Recommended feed-in tariff rates for NSW to fall again

Feed-in tariffs for rooftop solar in New South Wales have been slashed again, with the state’s pricing regulator recommending a retailer contribution of just 5.3c/kWh for solar energy exported back into the grid, down from the current 6.6c/kWh.

The decision from the Independent Pricing and Regulatory Tribunal (IPART) was announced on Wednesday, the same day it granted price rises of nearly 20 per cent for gas supplies in NSW – a decision that will inflate household gas bills in the state by up to $225 a year.

IPART says the changes in its solar FiT draft determination for 2014/15 reflect the likely removal of the carbon price – while its “benchmark range” is cut to 5.0c/kWh to 9.6c/kWh at peak times.

It represents the lowest FiT recommended by pricing regulators in Australia, and contrasts dramatically with regulatory rulings in the US, where in the state of Minnesota, for instance, the solar tariff is nearly as high as the retail tariff.

It also contrasts with NSW’s recommended retail tariffs of around 28c/kWh and peak tariffs of more than 52c/kWh.

In NSW, the rooftop solar FiT is voluntary, meaning retailers do not have to pay anything for exports back into the grid. Some utilities insist that commercial-scale installations have a mechanism that prevents exports back into the grid.

In Australia, pricing regulators FiT decisions are mainly guided by the impact on retailers and the so-called “avoidable” costs of delivery – the cost of wholesale generation, transmission losses, and some minor ancillary services.

But regulators in many US states take into account such things as the avoided fuel cost, as well as avoided costs of transmission, distribution and generation capacity, as well as the avoided environmental cost.

The position of state-based regulators on feed-in tariffs has caused the solar industry to consider establishing “peer-to-peer” pricing mechanisms, and to call for changes to the way electricity tariffs are structured.

© 2014 Solar Choice Pty Ltd 

Giles Parkinson