Solar panel image: B137, CC BY-SA 4.0
Victoria’s Essential Services Commission has published its final decision for minimum solar feed-in tariffs to apply from July this year, which will see electricity retailers being able to pay a single rate or time varying tariffs to solar owners.
The dual payment option model is to be a transitional arrangement, recognising there will be challenges for retailers in switching over to a time varying system. The transition period was originally to be a year, but may be extended.
Single Tariff Rate
The single rate tariff will be set to 9.9 cents per kilowatt hour minimum – a 1.4c reduction from the current feed-in tariff rate. The reasoning behind the drop is a forecast decrease in wholesale electricity costs during much of the day when solar exports are high, and increased wholesale pricing at the start and the end of the day when there is little in the way of solar electricity exported.
Time Varying Tariff Rates
Little has changed since the draft decision was published in December. Time varying tariffs have been introduced as the result of an inquiry that recommended solar owners receive rates better reflecting the wholesale cost of electricity at the time they export it to the mains grid.
- Off peak: 7.2c per kilowatt-hour (difference of -0.1 cents from December draft)
- Shoulder: 10.3c per kilowatt-hour
- Peak: 29c per kilowatt-hour
West-facing solar panels may be looking even more attractive, but the timeframe to capture the peak rate will be quite limited, particularly during winter. The following indicates the time periods to which each rate applies.
- Off peak: Monday-Sunday: 10pm – 7am
- Shoulder: Monday-Friday: 7am-3pm, 9pm-10pm, Saturday and Sunday: 7am to 10pm
- Peak : Monday-Friday: 3pm-9pm
Critical Peak Rates
As mentioned in December, critical-peak pricing, when wholesale prices skyrocket during short periods of particularly high electricity demand, didn’t get a guernsey this time around but will be considered in next year’s FiT decision.
Factors Considered
Among the aspects taken into consideration when calculating the new feed in tariff rates were:
- Wholesale value of electricity, including price forecasts with solar weighting for single rate and time blocks for varying, avoided ancillary service charges, market fees, distribution and transmission losses.
- Avoided social cost of carbon
The social cost of carbon element was based on 1.27 kg of carbon dioxide equivalent ( CO2e) being avoided for each kWh exported by a small-scale solar power (or other renewable energy) system. The cost per tonne of CO2e was determined to be $19.63, with the resulting avoided social cost working out to $0.025 per kWh of electricity exported.
Recent Electricity Price Rise In Victoria
Even if most retailers stick to offering the minimum reduced flat feed in tariff rate for some time, it should do little to discourage Victorians from installing solar power systems given energy price rises in January that will see households paying up to 14.9% more for electricity.
The full final Victorian Essential Services decision can be viewed here (PDF).
UPDATE July 3, 2018: Ronald has posted an in-depth look at Victoria’s time varying solar feed-in tariffs here.
About Michael Bloch
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It is so hard to make decisions about your solar systems. I have been considering putting more panels up, but deferred the decision to see what came of the FIT proposal. The fact that it has effectively been reduced 12% for one year and indeterminate really for the following years (if we have a change in government back to the coal lovers for example) inclines me not to go there. Can’t believe that when our power has gone up so much that we get a cut in our FIT. Poor power companies must need more free kicks. I wrote to both our federal member for mornington peninsula and also the state minister for energy about this and neither responded. Who is it they represent again?
Time based FITs will benefit me as I have a lot of West panels, but I don’t feel confident enough to make any decisions on something that may happen in 18 months time.
I wonder if some of the more progressive and environmentally supportive companies like Powershop might try out the time based FIT this year? (I have no relationship to Powershop other than being a customer.)
I still feel ripped off, and believe we should be locked to the retail prices in some way. So if we pay more, we get paid more – what could be fairer than that?
I want to now acknowledge that in an earlier post I stated that I had not had replies to letters to the Energy Minister and our local member. Both our local member and the Energy Minister have now responded to my letters re the reduction in FIT. The Minister responded via the ESC who stated that the value of energy that is being generated at times where solar energy operates, has decreased, and this is why the FIT has reduced. I have now written to her to ask her why if the value of this energy has decreased, the energy that I purchase at this time has continued to cost me more. Can’t have this both ways.
It seems to me someone is making more $ at my expense, and I think I know who!
With 10 panels (of 35 total) facing west and about 13% of my solar export occurring after 3pm on weekdays, I will get some benefit from these time varying solar export tariffs. I’ve done the calculation on my last 365 days of interval data and I would be about $130 worse off with the ESC rates. However if the retailers like Glowbird offer rates above the minimum ( particularly for the shoulder rate), I should end up the same or a bit better off.
Now would a Powerwall 2 be worth installing to shift solar from middle of the day to after 3pm? Shifting say 10kWh collected in the battery to the grid after 3pm at a rate of $0.187 ($0.29 – $0.103) would give an extra income of 10X0.187X260=$486 per year. With a Powerwall 2 costing about $11,000 installed, it would take 22 years to reach pay back. So the answer to my question is no.
It will possibly change some behaviours. Effectively, if you can shift power consumption from the peak period to the shoulder period, you benefit to the tune of 18.7c/kWh. Even if you shift consumption from the peak period to night time, you will benefit to somewhere around 9c/kWh. That’s correct – it will make more sense to send your solar power to the grid, and then shift your consumption until after dark when you pay less for power you draw from the grid than what you received for your peak exports!
People with pool pumps take note! It will make sense not to run them between 3PM and 9PM (as long as you are still producing solar power).
I don’t follow.first they said the feed in price would be reduced because of a predicted drop in power prices and then you say that the price of power will rise 14.5% ?
It is because the value of electricity varies with the time of day. The value of electricity when solar peaks (daytime) is going down as more solar is added. The value of electricity in the afternoon/evening peak as it gets dark is increasing as we lose conventional baseload.
So average power prices are up, but the average value of solar generated electricity is down.
Still don’t follow you a flat fee is a flat fee regardless of what a supplier buys it for .
I get 11 cents feed back and pay 29 cents flat and controlled load of 14 cents plus GST.
I get a 22% discount on those rates.
If it goes up 14.9% it goes up 14.9% regardless .
The next item on which we need some clarity is which retailers will be supporting the time of day tariffs.
Even if I only feed in 0.5 kWh in the peak period in Winter, the higher FIT will almost compensate for the 1c lost in the shoulder period. – I haven’t had my panels for a winter yet, but I don’t expect to feed a whole lot in in Winter anyhow.
In mid Summer, with nearly 6 hours at the peak tariff, it will make a bit difference.
The bit I don’t understand is why the flat rate tariff is lower than the shoulder rate of the time of day tariff? The only reason I can think of is to encourage consumers to rather favour the time of day tariff.
I’m on a flat tariff and years ago we were moved to time of use tariff whether we liked it or not.Then the government outlawed the practice. I then moved back to a fixed tariff which ended up saving me hundreds of dollars per quarter and I did not have to wash my clothes at midnight.
many moons later two meter changes , back to base metering I just can’t see that the provider in my case AGL in NSW will be able to implement this time of day tariff for those on fixed tariffs.
Sure, but how does someone on a fixed tariff system get metered at time of use ? seems to me that wont happen as it would require extra costs by the provider ?
I am sure the providers know what they will gain and what they will lose.
Josh, everyone (or at least almost everyone) in Victoria should have a smart meter by now. You can already request your last 2 years meter data down to a 30 minute granularity from your retailer (they get it from the distributor).
The impact is mainly on the rating and billing elements (which the retailer needs to have). The metering components are already in place.
Metering in 30 minute intervals is already good enough to implement this kind of tariff.
I also will be better off under TOU feed in. However, we have 18 months before that becomes compulsory in Vic. I would be surprised (pleasantly) if any retailer were to move early and offer this without a big sting of increased peak consumption tariffs, but let’s see. Perhaps we’ll see a bit of competition for the clean power! It does make the battery arbitrage situation more interesting for those like me that have larger systems and relatively small consumption. I haven’t tried to crunch the battery numbers again yet, but my gut feel is that it still won’t fly yet. Anyone had a look at that one yet?
It will be interesting to see. I believe that owners of rooftop solar systems will move very quickly to retailers that offer time of day tariffs. The reason is that it is an absolute no-brainer that you will get more back on the time of day tariff, because the shoulder rate (10.3c) is higher than the fixed tariff (9.9c) and nobody really exports anything significant before 7am, even in mid summer.
Sure but you keep going on about Victoria. i can assure you that we have smart meters and back to base metering in NSW but we also have fixed rate metering which i have had for 10 years since switching off the time of day tariffs which proved expensive and favoured the supplier and forced people into doing most of their stuff at night.But where you miss the point with time of day metering is with air conditioning.
Air conditioning is the most expensive part of using electricity and because the main time for using Air conditioning for those of us who are retired or stay at home moms is the afternoon from 12PM till 5,6 and sometimes 7 pm .Just check out the summer quarter and you will find air adds $300.00 to a bill and that’s on fixed metering, so with your time of day metering double that , and do you really think during these periods that you will be supplying back to the grid ?
Just checked my bill and my solar metering, I send nothing back to the grid from 1PM till the sun sets. in this summer quarter a ducted air conditioner will chew up all you produce and more .
also here is the link for Victoria
http://www.smartmeters.vic.gov.au/flexible-pricing
and like NSW its not compulsory to take a time of day.
If you sit down and do the figures a normal household pays more on Time of day because why do you think it is more expensive to use electricity at the peak ? well, it’s because that’s when most people use electricity .
You wont be feeding much if any back during peak unless you want to turn off all your appliances and swelter yourself to death.
I have run both time of day and Fixed and calculated on my consumption I pay more on time of day, a lot more .
What isn’t clear yet is whether retailers will try to combine time of day FIT with time of day consumption tariffs. That could be a sneaky way of doing things. That is where things could get messy.
If consumers are forced to take a time of day consumption tariff together with a time of day FIT, they will be worse off.
I don’t understand what inventive the energy companies have to offer the variable feed in option. My provider just told me they will offer the fixed rate. How do we find out who offers the variable rate? And presumably their cost of grid power will increase in the variable feed in plans.
*incentive
Origin Energy have just advised of the recuced FIT in Victoria (9.9 cents) from 1/07/2018 No mention of variable tariff. Also The Essential Services Commission reasoning of reduced wholesale prices is farcical given the 15 percent per Kwh price hike from 1/01/2018 Political lobbying wins out again.
Momentum Energy will only offer the fixed tariff. Why would they bother offering the variable tariff?
Yeh, i haven’t seen any variable FiT plans yet. Best plan i have come across recently is Amaysim, which offers 18c FiT (at all times) and decent grid/supply charge rates. Plugging it into my spreadsheet i would be $5 better off per month on the Amaysim plan compared to Alinta, due to the 18c FiT. That is based on last 3 months of data.
Just received a letter from Tango Energy stating they will ‘honour’ our existing 11.3c FIT – instead of the new mandated 9.9c. There was no mention of the 10.3/29c variable FIT…