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Regulator wants to slash Victoria solar tariff by 20 per cent

July 20, 2015 by Giles Parkinson Leave a Comment

Victoria regulator wants minimum feed-in-tariff paid for surplus rooftop solar output fed back into grid be cut dramatically.
Victorian energy regulator the Essential Services Commission has recommended that the minimum feed-in-tariff paid for surplus rooftop solar output fed back into the grid be cut to 5c/kWh from the current level of 6.2c/kWh in 2016.
The recommendation, included in a report released this week, suggest that the falling cost of wholesale electricity prices – coincidentally the result of reduced demand and increased renewable energy – justifies the cut.
This graph illustrates the findings of the ESC and how it got to its numbers.
victoria FiT
The forecast average pool price is self explanatory. The value of PV is higher because of when the electricity is generated (in the middle of the day), and rooftop solar is credited with avoiding line losses (5 per cent of electricity generated from centralised plants never make it to the customer). And there is a small sum for avoided “market and ancillary fees”
The solar industry has long criticised pricing regulators in Australia of estimating only the avoided costs of rooftop solar and not crediting it with any benefits.
For intense, apart from avoided line losses, there is no credit for network benefits, or environmental benefits. The contrast with some US states, where pricing regulators put the “fair” solar tariff at close to the retail price, is striking.
The ESC itself says that – like other Australian regulators – it does not include “any savings in relation to the following types of costs when quantifying the FiT: network costs, hedging costs, green scheme costs and retailer costs.

The solar lobby says this is not good enough.
“The Victorian Government should reject any recommendation by the electricity price regulator to unfairly reduce the state’s solar feed-in tariff,  the Solar Citizens group said in a statement.
“Families have made the move to solar to take back control of their power bills, a reduced tariff would make it so much harder for them.
“Victorians have been among the biggest adopters of solar, which is why the State Government needs to do more to support existing homeowners with solar and to help more households install solar on their rooftops.”
“The main driver behind power bill price rises is investment in network poles and wires, not solar homes.”
Victoria is predicted by the Australia Energy Market Operator to be one of the biggest adopters of battery storage in Australia, particularly for new solar homes. This is partly due to the structure of tariffs, such as the low FiTs that are paid in various states and in Victoria in particularly.
The ESC will make a final decision later this year. The new Labor government has promised an investigation into the “fair price”of solar.
Giles Parkinson
Giles Parkinson

Giles Parkinson is founder and editor of One Step Off The Grid, and also edits and founded Renew Economy and The Driven. He has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Filed Under: Policy, Solar, Tariffs

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