A report released last week to showcase the downward impact of renewables on power prices contained a stunning and timely reminder: nothing has crushed household energy bills quite like rooftop solar, and not just for solar households.
The report, released by the Clean Energy Investor Group on Wednesday, models counterfactual scenarios for 2024 where consumer demand is met by coal and gas plants, rather than firmed renewables.
The idea was to test the relentlessly repeated claims of federal opposition leader, Peter Dutton, that Labor’s progress on renewable energy – such that it is, after just three years in government – is to blame for a forecast jump in default retail electricity prices.
The report found that without wind, solar and battery storage, Australian households and businesses would have faced wholesale electricity prices up to between $30/MWh and $80/MWh higher than they actually were in 2024, and paid an estimated $155 – $417 more for household electricity bills.
But it also found that without rooftop solar the 2024 cost of electricity would have increased by a whopping $400-$3,000/MWh.
“This is the cheapest domestic energy in history,” ANU professor Andrew Blakers said in his keynote speech at the Solar & Storage Live conference in Brisbane on Wednesday.
“And five cents a kilowatt-hour is all you need to recover the cost of your rooftop solar system, and then you can use it to heat your water, charge your electric vehicle, get rid of gas, get rid of your electric bill.
“It’s just the cheapest domestic energy there’s ever been.”
Not everyone has – or can have – rooftop solar, of course. Nationally, an average upwards of 30 per cent of households have installed solar – although in Queensland, where the industry has gathered this week, the proportion of detached dwellings with PV is sitting at around 50 per cent.
But as data has have shown – and the CEIG report confirms – rooftop solar has driven down the cost for all electricity customers, not only those with a PV system, by crushing wholesale electricity prices during the day and reducing summer peak electricity demand and the use of costly fossil fuels.
It is also confirmed on an annual basis by various state pricing regulators, every time they announce fresh cuts the recommended price networks should pay for rooftop solar exports.
“The increased number of households with rooftop solar has reduced demand and increased supply during daylight hours,” Victoria’s Essential Services Commission said in February last year, to explain its decision to cut the state FiT from 4.9 cents per kilowatt-hour to 3.3c/kWh. (This year it was slashed again, to close to zero.)
“This has lowered the environmental impact of electricity generation and reduced wholesale electricity spot prices, especially during daylight hours,” the ESC said at the time.
“For this reason, solar weighted wholesale electricity prices are forecast to be lower in 2024-25 than they were for 2023-24. This means the minimum feed-in tariffs for 2024-25 will be lower than those for 2023-24.”
In 2025, with the number of rooftop solar systems installed on households now well past the 4 million mark, the huge popularity of rooftop solar is presenting some challenges to the grid.
The Australian Energy Market Operator is having to find ways to manage bouts of record low demand during the day, while the race is on to install storage of all forms and sizes to shift excess daytime solar to morning and evening peaks.
This dynamic that has led to claims that rooftop solar is now putting upward pressure on electricity prices, by adding to network costs and destabilising the grid. But these claims are, so far, largely unfounded.
According to the Australian Energy Regulator’s second annual report into the performance of distribution network service providers (DNSPs) in delivering export services to the grid, “DNSPs continued to use only a small proportion (about 1%) of their total expenditure to provide [rooftop solar] export services.”
The report, based on the 2023-24 operational and performance data of the 14 DNSPs on the National Electricity Market (NEM), also found that in the 2023-24 financial year, more than 10% of energy delivered was sourced from network customers with small-scale consumer energy resources (CER) – largely rooftop solar.
In South Australia, the state has gone a long way to addressing the problem of potentially dangerous amounts of solar on the grid through the implementation of flexible exports.
These have worked to double the amount of solar a household can export to the grid to 10kW in return for allowing the network to lower those export limits “periodically” to manage grid stability.
“SA Power Networks modelling shows flexible exports will likely be set below the doubled 10kW limit only 2% of the time or approximately 50 daylight hours per year,” distributed energy expert Gabrielle Kuiper explained in an IEEFA briefing note published in December.
“This is extraordinary, especially given about half of households already have rooftop solar installed in the SA Power Networks area, and at times rooftop solar supplies more than the state’s total electricity demand.”
Kuiper says the extra energy can be used to partially displace large generators in wholesale supply, support local networks, and to stabilise the grid, unlocking an estimated $A5.08 billion in net benefits for all consumers to 2042, according to a Deloitte cost-benefit analysis.
On the other hand, the IEEFA report estimates that the delays to implementing flexible exports outside of SA has cost households installing new solar systems and those with existing 8-15kW solar systems a combined $35 million in 2023.
The next step in continuing to make the best use of all this dirt cheap solar will be customer investment in battery storage.
This is already happening at a decent rate, thanks in part to state government incentives and the reduction of rooftop solar feed-in tariffs, which make using your own solar power the name of the game.
Pressure is now mounting for a federal home battery rebate or subsidy, which has been vaguely promised by both the Labor government and the opposition Coalition, to drive uptake in a more meaningful way and further reduce the cost of electricity for all.
Sophie is editor of One Step Off The Grid and deputy editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
