A draft determination released by the AEMC last week that would affect home solar in Australia caused quite a stir. Here’s SolarQuotes’ founder Finn Peacock’s take on it.
Last Thursday, the Australian Energy Market Commission released its draft determination on how to integrate more small-scale solar power into the grid and promote home battery uptake through a number of reforms. Among them are proposed charges on solar exports under certain conditions.
This triggered a flurry of clickbait headlines about a “solar tax” and lots of questions and comments coming into SolarQuotes. On Friday, Finn recorded a video with his views on what may lay ahead.
Transcript begins:
I just wanted to allay your fears on this Friday afternoon about the so-called “solar tax”, which is a terrible name for this thing you’ve heard about where solar owners will be made to pay for exports to the grid.
It’s a bit more complicated than what you’ve read about in the headlines.
Basically, the grid has an intrinsic limit on how much solar it can support in terms of them (systems) exporting their solar energy back into the grid when it’s sunny. So, we’ve got two options. We can either do nothing, which means we reach a point quite soon in the next few years where pretty much all solar systems can’t export to the grid.
That’s not good, it will cripple the growth of solar. That’s not good for anyone.
Or, we can pay to upgrade the grid in specific ways that increase the hosting capacity of the grid so more solar owners can export more solar to the grid when the grid needs it. We have a choice, and that’s all this is.
It’s a proposed solution from a mob called the AEMC, the Australian Energy Market Commission, and I personally think we should go with it.
The downside is it’s going to cost solar owners some money in the short term. If you’re a solar owner and you export solar to the grid when the grid really doesn’t need it, you’re going to get charged for that.
But one hand is taking away, another hand is giving.
Part of these proposals is they also reward you more when you export solar energy to the grid when the grid needs it. So, savvy solar owners should be able to come out ahead.
Financial Impact Of Solar Export Charges
But if you do nothing, what are we talking? Well, the proposal estimates if you’ve got a typical solar system – five kilowatt inverter, 6.6 kilowatts of panels – you’re looking at about a hundred dollars a year in lost savings.
It’s not that bad.
If you’re thinking of buying solar, this is not going to cripple your solar savings. You’re probably looking at between $1,200 and $1,500 a year in savings – six and a half kilowatts on a north facing roof and a reasonable feed-in tariff – taking a hundred dollars off that is not the end of the world. And you can probably substantially reduce that by doing some smart things with your solar system.
Not The Perfect Solution, But ..
So, is this the perfect solution? Absolutely not. Should the grid have been upgraded years ago? Should we have seen this coming? Yes. We were talking about this at CSIRO in 2006 – but the grid hasn’t been upgraded for various reasons. This is a way of getting the grid upgraded fairly quickly.
So, let’s do it. Otherwise, the alternative is we stand around and we talk about it for another 10 years and the solar industry grinds to a halt because we hit this intrinsic capacity that the engineers are telling us about.
Nothing Like The EV Tax
And one more thing I just want to get off my chest. This is nothing like the EV tax. Solar uptake in Australia is the best in the world. EV uptake in Australia is the worst in the developed world. So, they’re at two completely different stages. Don’t tax EVs, we need to help EVs. We can put these extra charges on solar because solar is phenomenally successful in Australia already thanks to other good policies.
Don’t believe everything you read in the media and in the green press, this isn’t the end of the world. In my opinion, it’s a good thing for solar. It shows how successful solar has been.
About Michael Bloch
RSS - Posts
Manure by any other name, still smells the same.
Why does his portrait at the top of the web site web pages, especially, the blog web pages, not show him wearing his gold rimmed spectacles?
Cartoon Finn can afford contact lenses.
Hi Finn can you tell us how exactly will this tax be calculated?
I am about to invest in second solar system but looks like the things are turning against people with Solar. Price of “feed back to grid” to “feed from” being like 1:3, and now some tax.
I use 70kWh in winter, when days are shortest. To me it looks like unless I have a battery, the Pay Back period will be long
There are no detailed plans at the moment. I can tell you it’s unlikely to apply to existing home solar systems. Household may be paid less for solar electricity in the middle of the day when wholesale prices are often very low. I assume in the future dynamic exports will be introduced. This is where your inverter will export as much power to the grid as it can securely accept. So it’s likely to be allowed to export all it can the early morning and late afternoon but may be restricted in the middle of the day.
Haven’t we been told for years that we were paying to Gold Plate the grid.
Why are we now being told we need to pay this extra fee too cover the upgrade of the grid?
What I am failing to understand is:
1: They(the Man) want to upgrade the grid so more solar can go on, however bad publicity (or just a bad idea) is going to put people off buying solar.
2: Transmission is already included in everyones daily fee’s.
3: Solar owners arent the only people using the grid…
So the everyday day Joe Blow who is trying to do the right thing has to cop a loss so people who dont have solar can get solar.
You would be better off subsizing batteries (community or domestic) and having demand charges for exports so its high when the grid needs it most and low when it isnt.
Or, they could just spend the money and upgrade the grid instead of putting in their back pockets. Because thats what this is really about, they want to continue to provide stable electricty without spending their own money….
Or bring in that 4% tax for the rich people and they can subsize the grid upgrade instead of taking it from the lower/middle classes….
Jake, I have to respond to the proposal to just ‘tax the rich people’. The facts are that here in 2021, approximately only 40% of individual Australian taxpayers actually make a net contribution to the tax base. Put another way, approximately 60% of individual taxpayers make NO net contribution to the tax base. So let’s be clear, the so called rich people (want to attempt to define who is rich; other than simplistically referring to those who own mansions overlooking Sydney harbour, drive Ferraris and holiday in Hawaii in summer and ski in Aspen in winter – who would comprise less than 0.01% of the Australian population) are already paying more – most likely vastly more – than the ‘lower/middle classes’. Yes they can pay more tax, but also, yes they already do!!!
I have a slightly different take on this ‘SOLAR TAX’. They are selling it as a Robinhood Tax, you know take it from the’haves’ and give it to the ‘have nots’. At least that’s how it appears on the surface. Let’s call a spade a spade! When Solar was first introduced, Energy Companies paid 47 cents/ kWh exported back to the grid, a good incentive for people to come on board and purchase Rooftop Solar. Great! Your PV investment was making money, whilst saving on electricity bills. Over the years changes were introduced to minimise that eg. if you upgrade your export dollar was reduced, if you changed anything on your system, your export dollar was reduced. That didn’t work so well for THEM. So they changed the pricing for new PV systems to about half. We came into this just over two years ago, when we were charged 26c/ kWh and received 16c/kWh for what we put back into the grid. Hmm, still not enough? Ok, let’s halve that again ( and btw. no notice given this time). What? Still not enough? Ok let’s charge those people that have Solar a tax for ehm, let’s call it ‘ upgrade the grid’ or helping those that can’t afford a new system, to get one! See where I’m going with this? Everyone is already paying for maintenance and power lines just running past their homes. Government is responsible for infrastructure. It seems to me that these morons from the AEMC are floating an idea as to screw over those people, who have spend their hard earned wages, so they can line their pockets with exorbitant salaries!! Perhaps they could look at better ways of making a/ electricity prices more affordable for our more vulnerable, b/ PV systems, complete with storage more affordable for a greater number of people and c/ introduce localised storage facilities, so it makes it easier to balance Solar feed in with demand. That’s where the real difficulty lies! Off course they’ll have to get off their butts to do some work for that, or is that too hard? All of the above would also help greatly to meet our green energy targets. Win, win!
“$100 a year in lost savings.
It’s not that bad.”
You are right – if the charges for the electricity we consume weren’t creeping up at the same time our feed in tariffs are going down.
“Savvy solar owners should be able to come out ahead.”
Only with a battery which you have stated time and again is uneconomical at this stage. Otherwise I haven’t worked out how to export to the grid at night with my solar panels!
And most importantly – why is this charge not across the board. Only us rooftop solar owners. Not the solar farms and the other big end of town players. Surely the solar farms have exactly the same problem.
I’m also a bit annoyed at the call for this charge as a form of equitable cost sharing when we have put our own money up and have helped to drive down the cost of power with our excess solar output.
The way I see it the only real solution to this problem is drastically increasing the amount of storage which this proposal doesn’t seem to address at all.
I agree, increased storage capacity would solve a lot of these issues for the grid. It would reduce the amount of excess power transmitted to the grid, lower the peak demands on the network, and likely reduce the cost of grid power overall.
Perhaps the government could subsidise or incentivise the uptake of batteries for residential homes, or even community batteries. I’d love to have one myself, but it would have tripled the cost of my solar install, and turned a profitable investment into a loss.
The big solar farms are already paying for this in the form of reduced revenue near midday. People talk about an “average” wholesale price, but the reality is I’ve seen the wholesale price fluctuate in 5 minute intervals between negative $300 / mW and $15000 / mW ( -30c / kW to $1500 / kW) and that is just this year. Both those figures were in SA where they have the biggest battery in the country, but with their high level of renewables (good job guys btw) it just isn’t enough.
Yes, I agree we need lots more batteries. Something on the order of 200 to 500 times more than the HPR. Renewables means far less control over the amount generated at any instant; batteries are (currently) the cheapest way to flatten the curve.
Oh, and I did some numbers myself and figure batteries can do the same job as Snowy 2.0 for about 40% of the cost, and respond much faster.
Greg. (Sydney)
Electricity prices are set by the Australian Energy Regulator (AER), not the AEMC.
Although most understand what’s meant by phrases such as ‘orderly transition’, the uncomfortable truth is that the very nature of solar PV makes it near impossible to achieve that. It doesn’t just ‘replace’ what’s already there, it completely up-ends it,
Once the few hours needed to install a roof-top solar system on a house is over, and the system is operational; that household is no longer merely just a passive consumer of the electricity generated and transmitted by the existing monolithic network. It becomes as well a ‘generator’.in its own right along with its own set of potential customers.
The first of those customers are the residents of the house concerned (which can also be called self-consumption), and the other potential customers broadly includes anyone else connected to the grid.
I’ve over-simplified things a bit to get my point across. There’s a tendency to think of solar PV as merely being a simple replacement of what’s already there with something that’s better and cheaper.
While that is true, focusing on that aspect alone tends to obscure just how fundamental the change really is. It’s akin to turning the Eiffel Tower upside down.
Hence, a somewhat plausible case can increasingly be made that FIT rates for household roof-top solar should instead reflect wholesale market spot prices received by electricity generators and vary accordingly.
Just show me the proof that local voltage isn’t high at night
If it is, then fix that first.
Secondly, move all “off peak” demand to high solar hours
Then, if we still have a problem, let’s talk about a solar tax
You are right RodM. It is ridiculous to switch on off-peak loads in the middle of the night when the grid is suffering from too much solar input in the middle of the day. Times have changed. Off-peak loads were devised before solar generation was available, and now the system should use every kWh of solar generation when it is available, and that’s not at night!
Yes, I used to have my doubts about a high % VRE grid given wind’s intermittency but single axis tracking solar has changed all that
300 days of pure sunshine in Pt Augusta and above makes for very reliable generation. Move all possible loads to solar hours. Preferably with dynamic control but even using timers would help
Abolish the night time “off peak” tariff or increase the price of it to encourage change
Well, all I can say is: if this does happen, and I end up having to buy batteries, then I might as well go off-grid.
I suspect that I will not be alone.
Who does that help?
Battery Manufacturers. ?
At the moment, it seems to me we are headed at increasing speed towards what I’ve seem described as a ‘Battery Armageddon’
Armageddon finally arrives when solar PV system owners – household, small and large businesses, large scale industrial etc – become so fed up with the persistent inaction by federal, state and local governments regarding a host of civilization threatening issues (which all intertwine and influence each other), they collectively decide to ‘spit the dummy’ and go off-grid completely.
That would be a highly undesirable outcome for our nation as a whole. But as the price of solar systems and batteries continues to fall, and the longer the majority of our elected representatives continue to ignore reality, the more likely some form of ‘Battery Armageddon’ progressively becomes.
Let’s face it – if the entire eastern coastline from the Sunshine Coast to Woolongong starts collapsing into the sea or getting buried under 6 metres of water due to an extreme weather event, and some tens of thousands of corpses start to wash up on the newly formed shore lines, it’s likely that this will be described as a ‘once in a million years event’ along with ‘please vote for us again at the next election, because the speed of our response to this unprecedented challenge demonstrates just how seriously we take climate change’.
If you think I’m exaggerating, have a look at this flood risk map for the state of Florida in the USA which has a 30 year timeline forecast and uses 1.5 degrees average global warming by 2050 as its major assumption.
https://floodfactor.com/state/florida/12_fsid
and also this related EcoWatch website that demonstrates the reluctance of Florida residents to concede that any problem exists at all.
https://www.ecowatch.com/florida-coastal-flooding-maps-2645087745.html
As well, this article from the Daily Record, based in Glasgow in the UK highlights the predicted levels of inundation for major cities in Scotland between now and 2050
https://www.dailyrecord.co.uk/news/scottish-news/frightening-climate-change-map-shows-21337676map-shows-21337676
Even within Scotland there are still some hard-core denialists, but nonetheless, the current Scottish Government is taking climate change seriously as this Scottish government link demonstrates.
https://www.gov.scot/publications/scotlands-environment-economy-leaders-group-tackling-climate-emergency-sharing-stories/pages/5/
Scotland has not operated any coal fired powered stations since 2016, and by 2019 was already generating enough electricity from wind turbines alone to meet the electricity needs of more than twice the number of its existing residences.
This article on Science Alert gives some more detailed information along with details of how the UK as a whole aims to have all its coal plants shut down by 2025
https://www.sciencealert.com/scotland-s-wind-turbines-are-now-generating-double-what-its-residents-need
The contrasts with Australia couldn’t be more pronounced.
Or, or: Johnny come lately can pay.
The rest of us can grandfather our FiTs.
That sounds like a better solution to me.
Hear hear….I live in NW Victoria as far from Yallourn as possible. Surrounded by rooftop Solar and Solar farms which power this region during the day… (Not a word about these farms paying for feed in … Companies like Carlton and United invested.in these to gain carbon credits.)So what grid are we talking about. There is no.power fed back.in when the sun goes down. But regularly 260 plus volts will be sent into people’s homes and they won’t even know they are paying for it. We have one.poles and wire distributor…Foreign owned Powercor which also runs SA network. Say no more!!
What we need is the ability to switch off our feed in at our option. We can then save the feed in tax. Also it gives a lever to support increased feed in tarifs because we could actually eliminate our input during periods of high demand so forcing retailers to pay exorbitant fees to meet demand. Obviously we need to still be able to access it own solar power when we cut off the feed in, this would also mean we could access our power during blackouts!
It doesn’t matter how reasonable an argument the generators put forward because once this is made law the generators will suddenly discover they underestimated how often they will have to charge to accept home-solar inputs and will continue to up the hours until no one gets more than a token pittance for their solar.
Further to the above, Vw’s new EVs have output sockets that will run the fridge, lights, TV etc. so those with PV and a garage could leave the grid using their Vw Ev as a battery.
Unless you have a rather large underground carpark full of these EVs, I don’t think you’ll have enough capacity to run your house reliably on their outlets.
IIRC, ev3 and or ev4 can supply between 2 to 4 kw from their 50-77 kwh batteries, with a bit of planning a single or double person home (particularly if retirees) should be able work with that.
At first I scoffed at your suggestion, but it seems your numbers were about right:
https://thedriven.io/2021/03/29/first-vw-id-4-electric-suvs-delivered-in-germany/#:~:text=With%20battery%20capacity%20up%20to,engine%20generating%20310Nm%20of%20torque
With an expected price tag north of $60k, it’s yet again more expensive than a residential battery, but if you also get to drive that battery around, it becomes an interesting proposition. It certainly has my attention.
I wonder what the expected life cycle of the battery would be if you used it during the day, spent some time charging it, then discharged it again at night. Would it still have enough charge to get you to work in the morning, etc.? Would any warranty on the battery be void if you cycled the charge/discharge more than once a day?
Tony, I’m sure it’s not a solution for a family of 6 with 24hr climate control, a sauna and swimming pool, but for a retiree like me who averages 10kw pd I can’t see more than 2/3 kw per night if I moved my Hws to daytime solar power and turn off heat/cooling shortly after sundown as I do except in extreme temperatures, leaving only fridge, TV and lights till bedtime and fridge alone till morning.
For more examples of off-grid use check out youtubers “Sailing Uma”, “Gone with the Wynns” and the O’Kellys, small yacht cruisers relying mostly on pv and wind.
If we are going to install batteries it is more effective and cheaper to install a larger battery next to a local substation than have individuals each doing their own thing. Ausgrid is doing a trial on community batteries – the biggest barrier is much of the rules.
Worth remembering that if the network was run by engineers like it used to be instead of by accountants and shareholders like now we would all be better off – why do we privatise monopoly assets??
>why do we privatise monopoly assets?
So that governments have the cash now to fulfill election promises without increasing taxes just yet. Basically you turn assets into a revenue stream in order to buy votes.
A single large scale battery may be cheaper, but I don’t think it’s more effective. As I understand it, the limitations on the network are because of the amount of power flowing to/from substations to homes. If we stick a battery right next to the substation, it doesn’t solve that problem at all, power still has to flow over that section of the network, either to/from the substation, or the battery.
Residential batteries, on the other hand, can absorb some of the excess solar power at the source of the “excess power problem”, and discharge during peak periods, so there’s not as much load on the grid.
As for your last comment, I completely agree. Why the NSW public voted to put in a Liberal government that quite plainly stated they were selling off profitable companies (to the tune of billions of dollars a year) for a 99 year lease for a measly few billion dollars is utterly beyond me. All the sheep happily followed “The Good Shephard” Mike Baird over the cliff, but we haven’t seen the worst of it yet – we’re still falling, we haven’t hit the bottom!
Tony, basically NSW’s Liberal/CP way of reducing the taxes we pay them is to sell the right to tax us to corporations that buy up monopoly infrastructure like power networks, toll roads, airports etc.
The grid has INTENTIONALLY not been upgraded by the current government because it is in partnership with the fossil fuel industry, coal in particular.
The only thing the coalition government has worked hard at is in finding ways to hand taxpayer money to the fossil fuel industry and to destroy the industry altogether. Thankfully the media has taken up the challenge to stop the betrayal of the nation apart from some right wing media outlets touting the rubbish from the Murdoch rags.
The game plan appears to be to sabotage the solar industry. This is doomed to fail as will the current government if it persists in destroying our economy and future jobs. There should be a price to pay!
Well aside from the fact that the grids have always been operated / regulated by the STATE governments and not the FEDERAL government you are 100% correct. Perhaps you should blame the state governments for the grid. You know like Queensland and WA LABOR governments since they are the largest public owned networks.
From energynetworks.com.au webpage.
There are 22 electricity and gas network businesses in Australia with a mix
of public and private ownership.
• 100 per cent privately owned electricity networks: Victoria, South Australia
• 100 per cent government owned electricity networks: Tasmania, Western Australia,
Northern Territory and Queensland
• In NSW, one electricity network is privately owned, two are 50.4 per cent
privately owned and one is fully government owned. The Australian Capital
Territory’s electricity network is a joint public and privately owned entity.
Thanks for the enlightening information Brent. Whilst you are providing apparent choices ALL GOVERNEMNTS are willing to sell out the public for much needed election funding to get themselves into power. Once there its time to pay the Piper. Coalition governments take this to the extreme and from what I can see corruption issues are their modus operandi. The current batch both federal and NSW state have gone way over the line and are losing control of the game.
The networks may be a mixed bag but the issue is accountability and who has to be vs who can do as they like.
As far as consumers are concerned we have to make decisions based on this corruption and that’s where it gets hard to make a good call. Renewable energy may be a no brainer but when you have morally corrupt governments in power even dead certainties are not guaranteed to be the right choice. I do however suspect rooftop solar has been a good choice but Finn has laid out the case for what the bastards are wanting to do, which entirely fits the game plan and the sponsors’ needs.