The Australian Energy Market Commission (AEMC) is calling for submissions on proposed changes to National Electricity Rules, including allowing for charges to be whacked on those who export solar electricity.
Surplus electricity generated by residential solar power systems is exported to the mains grid and the system owner usually receives a payment for this energy – this is called a solar feed in tariff. The electricity retailer then sells that electricity at a much higher price.
To this point, the National Electricity Rules (NER) have prohibited solar owners from being charged for export services into the distribution network by Distribution Network Service Providers (DNSPs). At the beginning of this month, St Vincent de Paul Society Victoria (SVDP) submitted a rule change request seeking to strike this clause from the NER and SA Power Networks also backs the idea. SAPN and Vinnie’s believe enabling export charges as a pricing tool would:
- send efficient signals for future expenditure associated with export services
- reward customers for actions that better utilise the network or improve network operations, and
- allocate costs in a fair and efficient way.
The old chestnut of non-solar owners subsidising those with solar panels has been brought into play in the argument – that solar owners should pay their “fair share” of the costs associated with integrating distributed energy resources into distribution networks.
But rooftop solar has been putting downwards pressure on electricity prices and pushing out coal-fired power generation. This benefits everyone on three fronts – health, environmental and financial. And as mentioned, what electricity retailers pay for that clean electricity is far less than what they charge others for it.
St. Vinnies also says it isn’t necessarily advocating for solar owners paying for using the networks. They could also choose to be constrained, meaning having their exports limited. SAPN envisions different “tiers” of service, including:
“a ‘basic’ service at low or zero cost, perhaps reflective of a fixed, low export capacity, aligned to the intrinsic hosting capacity of the network”.
Other Proposed Changes To The National Electricity Rules
The potential for charges on exporting solar electricity is one of three proposed changes to the NER, the others being:
- Updating the regulatory framework to reflect the community expectation for distribution networks to efficiently provide export services to support distributed energy resources.
- Promoting incentives for efficient investment in, and operation and use of, export services.
“We recognise some of these proposals are contentious and we are establishing a Technical Working Group to inform our consideration of the requests,” says the AEMC.
By “some”, it probably means one.
It’s not the first time the AEMC has been involved with the idea of a potential “sun tax”. In a report from 2017, it somewhat timidly suggested it may be time to revisit the NER clause and that didn’t go down too well. This time around, it has St Vincent de Paul Society and SA Power Networks to hide behind. But the proposal will also be facing many more solar owners – by 2017, around 1.8 million systems had been installed in Australia and today that figure is around the 2.46 million mark.
A “sun tax” of this nature isn’t set in stone. A virtual public forum is to be held on 13 August 2020 (registration here), which could be a very interesting event. Submissions on the consultation paper close on 10 September 2020.
If you feel strongly about potentially having to pay to export your surplus solar energy to the grid, read the consultation paper’s arguments for this proposed change and have your say.
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So, St Vincent de Paul and the AEMO want to change it so that we pay the electricity companies to accept the electricity that we supply to them – correspondingly, of course, that should mean that the electricity companies would also pay us, at least the same rate per kWh, to accept the electricity that they supply to us.
Seems fair, to me.
We house holders have paid big money to save money. The retailers get excess power at a cheap rate and then sell it to others at a much higher rate. Why should we pay for access when we have to pay a large daily figure to be connected to the grid. Totally unfair.
Where do I protest? Where is a link?
Don’t export to the grid then, simple
Which means purchasing a battery to fully utilise the power generated, in turn meaning more cost, and at this stage, very poor payback time.
Retailers are more than likely paying you more for your solar PV energy than it would cost them to buy the energy from the wholesale market. Especially during peak solar production hours when PV exports are highest.
For every kWh a retailer buys from you to on sell to someone else, well the retailer has to pay the distribution network fees for selling that energy. Those distribution network fees are substantial, significantly more than the cost of the energy.
e.g. in my distribution zone, the distribution network fee per kWh during solar production hours is 13.1c/kWh. That’s what the retailer has to pay the distributor (not including the daily fees they also have to pay the distributor).
Now add the 10.5c/kWh FIT the retailer pays me to buy the energy and already the cost of the energy to on sell to others is already at 23.6c/kWh.
That same retailer sells that energy in our area for 22.8c/kWh. That’s a loss of 0.8c/kWh before admin costs and other expenses. It’s hardly a rort.
If you really want a fair price for your solar PV export, then accept the wholesale market price for it.
“Surplus electricity generated by residential solar power systems is exported to the mains grid and the system owner usually receives a payment for this energy – this is called a solar feed in tariff. The electricity retailer then sells that electricity at a much higher price.”
Yes, but this is quite misleading as it implies the price difference is a nice fat lazy profit for the retailer.
Retail tariffs and feed in tariffs have a very big and significant difference.
The retail tariff includes network fees and charges payable by the retailer while the feed in tariff does not. These network fees are the largest part of the cost. The retail tariff they charge for onselling the energy purchased from a solar generating household is mostly network costs, and not super profit.
IOW comparing a feed in tariff with retail tariff is apples with oranges.
The right comparison for FIT is with the alternative sources of energy generation, i.e. the wholesale market.
Any extra profit a retailer may make by onselling a household’s exported solar energy will be determined by whether that energy would have cost more if it was instead bought on the wholesale market.
e.g. My FIT over the full year 2019 was 6c/kWh more than the wholesale value of the energy I exported. As far as I can tell the retailer is losing money on my exported energy, and not making a handsome profit at all.
It depends on the area, ie. retailor and distribution company and remember we get charged a wacking amount for day to day connection. One presumes that goes to the distributor.
Totally agree. Bring on the 1:1 FIT.
They want to charge us to export then we should be paid fairly!
I can see this driving Battery storage and also people possibly heading off grid!
NFP charities should stay far away from commercial activities.
SVDP seem to be altering their business model to emulating all the other ‘vulture capital’ corporations.
There is a very limited value in supplying electrical energy back to the grid therefore we as society should endeavour to semi isolate when we can produce adequate self use power.(stand alone plant) but remaining synchronised at standing 50Hz rate. Perhaps the daily charge should be modified, in price, to a time based charge only applied if we are actually electrically connected to and drawing/supplying from or into said grid.
What arguments for or against are being made by the Federal and State Governments? They are responsible for the uptake of residential solar systems as they have encouraged us to install these systems, primarily to ‘save the environment’ but for many of us, to reduce our power bills.
We now have the issue of too much power being available, albeit intermittently, so they now wish to punish those who followed Government policy.
Because of the financial outlay involved, my decision to recently purchase and install a roof solar system was based solely on the present Government and Electricity Company rules, regulations and fees. Now they propose to introduce a “KWhr Export Tax”. I guess this must be in the same funds gathering category as the “Supply Charge”