By Connor James | Nexus Law Group Consulting Principal
What is a reasonable Feed-in Tariff (FiT) and why should a solar household in Bundanoon receive less than a solar household in Ballarat?
From July 2017, Victorian solar households will see a rise in the mandated minimum FiT. While this is good news for Victorians, residents of other states are left to compare and negotiate a FiT from their retailer. As a result, many are left with a less than fair and reasonable FiT.
An examination in each state and territory of the value of solar energy and best structure of a FiT is the first step in developing supportive regulation. Even if some components of value cannot be quantified, such an exercise will avoid the unfairness of unreasonably low FiTs.
The July 2017 increase in Victoria
Last month, the Essential Services Commission (ESC) announced an increase to the minimum FiT to be paid to Victorian solar households. As of July 2017, an 11.3c FiT will apply to small renewable generators in Victoria that have less than 100 kW capacities.
To determine the wholesale value of distributed generation, ESC used ACIL Allen Consulting’s proprietary PowerMark model. The forecast average pool price from the PowerMark model is $77.22/MWh for 2017–18. The ESC then examined the weighting of relevant export time intervals, settling on a forecast solar weighted average pool price of $81.30/MWh for 2017–18. The ESC subsequently applied a loss factor of 1.074, added 0.1 c/kWh for avoided ancillary service charges and market fees, and applied a social cost of carbon of $0.025/kWh.
In contrast to Victoria, solar households in other states and territories are left to shop around for the best offer. Electricity retailers in all eastern states are required to present their offers in a standard way, designed to help consumers determine which offer is best. The Australian Energy Regulator operates Energy Made Easy (www.energymadeeasy.gov.au) to help consumers compare offers. The Independent Pricing and Regulatory Authority of New South Wales (IPART) has produced an Excel tool to help solar households in NSW compare offers.
In reality, it is very difficult to compare energy offers, particular energy offers with a solar FiT component. As a result, a large number of consumers are not getting the best FiT or retail rate available.
The above is an excerpt from an article Connor authored for RenewEconomy – a website about renewable energy.
If you would like to read the article in full, please click here.
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