Victoria’s Essential Services Commission has finalised the details of its first-of-a-kind time varying solar feed in tariffs (FiT), which are to be introduced in July 1, 2018, and ultimately become compulsory.
The shift from a flat FiT to a time varying one is a first for Australia, and was proposed by the ESC in response to a push by the Labor state government to find a “fair price” for solar exports back to the grid from the 1GW of rooftop solar installed on homes and small businesses.
The rates will be more or less advertised in its draft report in December.
They will require retailers to pay a minimum 29c/kWh for those who manage to export between 3pm and 9pm, a minimum rate of 10.3c/kWh for the time between 7am and 3pm, and a minimum rate of 7.1c/kWh (down from 7.2c) in the unlikely event anyone is exporting between 10pm and 7am.
The use of time-varying tariffs will be voluntary for retailers for just one year, although the ESC suggested it may consider an extension in the face of objections from the likes of Energy Australia.
So, for the next year, an alternative flat rate of just 9.9c/kWh can be paid.
That raised concerns from solar advocates of a much lower price – down 1.4c/kWh from the previous flat rate at a time when wholesale prices have jumped, but the retailers argued it was too high.
The ESC justified the lower cost for the flat rate from modelling from ACIL Allen which argued that the any-time price of electricity has fallen, while the price in the evening has jumped. The arrival of more solar connections is expected to further depress day time prices.
The ESC expects the time varying tariffs will provide an incentive for households to either shift their load (such as pool pumps), orientate their panels to the west, rather than the north (to produce more later in the day), or to install battery storage.
The ESC is also looking at imposing “critical peak tariffs”, which will result in even higher payments when wholesale prices jump above $300/MWh and surge to the market cap ($14,200/MWh, or 142c/kWh).
But due to the complexity of this tariff, which will have to be done retrospectively, in other words after the event, this element will not be introduced until 2019/20.
The Victoria tariff is also the only state-based FiT that explicitly includes a “social cost” of carbon, 2.5c/kWh.
The ESC in its final report noted that some parties – consumers groups, the Alternative Technology Association and retailer Powershop had raised concerns that consumers could charge up their battery at night and then “export” during the evening peak.
The problem with this is that they would effectively be exporting stored coal power, and gaining a tariff that included the social cost of carbon. “That would be a perverse outcome,” the ATA said.
The ESC noted the concerns, but said they would be more relevant to future FiT setting processes than the current one. But it will take a look.
“The scenario depicted above is unlikely to emerge to any material degree due to the low penetration of batteries,” it said.
“We recognise the issue raised by stakeholders and will continue to work with the relevant government agencies on the appropriate FiT arrangements.”
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.
This post was published on February 28, 2018 9:20 am
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With 10 panels (of 35 total) facing west and about 13% of my solar export occurring after 3pm on weekdays, I will get some benefit from these time varying solar export tariffs. I’ve done the calculation on my last 365 days of interval data and I would be about $130 worse off with the ESC rates. However if the retailers like Glowbird offer rates above the minimum ( particularly for the shoulder rate), I should end up the same or a bit better off.
Now would a Powerwall 2 be worth installing to shift solar from middle of the day to after 3pm? Shifting say 10kWh collected in the battery to the grid after 3pm at a rate of $0.187 ($0.29 - $0.103) would give an extra income of 10X0.187X260=$486 per year. With a Powerwall 2 costing about $11,000 installed, it would take 22 years to reach pay back. So the answer to my question is no.
The payback figures will also depend on how much you are paying for power after peak export times, combines with your personal use. If it is more than your export payment, your payback will be earlier wouldn't it ?
Yes Greg, it would. But I only import an average of about 2.5kWh a day and at an effective cost of about $0.14 per kWh, that saves only an extra $130 a year resulting in a pay-back period of about 18 years.
I think the $14,200 / MWh cap is actually $14.20 / kWh or 1420c / kWh rather than the 142c / kWh stated above
Divide $14,200 by 1000 to get price per kWh, so yes, your calculation is correct.
And apparently, if you are a Reposit customer, they pay you $1.00 (for a grid event) and keep the balance for themselves... But one can't be sure, because they don't/didn't post any costs/rewards on their web site :-(