Less than a week after the Victorian Andrews government promised to fight network discrimination against rooftop solar households, the state’s Essential Services Commission has confirmed it will slash the feed-in tariff for solar power exported to the grid to 5c/kWh.
The ESC said in a statement on Monday that it has decided to set the minimum rate for purchases of small renewable energy generation electricity at 5 cents per kilowatt hour, starting January 2016.
It said that it had come to this price by weighing up the marginal cost of the equivalent amount of electricity that would otherwise need to be purchased from central generators, as well as “the locational value of electricity produced close to the final consumers compared to relatively distant central generators.”
The ESC said the energy value of PV electricity had been calculated as a weighted average of the forecast spot market prices for Victoria for each half-hour period of 2016, as prepared by ACIL Allen Consulting.
Ironically, the Commission also said part of its decision to go with the lower 5 cent rate, down from the previous 6.2c/kWh rate, was due to a lower forecast wholesale market price of electricity, particularly during daylight hours when PV electricity was being generated.
The commission said it did not take into account any environment or network benefits of rooftop solar, because of a “lack of evidence”. The decision was panned by the solar industry, who say the fair value of solar should be at least twice as much, if not equivalent to the full retail rate.
“This decision delivers a transfer of wealth from solar PV owners to electricity retailers,” said Australian Solar Council chief John Grimes.
“Solar energy exported to the grid is sold to your neighbors at the full retail rate, often upwards of $0.25 per kilowatt-hour. So paying a solar owner $0.05 cents per kilowatt hour for that exported energy is simply unfair.”
Solar Citizens national director Claire O’Rourke said the ESC had got its decision wrong, and was sending a starkly different message to Victorians that the state government, which just last week announced a Renewable Energy Roadmap aimed at achieving a renewable energy target of no less than 20 per cent by 2020 and with the stated goal of promoting rooftop solar uptake, and protecting the rights of existing rooftop solar households.
“The slashing of the feed-in tariff by the ESC is extremely unfair and risks undermining increased renewable energy as part of Victoria’s energy mix,” O’Rourke said in a statement on Tuesday.
“The Victorian government has committed to a review determining what a fair price should be later this year, but this could be too little too late if the ESC feed-in tariff cuts get the green light.
“It’s not proper process to cut the feed-in tariff now, before we know what a fair price for solar fed back into the grid should be.
“Energy Minister (Lily) D’Ambrosio should delay these changes until the results of the upcoming State Government review are available.
“It punishes tens of thousands of households that are likely to lose a large chunk of the already small financial return they receive from providing clean, renewable energy back into the grid.
“This cut will also make it more difficult for the thousands more families in Victoria who want to make the move to solar and enjoy the cost savings on electricity that rooftop solar can bring.”
Editor’s note: An earlier version of this story indicated that the rate was retrospective. This is not the case and the story has been amended accordingly.
Sophie is editor of One Step Off The Grid and deputy editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
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The Victorian has been full of good intentions on renewable energy but the FiT issue is now past being a joke. Retailers are now charging a 5C surcharge from green power, which means in 2016 with the FiT at 5C they will effectively be payable exactly zero to buy rooftop solar. This is scandalous.
Yes @ zero credit is going to kill the ntwk as those that have the space will put in more solar & wind with batteries to give 95% electricity supply. The last 5% can be
augmented with a gen set. The future is, country people on acreage will put in enough solar so as to desert the grid. This will in turn make it more expensive to maintain the grid with costs flowing directly to customers that are still connected. The snow ball effect is more customers will follow suit and disconnect. Network owners will begin to off load uneconomic sections of the grid either by shutting them down or offering them to the govn’t for the price of a peppercorn . A prime example for yrs PowerCor wants to off load the the Otway Ranges back to to Victoria govn’t
I don’t think the network can on-sell private PV generation as green power because green power is supposed to come from new additional generation.
Can we get some clarity please as to whether this really will be applied retrospectively to people who installed their systems with assurances that their 60c feedin tariff would run for a defined period of years before reverting to whatever the standard rate would be at that time. The document linked to in this article makes no mention of who will be subject to the new tariff. If they can tear up their agreement with us, then what is the basis for any other entity’s contract with the government. For example, why not just unilaterally declare that all contracts signed with regards to freeway construction projects are null and void?
Sorry, it’s not retrospective. I’ve made a correction.
Thanks Giles. You should add the note to the repost on RenewEconomy as well.
Victoria needs to get a cohesive plan together. The state seems to be talking a good talk, but the ESC seems to be looking out for the utilities. Another somewhat sad situation for AUS.
Whilst I most certainly agree that solar energy should be valued much higher than it is today, raising the feed-in tariff is not a sustainable way of doing so. The reasoning is that the national electricity market (as it is currently designed) only values electricity in relation to the market price, i.e. all energy is valued equally whether it’s generated from coal, gas or solar. That wholesale value equals 3.5-4c/kWh or so and the main components that make up our electricity bill relates to network and transmission costs (which have been heavily gold plated over the years) and also retail costs. Here is a great article on electricity networks and the gold plating that’s occurred: https://www.themonthly.com.au/…/jess-hill/power-corrupts
The reasoning for a 5c/kWh feed-in tariff therefore is to reflect the value of those electrons – being slightly higher than wholesale value due to not fully utilising transmission networks and due to daytime timing. So if a higher feed-in tariff was introduced, it would need to be directly paid by taxpayers or it would be fully passed through by energy retailers.
We should re-think the problem and instead look at other (more sustainable) solutions:
– How about working towards making all exported solar energy GreenPower accredited (this would about double the export value)?
– How can we connect suburbs or neighbourhoods to fully account for all solar energy produced?
– How about scheduling more appliances to use solar energy during the day, and/or work towards more smart appliances?
– How about setting different prices for energy produced by different energy sources?
– How about including sustainability in AEMO’s mission?
So I absolutely agree, we need to make solar energy worth more than it is today!
A 5c/kW generator payment would speed adoption of new technologies to enable local usage – neighbours or self storage before giving generated electricity away.
Well Well looks like i have to shut off the two switches the one after my panels and the one before the inverter why should i get paid only a min of 5 cents per KWH when the power company will charge my neighbours and my self in excess of 25 cent per KWH
So in other words i made the investment for the power company to gain from Instead of myself ….. Thanks VIC government for nothing but another con