Solar industry says utilities unfairly targeting solar homes in ‘demand tariff’ report

The Australian solar industry has accused electricity network operators of unfairly targeting the nation’s two million solar households to justify tariff changes designed to protect the “gold plating” of the networks over the past decade.

The Energy Networks Association on Wednesday resumed its push to introduce so-called “demand” tariffs, which it said would be more cost reflective for consumers.

But while the solar industry agrees with the concept of demand tariffs, the ENA has also claimed, according to “research,” that non-solar households would pay $655 in annual cross subsidies to solar households by 2034.

“These are simplistic conclusions from a dodgy report,” said John Grimes, the head of the Australian Solar Council.

“It is like putting the fox in charge of the hen house,” Grimes said. “This is a self-serving report aimed at preserving the profits of a few large power companies while pretending to act for consumers.”

The Australian PV Institute (APVI) said it was pleased that the ENA agreed with its recommendations from over a year ago that network pricing should be cost-reflective, and that a tariff with a demand charge component is the best way to do this.

“Tariffs with a demand charge will reward the owners of PV systems for reducing peak demand, and will encourage households to have PV systems that face west and install battery storage to reduce demand peaks even further,” said Rob Passsey of the APVI, which is concluding a three-day conference at the UNSW on solar technologies.

“The APVI is concerned however that the ENA is implying that households that install PV systems are imposing costs on other customers,” Passey said.

“The costs the ENA refers to are due to reduced payment of network tariffs by owners of PV systems, but most distribution networks in Australia absorb these costs themselves and cannot pass them onto other customers.

“This higher absorbed cost is presumably why the ENA is targeting PV. Of course, this reduced payment of network tariffs is also caused by any other activity that reduces electricity use, including low flow shower heads, efficient lights and more efficient appliances.”

Passey noted that the ENA states that they want to be able to “assign customers making new connections or upgrading their existing connections to a cost-reflective network tariff”.

He said this meant that any household who installs a PV system will be required to move to such a tariff, however households who install air conditioning systems will not – despite both the ENA and the Productivity Commission identifying air conditioners as the main culprit for increased electricity prices.

Muriel Watt, a consultant with ITPower and former head of the APVI, said there were numerous cross subsidies within the grid – from city users to rural users, from daytime users to night-time users – that was the reason why it was built.

“They currently want PV to be doing all the work, and say it is coming in and wrecking the grid,” Watt told RenewEconomy at the conference. “They do not want to change the say they manage the grid, but they have to, because everything that is happening is changing the grid.

“This needs to be a discussion about how tariffs are set, and how the grid is managed. Things have changed. Tariffs have to be set fairly and in a technology-neutral way, so you don’t try and penalise PV.”

Top image: Australian Solar Council head John Grimes, via solar.org.au

© 2014 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