South Australia’s independent industry regulatory body–The Essential Services Commission of South Australia, or ESCOSA–has released a draft determination about its recommendations for the electricity retailers’ contribution to the state’s Transitional Solar Feed-in Tariff. From 27 January 2012 , the retailers’ contribution will be offered in addition to the 16c per kilowatt-hour (kWh) currently offered to solar customers.
The new South Australia Transitional Feed-in Tariff: 23c/kWh for 2012
Solar PV installations in South Australia (Source: ESCOSA)
Since its introduction, the South Australia Solar Feed-in Tariff scheme has given a strong incentive for South Australians to install solar power, with over 47,000 premises signed up under the FiT scheme, resulting in a cumulative capacity of 120 megawatts (MW) of solar installed in the state. Until 30 September 2011, the rate for solar power fed into the grid was a generous 44c/kWh, which made going solar a financially viable option for many households and businesses in the state. Although less generous than previously, South Australia still has one of the highest Solar Feed-in Tariffs in Australia.
South Australian residents who apply for the state’s Transitional Solar Feed-in Tariff between 27 January 2012 and 30 June 2012 will be offered at least (16c/kWh + 7.1c/kWh =) 23c/kWh for every unit of electricity exported to the grid. Although a smaller amount than the previous 44c/kWh rate, the mechanism used to arrive at this new rate is slightly more complicated than it was before, and may mean more paperwork for new grid-connect solar customers.
How does South Australia’s Transitional Solar Feed-in Tariff scheme work?
The South Australia Feed-in Tariff was until 30 September 2011 offered at a rate of 44c/kWh on a net feed-in scheme, meaning that electricity customers with eligible grid-connect solar systems would be paid 44c for each kWh exported to the electrical grid, with no obligatory contribution from electricity retailers. Since the closure of the scheme (which coincided with the end of Victoria’s Premium Feed-in Tariff program), a transitionary feed-in tariff program has come into effect and the format of the incentive has changed, with the government now mandating a significantly reduced rate of 16c/kWh (a rate determined by ETSA Utilities), plus requiring a set contribution from electricity retailers who accept solar customers (a rate determined by ESCOSA).
South Australia Transitional Feed-in Tariff Premium Rates Draft Determination until 2014.
As the rate for South Australia’s retailer contribution is meant to reflect the ‘real value’ of solar power to the electricity grid, ESCOSA initially modelled two separate outcomes for for the Feed-in Tariff Premium: one with a carbon price, and one with no carbon price. Since the recent passing of the carbon price legislation in the Australian Parliament, ESCOSA has removed the ‘no carbon price’ model from its projections and has made a clear determination as to what the retailer contribution should be. As the carbon price is expected to drive up the cost of fossil fuel-fired generation, under a carbon price scenario the retailer contribution rate to be offered will be higher than without. The chart to the right (from the ESCOSA report) details these rates for the next 3 years.
How will the two components of the SA Transitional Solar Feed-in Tariff scheme change over time?
The Future of the South Australia Solar Feed-in Tariff
The 16c/kWh rate will apply to customers with eligible solar systems who sign up for the scheme between now and 30 September 2013. Those who apply by this deadline will be eligible to continue receiving this rate until 30 September 2016, whereas the retailers’ contribution will continue indefinitely. Those who sign up after 30 September 2013 and before 30 September 2016 will (unless the government introduces new solar incentive policy) only be eligible for the retailer’s contribution, whose rate will be reassessed annually until the end of the scheme. The retailer’s contribution is expected to continue on in this way into the near future.
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