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Submission to VIC Renewables Roadmap suggests how to make solar feed-in tariffs fair & effective

A submission to the Victorian government’s Renewable Energy Roadmap paper has proposed that a different approach to rooftop solar tariffs, giving solar households better value for the energy they export to the grid, could also help clean up Australia’s electricity market.

The submission, by energy and environment policy expert, Alan Pears, notes that the current levy on PV exports to the grid pays rooftop solar owners in Victoria around 6 cents/kWh, but is then resold to (mostly) nearby consumers at 20 to 30 cents/kWh, leaving 15-25 cents/kWh to be shared as a “windfall profit” by the retailer and network operator.

But according to Pears – one of Australia’s leading energy efficiency experts – this system could be a lot fairer for solar households, while also helping governments to fund renewables growth and the transformation of ageing grid infrastructure, without cutting into the “legitimate” costs of power retailers and networks.

“The government should capture this [15-25 cent] margin (minus the legitimate costs of the retailer and network operator). Part of this should be paid to the PV owner, and part used to fund clean energy development.

“In particular, costs of grid upgrades to facilitate high penetration of distributed electricity generation could be funded via this mechanism.”

The recommendation is part of a number of strategies outlined by Pears as part of an integrated approach to clean energy, energy efficiency, smart management, storage and renewables the Victoria government could take.

According to Pears, this should include action on replacement of gas – by a mix of energy efficiency, solar thermal and advanced renewable electricity technologies – as well as clean transport alternatives.

The aim, says Pears, should be to ensure there is enough renewable energy and associated technologies, like energy storage, to keep wholesale electricity prices low – or at least, no higher than they are now – so that renewables “cannot be ‘blamed’ for increases caused by closures of coal power stations or other changes in the electricity market.”

He also recommends the Victorian government uses a similar approach as the ACT government, by using a series of ‘contract for difference’ projects sourced via a bidding process possibly run, under contract, by ARENA.

Pears also highlights the importance of a working renewable energy target as part of an efficient energy market transformation.

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