There have been hundreds of articles and blog posts that customers in south-east Queensland, New South Wales and South Australia will soon be able to opt in, and get three “free” hours of electricity in the middle of the day.
This sounds great if you are a renter or live in an apartment and can’t get rooftop solar, and are in a position to move some big loads to the middle of the day.
But, as many people have pointed out, even if wholesale energy is free in the middle of the day, delivering it over the network is not, and those costs (together with environmental costs, retailer costs, profit margins, etc.) would typically make up more than half of the bill.
Due to cloudy/rainy days, the wholesale price has not always been free, either. Josh Stabler posted that between 11am-2pm, the “average wholesale prices for the past 12 months have been – NSW: $34, QLD: $11, SA: $1, TAS: $68.7, VIC: $10.” That is, for example, in NSW: $34/MWh = 3.4c/kWh.
Some retailers have already offered “free energy” plans for a number of years and, to make them work commercially, the daily charges and prices at other times of the day have been higher to pay for these other costs.
A very important question is, will this kill the rooftop solar (RTS) industry? I do think it’s important to get a sense of how much “damage”, if any, this policy will do to the future RTS installation market.
Bruce Mountain says “there’s little point installing solar if grid-supplied power is free at the times when most of the rooftop solar production occurs.”
He’s right to be worried, but what is the actual financial impact to potential RTS owners?
I have modelled that around 40 per cent of solar generation occurs between 11am-2pm on northern roofs, so 40 per cent is a ceiling to the amount of “damage.” I have also confirmed this with half-a-dozen actual north-facing systems here in Brisbane over 2023 and 2024.
But because prices will need to be higher at other times, the “damage” will be less than 40 per cent by being on this plan versus installing RTS.
Also, because feed-in tariffs have already been trending to almost zero, and as most RTS owners don’t use all their generation in these hours, the “damage” compared to installing RTS will be less again.
But perceptions can be more powerful than facts. As Finn Peacock says, “it can still make sense to buy solar” but “it just looks like the government made solar pointless. And perception drives behaviour.”
Although the impact compared to RTS will be lower than 40 per cent, the perception could be much higher. We will have to wait and see.
Although we are somewhat financially rational, I think Australians love RTS and distrust electricity retailers, despite RTS tracking 14 per cent lower than 2024 due to the “cheaper home batteries” installation boom.
This article was originally published on LinkedIn here. Republished here with permission.
Robert Farago has been writing software, building the internet and installing solar, sometimes simultaneously. An EV driver since 2012.
