Rooftop solar tariff set to jump by 40 pct in boost for regional households

Solar households in regional Queensland can look forward to a good dash more return from their rooftop panels come July, with hints of a nearly 40% jump in the amount paid for the excess generation sent to the grid.

In a move that bucks the trend being seen in other National Electricity Market states, the Queensland Competition Authority has this week proposed lifting the solar feed-in tariff from 9.3c/kWh to 12.9c/kWh for customers on the regional Ergon network.

The 39.3 per cent jump the QCA puts forward in its draft determination on the regional solar FiT is even headed in the opposite direction from tariffs in the state’s south east, where the average rate being offered by private retailers has dropped to around 5.7c/kWh.

It also marks the second major hike in the price paid for regional solar FiTs, with the QCA last year setting the rate at 9.3c/kilowatt-hour up from 6.5 in 2021-22 – a 41% jump.

In its determination this time around, the QCA says the new 12.9c/kWh number seeks to reflect the costs a regional Queensland retailer will avoid by sourcing electricity from solar customers, instead of buying it from the NEM.

The regulator also believes that the higher rate gives customers “fair and reasonable compensation for the electricity they export to the electricity grid.” Imagine!

“Based on our draft approach, customers can expect an increase in the solar feed-in tariff, largely due to the significant increase in wholesale energy costs estimates for 2023–24,” the draft determination says.

And in a nod to those less fortunate southern urban Queenslanders, it adds:

“We note the solar feed-in tariff rates offered by retailers in south east Queensland (SEQ) do not necessarily reflect the avoided cost of purchasing electricity from the NEM – which is the methodology we are required to use to determine the regional solar feed-in tariff.”

Quite.

But then again, other state pricing regulators use strikingly similar methodologies to the QCA, and yet have continued to ratchet down the rooftop solar FiTs that guide retail offers in those states.

In Victoria, for example, the Essential Services Commission last month cut the minimum flat rate retailers are directed to pay their solar customers for excess generation from the current level of 5.2c/kWh to 4.9c/kWh, starting in July.

The ESC made the around 5% cut to Victoria’s flat rate feed-in tariff – the rate paid at any time of the day or week for solar exports – despite, it said, the fact that wholesale electricity prices are, on average, increasing.

It will be interesting to see what happens in New South Wales, with that state’s pricing regulator, IPART, due to make a decision 2023-24 solar FiTs in coming weeks.

Last year IPART pleasantly surprised by raising its guidance for rooftop solar exports to between 6.2-10.4c/kWh – an almost doubling of the rate.

That said, the feed-in-tariff rates set each year by IPART are not binding to electricity retailers, but rather a recommended benchmark for industry and consumers, so NSW solar households aren’t guaranteed a bigger payment.

“Slashing feed-in tariffs is what many retailers are doing to recoup some of their profits. It can be really hard for solar customers to find a good deal,” says Solar Citizens deputy director Stephanie Gray.

“At the moment we’re seeing very high wholesale power prices due to high global coal and gas prices, and the only price relief we’re getting is during the day when the State’s 900,000-plus solar homes and businesses are generating cheap, local electricity.

“The higher power prices we’re seeing at the moment should mean that solar owners get more for the electricity they supply, but unfortunately that’s not what we’re seeing in areas like South East Queensland where retailers can offer customers whatever they like,” Gray says.

“In many cases it’s a pittance.”

And further souring the deal for NSW solar homes is the fact that networks in that state are in the process of introducing a “sun tax” that seeks to charge rooftop PV owners – via their retailer – a fee for exporting to the grid at times of low demand and peak solar generation.

“In New South Wales network companies have proposals sitting with the Australian Energy Regulator to charge solar owners for putting cheap solar energy into the grid during the middle of the day,” says Gray.

“It’s an outrageous sun tax and we’re calling on the state government to rule it out for Queensland.

“Queensland’s solar owners are playing a critical role in bringing down wholesale electricity prices for everyone while slashing the state’s emissions,” Gray says.