Networks want to hit household solar exports with extra grid charges

The main lobby group representing Australia’s electricity and gas networks has renewed its push to hit households exporting solar back to the grid with additional grid charges – to the horror of some consumer groups and industry experts.

Energy Networks Australia on Monday circulated an “opinion” piece written last week claiming that the lack of specific network tariffs on solar exports from homes back into the grid amounted to an unfair “ban” on charging.

This relates to a rule, 6.1.4, introduced in 2007 as rooftop solar started to become a thing in the Australian market. It was designed to avoid the double billing of solar power and was consistent with market rules that charges the customer for network usage, not the generator.

But the networks lobby has been keen to have the role reversed as rooftop solar grew far beyond its expectations. It is not the first time a “solar tax” has been canvassed, the main rule maker discussed such an idea back in 2017.

In its latest missive, Is the sun setting on the electricity export charging ban”,the ENA claims that leading consumer groups such as Renew (formerly the Alternative Technology Association and no relation to this publication) and the Total Environment Centre are sympathetic to the idea, quoting a paper they published in December last year.

Not so, say the authors of that report.

They say they argued for a wholesale rethink of market rules, to make them truly “cost reflective”, and insist that, taken in isolation, hitting solar exports with network tariffs is a money grab by the networks, in much the same way as the huge hike in fixed costs that has seen some consumers pay as much as $600 a year for the network, even before they switch the lights on.

“If you have fully cost reflective pricing, then you get rid of the issue,” says Craig Memery, formerly of Renew and now with the Public Interest Advocacy Centre in Sydney, and a contributor to the report.

“But the cost reflective pricing proposals have not been fully implemented. If you put a tax on exports before we have cost reflective pricing on imports, you are putting cart before the horse.

“It has got to be symmetrical. There are times of day where rooftop solar clearly produces a net benefit, so the network need to be prepared to pay people for that benefit. You have got to have nuance,  and that is what the ENA is probably lacking.”

Mark Byrne, from the TEC, also took issue with the ENA’s claims that: “At present some people, often those least able to afford it, end up paying more than those who can take advantage of new and exciting technologies to reduce their bills.”

Byrne says the networks and other groups being encouraged by the networks to pursue such a rule change have done little about this issue.

“If they are genuinely interested in equity, ENA should be focused on improving access to solar and batteries for renters, apartment residents and low income households.

“That’s where the real challenge lies; not in clipping the rooftop solar ticket and sending yet another signal that the the incumbent industry is more interested in maximising revenue than changing its business model.”

Byrne also disputed the ENA’s assertion that solar penetration was causing network problems, and its statement that the only two solutions – apart from charging for exports – were either building more network or banning exports for new solar connections altogether.

“These are not the only options available to networks,” Byrne says. “Others include managing the existing network better (eg by changing the voltage settings in transformers to prevent overvoltage) and communicating with smart inverters to reduce the output during periods of very high demand (as South Australia Power Networks has proposed).

“Finally, there is a flipside to this argument: that if networks want to charge solar households to export to the grid, they need to be prepared to also reward solar owners for the savings they create for networks. As the AEMC recently recognised, rooftop solar can reduce peak demand and support the reliability and security of the system.”

He also noted that SAPN -which operates the network with the highest penetration of rooftop solar in Australia, and likely the world – had priced its extra spending needs for PV related costs from 2020 to 2025 at $36 million. That’s under $20 per year, per customer.

Other experts also pointed to the fact that the ENA’s proposal also ignores the fact that solar households exporting into the grid are paid substantially less by utilities for their exports, and yet these same electrons are then sold to other customers at the normal retail rate, which includes the network charges. Charging the seller for the export would be double counting.

“In effect they are already paying for exporting to the grid (i.e. the substantial difference between what they sell their elec to the retailer for and what the retailer then onsells that electricity for),” says Rob Passey, a solar and regulatory export who is a Postdoctoral Fellow at UNSW’s Faculty of Engineering..

“They are offsetting the spot price, and that is all they are paid for. This ‘need to pay’ argument completely ignores the benefits that distributed PV/batteries is providing in terms of grid support, reduction in wholesale prices and reduction in GHG emissions.”

Muriel Watt, a solar and regulatory expert who works for ITP Renewables, says if customers were charged for exporting their electricity to the grid, then maybe large generators should be too.

“If we go down this route, it has to be applied to large generators sending power down transmission lines as well, otherwise we will be discriminating between large and small generators and customers.

“On the face of it, it would of course encourage batteries and grid defection and hence may be counterproductive with regard to the equity and cross-subsidy argument.”

(Mind you, the networks have also toyed with the idea of compulsory charges for all consumers, including grid defectors).

Byrne also took issue with the ENA’s claims that: “At present some people, often those least able to afford it, end up paying more than those who can take advantage of new and exciting technologies to reduce their bills.”

Byrne says the networks and other groups have done little to deal with this issue.

“If they are genuinely interested in equity, ENA should be focused on improving access to solar and batteries for renters, apartment residents and low income households.

“That’s where the real challenge lies; not in clipping the rooftop solar ticket and sending yet another signal that the the incumbent industry is more interested in maximising revenue than changing its business model.”

This article was originally published on our sister website RenewEconomy.

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