Following last week’s decision by Victoria’s Essential Services Commission to cut the minimum solar feed-in tariff by 20 per cent, NSW’s Independent Pricing and Regulatory Tribunal has followed suit, released a draft determination recommending minimum feed-in tariffs of 4.4 to 5.8 cents a kilowatt hour – a cut of around 15 per cent.
IPART chair Dr Peter Boxall said the decision was made due to lower demand for electricity during the day.
“High spot prices during the day generally increase the value of PV exports. In recent years, spot prices have been fairly low and flat during the day, and this has contributed to the lower value of PV exports,” he said.
However, one of the key causes of lower peak demand has been the proliferation of solar PV, the owners of which are now being punished for reducing wholesale prices.
The Victorian ESC said this was a key reason for its decision to reduce feed-in tariffs.
“The rate is lower than the 2015 FiT of 6.2 c/kWh due to a lower forecast wholesale market price of electricity, particularly during daylight hours when PV electricity is being generated,” it said.
Consumer solar advocacy group Solar Citizens’ Dan Scaysbrook said the reasoning “would be laughable if it wasn’t so serious”.
The Clean Energy Council condemned the state governments’ moves, saying they had overlooked the broader value of solar power to the electricity network.
Clean Energy Council policy manager Darren Gladman said the new recommended rates were about a fifth of what it cost to buy power from the electricity grid.
“Last week the Victorian Essential Services Commission slashed the minimum rate to be paid for solar power exported to the power grid. And this week IPART is proposing an even lower range of just 4.4 to 5.8 cents per kilowatt-hour to be paid to NSW solar households – essentially a voluntary rate paid by retailers that is not backed up by a guaranteed minimum,” Mr Gladman said.
“There are three key components of a solar feed-in tariff that have been overlooked by all state governments to date. These are peak wholesale value, carbon abatement and the avoided spend on poles and wires.
He said the wholesale value of electricity could get up to $13.50 during periods of high power demand, such as hot summer days when airconditioning was being used across the state. Solar in this instance was reducing the peaks, delaying or avoiding infrastructure upgrades, but being paid just five cents a kilowatt hour for the privilege.
He said a feed-in tariff to reflect the benefits of solar in this instance would be a good move.
“A critical peak feed-in tariff would reward households and businesses for the real value of the electricity they feed into the grid,” Mr Gladman said.
Because Australia no longer had a carbon pricing mechanism, he said an extra 2c/kWh on top of existing feed-in tariffs would work to recognise the carbon abatement delivered.
“Distributed generation and storage can also save money by delaying or avoiding the need for new investment in poles and wires,” he said.
He said the CEC had produced a guide on methodologies for valuing solar.
“The governments of Victoria and Queensland will soon be reviewing the methodologies they use to calculate their feed in tariffs. We are hopeful that they will recognise the need for a feed in tariff that is fair, efficient and reduces electricity costs for everyone.”