NSW feed-in tariff rates: IPART now preparing report for 2013-2014

NSW’s Independent Pricing and Regulatory Tribunal (IPART) has begun working on its recommendation for the state’s benchmark solar feed-in tariff rates for the financial year 2013-2014. IPART will be accepting submissions about its proposed approach until 7 June, with a final draft to be released by the agency in the last week in the same month. The new rates will go into effect from 1 July.

Solar feed-in tariff benchmark rates: What are they?

The benchmark rates are IPART’s answer to the dilemma about how to fairly subsidise solar electricity generation after the closure of the state’s Solar Bonus Scheme to new applicants in April of 2011, following a change of government in the state’s legislature. For 2011-2012, the recommended rates were between 5.2c and 10.3c/kWh, and for the financial year 2012-2013, they were between 7.7c and 12.9c per kilowatt-hour (kWh). The 2013-2014 feed-in tariff rates are likely to continue this upward trend.

IPART’s benchmark rates are a guideline only; ultimately, all NSW feed-in tariff rates are paid on a voluntary basis by electricity retailers to electricity customers who own solar power systems. However, as these rates are intended to independently reflect the ‘true value’ of solar power to electricity utilities, knowledge of the recommended range gives solar homes and businesses greater bargaining power when it comes to negotiating a deal with their retailers.

Electricity retailers, whilst not required to offer anything in exchange for solar power, are still obligated–in the name of market transparency–to display their offering (or lack thereof) on IPART’s MyEnergyOffers website. In fact, most electricity retailers advertise a feed-in tariff rate of zero, and the non-zero rates available are generally at the low end of the recommended range. For example, AGL offers a rate of 8c/kWh, and Energy Australia offers a rate of 7.7c/kWh.

I’m thinking about going solar. How will the new feed-in tariffs affect me?

NSW residents who install a solar system after April 2011 are no longer eligible for either the 60c/kWh or 20c/kWh rates that were once on offer in the state. Even so, the dramatic fall of solar photovoltaic (PV) system prices and sharp spike in retail electricity prices across Australia means that systems are still a worthwhile investment for the right NSW homes and businesses.

In particular, solar PV systems are a great investment for those who consume a lot of electricity during the daytime–when the sun is shining and the solar panels are producing power. This is often referred to as solar self-consumption. By using their solar power directly, system owners reduce the need to purchase costly power from the electrical grid.

Low feed-in tariff rates have 2 implications for potential solar system owners: The first is that systems should be sized to produce slightly less energy than the home or business in question will actually use during the day, and the second is that they should try to use as much of the solar energy as possible while it is being produced. Selling energy to the grid should be avoided as much as possible because the savings that can be had through self-consumption is greater than that which can be had by selling the solar power to the energy retailer. Electricity in NSW typically retails for over 20c/kWh–sometimes higher. Selling solar power to the grid for rates as low as 6c/kWh instead of using it is comparable to throwing it away. Although the new, presumably higher feed-in tariff rates will give a bit more of a buffer for times when the power can’t be used–e.g. holidays away from home–the basic idea remains the same.

If you’d like to learn more about options and benefits for going solar in NSW contact Solar Choice today by filling out the Solar Quote Comparison request form to the right of this page, or by calling us on 1300 78 72 73. Solar Choice is an impartial brokering and advice service that works with over 120 solar installation companies across the country. Let us help you make the right choice about going solar.

© 2013 Solar Choice Pty Ltd

James Martin II