As retailers & regulators seek to protect revenues, next major battleground for solar emerges

Australia’s solar industry looks to have a major battle on its hands, as pricing regulators and utilities take action to protect revenues and make rooftop solar less appealing for consumers.

In South Australia, the grid operator has applied to slap solar households with higher charges, and West Australia’s state-owned utilities have been considering a similar measure.

Tariffs are also being skewed to protect utility revenues and reduce the incentive to install solar. In Queensland and Victoria, the tariff paid for exports of excess solar power back into the grid are being slashed.

In Queensland, fixed tariffs have been jacked up, removing the incentive for consumers to use less electricity or to install solar. For low energy users, particularly pensioners, half the bill is now unavoidable. New limits are also being placed on solar installations in regional areas.

In NSW, something called “declining block” tariffs are about to be introduced, where rates are actually higher for a set amount of consumption, and then decline afterwards. It is akin to a fixed charge, and does not encourage efficiency.

Elsewhere, metering charges are also being jacked up to make it more expensive for households to install solar. New “so called” cost reflective tariffs are being introduced, but are being criticised for being anything but “cost reflective”, because they seek to reclaim past gold plated investments, not new ones.

Solar installers are also being squeezed by the big energy players, with some retailers now offering rooftop solar for free, and then offering to sell the output back to the consumer at a deep discount to grid costs.

Interestingly, this week Paula Conboy – the new head of the AER, who last year noted the rise of the “pro-sumer” and the need to set returns and tariffs that benefit consumers, rather than the incumbent network operators – has foreshadowed plans to get at least some long-term visibility in tariff structures.

Rather than a piecemeal, year by year approach, the AER wants to build in tariff structures that will be binding for a regulatory control period (typically five years), and any changes to tariff structures will need AER approval.

That may be good for visibility for consumers, and to help make decisions about whether solar and storage is a good deal or not, but it may also lock in poor outcomes.

© 2015 Solar Choice Pty Ltd

Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson