Industry skewers “messy” solar tax proposal in joint submission to AEMC

Attempts to assuage concerns around a proposed rooftop solar export charge appear to have fallen flat, with a new submission to the Australian Energy Market Commission warning that an approach determined by individual networks would further fracture the national grid.

The joint submission co-signed by the Smart Energy Council and The Australia Institute and delivered to the AEMC on Monday, warns that the introduction of a “solar tax” would undermine one of Australia’s biggest renewable energy success stories, and fragment the national grid at a time when cooperation and common goals were all-important.

“The growth of rooftop solar has been the most constant national success story in energy and climate in Australia. This rule change will undermine that progress and put in place a messy regime that might not even be implemented uniformly across states,” said Dan Cass, energy regulatory lead at The Australia Institute.

“There is a huge amount of value in household PV, batteries, electric vehicles, demand response and other distributed energy resources. What is needed now is a clear roadmap from the Energy Security Board for DER integration and economic regulation.”

The submission, which was also signed by lobby group Solar Citizens, ShineHub CEO Alex Georgiou, and by Professor Bruce Mountain of the Victorian Energy Policy Centre, also argued that the AEMC had not presented “nearly enough evidence” to support the introduction of solar export charges.

“We reiterate the case presented in the joint Australia Institute and Smart Energy Council submission that the problem definition is not clear,” the joint submission says.

“Before making such a significant change to the NEM it is necessary to fully consider the costs and benefits of doing so.”

The submission is the latest in opposition to the solar export charge, proposed by the AEMC as a solution to a problem that everyone agrees needs fixing – export limits being placed on rooftop solar systems due to network congestion and outdated, ill-equipped infrastructure.

While there are some key proponents of the proposed rule change – including the Australian Council of Social Services, which argues it would deliver a fairer framework for distributing the costs and benefits of increasing rooftop solar uptake – the push-back has been strong, including from at least two state governments.

The AEMC last month sought to quell concerns around the rule change by stressing at a public forum that the introduction of a solar export charge could be optional and their design largely left up to each individual network provider.*

But this, too, has failed to comfort critics, with the joint submission warning that presenting the “solar tax” as a “set of principles and a decision-making framework to inform network determinations” could only end in tears.

“It would risk upending a fundamental pricing principle of the NEM and creating a complex and changing arrangement of different export charging regimes across different distributors,” the submission reads.

“The rule might not even reduce the network costs actually paid by non-solar customers. There is no requirement for electricity retailers to reduce network charges on the bills of consumers without rooftop solar,” it adds.

“For example, in Queensland the distribution network Energex allocates a daily fee of 7c to solar households but some retailers operating pass this network cost through to non-solar households.”

The submission also notes that the body charged with policing the solar tax would be the Australian Energy Regulator, taking it outside of its usual remit of regulating monopoly networks and other market participants.

“How does the AER intend to transform itself into a consumer-facing regulator with millions of new market participants/stakeholders? Is this the most efficient regulatory framework for demand side participation?” the submission asks.

All of this said, the signatories of the submission concede that there are “some really important parts” to the AEMC’s proposal that they do support, including the need for increased transparency around when zero export limits are being imposed on solar customers.

“We need to make sure that network companies are embracing solar exports and exploring all options for increasing the grid’s hosting capacity,” said Solar Citizens’ national director Ellen Roberts.

And the submission calls for the fast-tracking of trials of clean technology that can support flexible solar exports as well as the coordinated management of rooftop solar exports in a way that could benefit both consumers and the greater grid.

“Inverters with dynamic operating envelope capabilities, smart electric vehicles chargers and community batteries are smarter solutions to DER integration than export charges,” it says.

“Trials of these and other technologies should be expedited and used to inform market design work.”

Submissions to the AEMC have now closed, with the final determination expected in July.

*This story has been corrected to reflect that the AEMC’s proposed DER reforms always made it optional for networks to introduce export charging and reward pricing. “That’s because each network will have different circumstances re. capacity levels, customer mix, solar penetration etc. Networks may choose not to go down this road at all. It simply makes the option available,” a spokesperson told One Step Off The Grid.