Australian electricity distribution companies are gearing up to test out new market rules enabling two-way network power pricing, including the ability to charge for household solar exports to the grid, in line with strict rules set out by the Australian Energy Regulator.
The new tariff structures were approved by the Australian Energy Market Commission in August 2021 – after much public debate and criticism – in response to proposed rule changes around pricing and incentive arrangements for distributed energy resources.
And while the new rules don’t officially come into play across the National Electricity Market until July 2025, the AER has invited distribution companies to start running carefully monitored trials as part of the current 2019-2024 regulatory period – potentially kicking off as early as July this year.
According to the Energy Regulator’s Tariff Trials web page, just a handful of DNSPs – mostly in New South Wales – have proposed charging for solar exports, so far, while others are taking the opportunity to run trials incentivising customers to shift their loads to times when solar generation is more plentiful.
As noted above, these trials must be signed off by the AER and, to achieve the tick of approval, must meet a number of strict criteria, including making any trial tariff structures “opt-in” only and ensuring no more than 1% of revenue is recovered from these trials, each year.
“We see this as offering businesses the opportunity to explore innovative tariff strategies while protecting consumers from the wide scale introduction of tariffs they may struggle to understand or respond to,” the AER said here.
“…Each trial needs a clear purpose and that the results of such trials can help build stakeholder understanding and inform the design of a new capacity tariff proposal in the 2025-30 regulatory control period,” it adds.
So what are the DNSPs proposing? Here’s a brief rundown of a cross-state selection of some of the tariff trials being put to the AER so far…
What it’s proposing
For residential customers, Ausgrid wants to trial a two-way tariff that it hopes will signal when household consumption and solar exports support the network and allowing retailers to develop more sophisticated ‘prices for devices’ offers.
According to Ausgrid’s own modelling, it believes the trial will reduce network charges for more than half of its customers with solar, even before “behavioural responses” are factored in.
That said, the modelling also found that for a “large minority” of customers network charges would increase, “typically driven by the expanded peak charging windows of the trial tariff.”
But Ausgrid says it will mitigate the risk of customers paying more in the trial by making the new tariff “opt in,” offering ways to reduce bills through behaviour change, and by offering all partner retailers a “no customer worse off” guarantee.
What it says
“All our tariff trials will teach us important lessons about our customers, both retailers and end-use-customers. Following the AEMC’s recent lifting of the ban on export charging, there is very limited real-world evidence of how customers are likely to respond to export charges and rewards.
“Before we can consider wide-scale implementation of two-way tariffs, we need to better understand how traders (both traditional retailers and emerging virtual power plants) and customers react to export charges and rewards.”
What it’s proposing
A seasonal export charge designed to address potential export-related constraints on Evoenergy’s network, particularly in the middle of the day during spring and summer when solar exports are high and energy imports by residential customers are relatively low.
The export charge will be levied on any exports in excess of a 3.75 kWh threshold during any one-hour period between 11am and 3pm (AEST).
What it says
“Given the new and innovative nature of the proposed tariffs, Evoenergy is committed to maintaining close contact with the AER, consumers, and retailers to ensure the tariffs are fit-for-purpose and deliver on their objectives.
“The design of the tariff trials has been informed by close engagement with consumers (including consumer groups and large- scale battery proponents) and retailers. The tariff design is also aligned to Evoenergy’s overall tariff strategy of moving towards greater cost-reflectivity and transparency in its tariff structure.
“In practice, customers are likely to receive a feed-in-tariff from their retailer that is higher than the seasonal export charge. This means that the seasonal export charge may in effect reduce the ‘net’ feed-in-tariff received by the customer, rather than being a net charge to the customer.”
SA Power Networks
What it’s proposing
As this stage, there is no export charge proposed for SAPN’s trial – the state already has fairly strict export limits in place across the board – rather it is proposing to trial a new network tariff from 1 July 2022, called Electrify, to encourage customers with an above average energy consumption to use more of their energy outside peak demand times.
Electrify will have a year-round peak period of 4 hours between 5:00pm–9:00pm SA time, to simplify the tariff structure by not distinguishing between summer and winter, and to recognise that, over time, electrification will increase winter peak demand.
As a result, a lower Peak price and a lower 15 hour Shoulder price can be created. Low prices are
available for 20 hours per day with Electrify, with 5 hours of Solar Sponge and 15 hours of Shoulder.
What it says
“Electrify is designed for customers who predominantly or solely meet their energy needs through electricity, but have sufficient flexibility in their appliances, eg electric vehicles (EV), heat pumps, energy storage etc, to optimise their usage outside peak demand periods.
“These customers are expected to have an above average energy consumption, so the tariff is structured to provide more opportunities throughout the day to access lower cost electricity outside of distribution network peak periods.
“Electrify, through its price signals and structure aims to encourage residential customers to manage their electricity usage at peak times, when the distribution network is under its greatest constraint.
“The tariff also creates large windows of time where flexible usage can be accessed, eg storage of energy in a battery, charging an EV, heating a home or hot water. This tariff may also reward those homes with efficient insulation that enables lower peak energy usage for heating and cooling.”
Like South Australia, Victoria showed a general lack of interest in the concept of solar export fees when the rules were being debated, and at this stage none of the state’s DNSPs that have submitted trial tariff proposals have proposed introducing one – not for residential customers, at any rate (community batteries will be another story).
Rather, the focus is on maximising the use of cheap solar power – particiularly for non-solar housheolds – through time of day tariff incentives and the use of community batteries.
What it is proposing
From 1 July 2022 to 30 June 2026 CitiPower will offer an optional residential Daytime Saver trial tariff with the following tariff structure and indicative rates.
What it says
The Daytime Saver trial tariff is expected to particularly benefit customers who don’t have rooftop solar and can:
• Charge their electric vehicle at home between 10am and 3pm
• Set their pool pump to operate between 10am and 3pm
• Set their air-conditioner to pre-cool their home before 3pm
• Shift some of their appliance usage, such as dishwashers and washing machines, to operate
between 10am and 3pm
The trial’s key objective is to “incentivise residential customers to use more electricity around midday to increase solar hosting capacity on low voltage feeders.”
A retailer can opt in or out of the trial at any time. “Interest will be monitored and if deemed necessary tariff rates will be adjusted to provide a greater incentive for take up,” CitiPower says.