:
https://theconversation.com/labors-love-lost-the-tide-is-turning-on-private-ownership-of-electricity-grids-193091
The NSW LNP gov’t (Mar 2011 – present) sold off:
* Eraring Power Stations (PSs) to Origin Energy for $50 million in 2013;
* Wallerawang & Mt Piper PSs to EnergyAustralia for $160 million in July 2013;
* Bayswater & Liddell PSs to AGL Energy for $1.505 billion in Sep 2014;
* Vales Point PS to Sunset Power International for $1 million in Nov 2015.
Coal barons Trevor St Baker & Brian Flannery announced in Sep 2022 the a sale of their interest in Delta Energy (including Vales Point PS) to a Czeck family investment group, subject to FIRB approval.
http://crudeoilpeak.info/sale-of-vales-point-how-will-czech-brown-coal-baron-pavel-tykac-with-business-registered-in-liechtenstein-impact-on-nsw-coal-and-energy-markets
Who is a solar company? As opposed to power companies? These are meaningless terms of reference.
How is solar generated electricity any different to electricity generated by coal fired generators. Electrons don’t know any better. An electron is an electron.
Retailers – they simply do accounting for energy used/export. We do not buy power. We pay for energy used.
Distributors – they simply distribute energy, not power (there is no power that flows through a wire, only current/electrons).
Transmission – transmit energy from generators across the grid.
Generators – they generate power, but we don’t pay them for power used, we pay them for energy consumed.
So, again, who is a solar company? Are they suppliers of solar equipment?
Are they the big solar farms. Why would we pay them? They are no different to a coal fired generator on the grid. You can’t pick your source of electricity generation in an AC grid. The solar farms bid into the NEM/AEMO to deliver energy to the grid. The solar farms get the same price that the coal fired generators receive. Ditto for wind and hydro. So, it won’t make any difference who you pay for electricity generated. All the generators in the same state get the same price that was successfully bid by the lowest offer, every 5 mins!
Which electricity companies are we referring to? There is no still single electricity company we deal with, only the retailer.
For residential customers:-
1. they do not deal with the generators direct, this is handled by your retailer to settle energy usage.
2. they do not deal with transmission networks, this is handled by your distributor, who then passes the charge to your retailer
3. they do not deal with distributors direct (except when the distributor is also a retailer, like Ergon in Qld). Distributors pass the charges to your retailer.
4. they do not deal with metering providers. That is handled between the distributor and retailers. Metering charges are passed to the retailer.
We don’t deal with electric utilities. We deal with retailers. Retailers for the most part don’t touch the poles and wires. (except for those like Ergon which is both).
You do realise that the electricity bill has to pay at least 5 entities, some of which are not negotiable*
1. the generators = wholesale price, typically about 30% of the tariff
2. the transmission networks = about 2-5%*
3. the distribution networks = about 35-40%*
4. the retailer = about 15%
5. GST = 10%*
Your feed-in tariff is influenced by 1 item – the wholesale price (the retailer’s ability to negotiate good wholesale prices via locked contracts and hedging).
The other 4 do not influence solar feed-in tariffs.
This is why bills are changing. Previous feed-ins were locked in by state governments which ran for a few years and closed off. Some are finished now and now have voluntary feed-in.
Then there’s your daily supply charges (three parts)
1. The distributor’s component, typically about 45c/day
2. The retailer’s component (usually 50-100%+)
3. GST – 10%
When you add all those up, they can result in a small bill, unless one is either on a very good FiT or exporting a LOT of excess solar electricity to cover all.
It doesn’t take much for one of those components to change to have a knock on effect.
I don’t understand how someone with solar can have a flat rate anymore. I thought Time of Use plans are mandatory in South Australia for anyone with an import/export meter. I wish I could pay 38 cents. Instead we have a 3 tier time of use system with times that are unfair. For example one of the Peak periods is 3pm until 1am!!! In Tasmania the same afternoon peak is 4pm until 9pm. And I think weekends in Tasmania are off-peak. We might have a high level of renewables but the State Govt. is not providing the benefits to residents. If they really did care they would make the Time of Use periods fairer. By the way I am paying 48 cents during peak times but at least my Fit is 13 cents. It is now near impossible to get a quarterly bill in credit for a four adult household in a large house.
if the federal govt had any b***s they would mandate a minimum FIT of 33% of consumption, eg: electricity charge 33cpkw, FIT no lower than 11cpkw, we are getting ripped off blind by the power companies
A battery changes a lot. With a battery, I rarely export to grid so feed in tariff really does not bother me. Feed in tariff will become less relevant as batteries are increasingly used.