The Queensland Labor government’s promise of a better deal for rooftop solar households has met with resistance from its most senior bureaucrat in the department of energy.
Paul Simshauser, appointed in July to head the Department of Energy and Water Supply, has published a new paper that attacks the “transfer of wealth” from households without solar to those with rooftop solar.
Controversially, the paper also recommends new tariff structures that will see network fees fall for those households with air conditioning but no rooftop solar. Simshauser suggests that, under his model, network fees should rise for households with rooftop solar but no air conditioning.
The thrust of Simshauser’s arguments are that tariffs need to be changed, and to use “demand” tariffs so that they become “cost reflective”.
The question is, how to ensure that these new demand tariffs are constructed in a way that are in fact, cost reflective, and not just a revenue haul for the networks.
The assumption has been that the network revenue should be protected, despite overwhelming evidence – as highlighted by Mark Byrne’s excellent analysis on Ausgrid – that those networks have been overbuilt, based on misplaced assumptions about rising demand, and therefore should be written down.
The primary reason those networks were overbuilt was because of the growing use of air conditioning. The federal government way back in 2012 conceded that this represents a massive cross subsidy, with every $1,500 unit of air conditioning adding around $6,000 to network costs.
Networks were happy with that because it meant more revenue, and Simshauser doesn’t want to increase network fees for those homes with air conditioning and no solar PV.
He wants to lower them. Instead, he wants to increase network fees – by up to $225 a year – for solar households, who will face rises in network fees whether they have air conditioning or not.
Under his “three-part” tariff system, network bills for households with no solar and no air conditioning will fall by $152.49, network bills for households with no solar but with air conditioning will also fall by $44.75.
Simshauser says such households are “beneficiaries of implicit air-conditioner subsidies but bear the incidence of implicit solar PV subsidies.”
On the other hand, network bills for solar households would increase by $89.50 and by $225.27 or +27.8 per cent, in the case of solar households with air conditioning.
Part of his justification goes to graphs that he says show that rooftop solar PV misses the peak by a big margin, thereby contributing very little to network augmentation.
But figures can blur the true situation, as we pointed out when SAPN used a similar argument to defend their demand tariffs, a move SAPN concedes will likely halve the uptake of rooftop solar in the next few years, if adopted.
It is also interesting that there is so much focus on supposed cross-subsidies between solar and non solar households, and not the even greater subsidies between city and regional homes, or from air con use and no air con use.
In Queensland and Western Australia, the cross subsidy to homes in regional centres is enormous, totalling between $500 and $600 million a year, and up to $1,000 per household.
And nowhere in Australian regulatory circles are the “benefits” of rooftop solar included in calculations of a “fair price.”
The solar industry says that if a demand tariff is to be set, then it should be on the network peak, not the customer peak, which can be completely different. That will also provide an incentive to change their behaviour. In Queensland and other states, some solutions may be as simple as encouraging west-facing solar arrays, or even using daylight savings.
© 2015 Solar Choice Pty Ltd