The long-awaited result is finally in: IPART has made its recommendation as to how the NSW government should replace the state’s now defunct Solar Bonus Feed-in Tariff Scheme. Under IPART‘s recommendations, NSW residents interested in installing solar PV systems will not be eligible for a standard, state-wide Solar Feed-in Tariff. Instead, the government, as foreshadowed in IPART’s draft report report last August, has revealed an education campaign and a website to keep electricity customers fully informed about their options for electricity and the new ‘subsidy-free’ Solar Feed-in Tariff rates on offer from the electricity retailers throughout the state. The non-mandatory Solar Feed-in Tariff rates will be between 5.2c/kWh – 10.3c/kWh for 2011/2012, depending on the retailer.
A ‘fair and reasonable’ Solar Feed-in Tariff for NSW
IPARTs recommendations were constrained from the outset by the terms and conditions set by the NSW Liberal government, which prior to commissioning the review had already suspended the generous Solar Bonus Scheme completely and abruptly on 28 April 2011. The terms and conditions contained two important stipulations that effectively eliminated the possibility of any government subsidisation for solar power: 1) There would be no government funding for any new solar support scheme, and 2) the new Solar Feed-in Tariff could not drive up the price of electricity for ordinary electricity users.
Certainty finally comes to the uncertain NSW solar PV market
Although IPART’s recommended rates are far from generous compared to those that were on offer when solar power first boomed in NSW, they provide a large degree of certainty for solar PV system customers and solar PV installers alike.
Instead of a set, state-wide rate, the new ‘fair and reasonable price’ for solar power will be based on solar power’s ‘real value’ to the electricity grid operators and their retail arms. IPART CEO Jim Cox said in a media release (pdf), “The benchmark range represents the fair and reasonable value of electricity expected to be exported to the grid by PV customers during 2011/12.” (It is worth noting that the environmental benefits of solar are not incorporated in its value.) IPART, through its research, has determined that the benchmark rates for the year 2011/2012 should be between 5.2c/kWh – 10.3c/kWh, but does not mandate that the ‘gentraders’ (Energy Australia, AGL, and Origin, primarily) pay households and businesses that export solar power to the electricity grid.
The benchmark solar feed-in tariff rate will be reevaluated annually and is expected to rise in the coming years–in part due to the implementation of a carbon price set to come into effect from April this year. The rising rate of the value of solar, combined with the rising electricity prices across Australia (including by up to 40% by 2014 for NSW), and the unprecedentedly low cost of solar PV systems due to increased competition and a global glut of stock (especially from China), means that returns on investment on solar systems are potentially attractive for those who use their solar electricity wisely. (Read more about the benefits of a Solar Feed-in Tariff vs Solar Buybacks.)
Current 60c/kWh and 20c/kWh Solar Bonus Scheme recipients to remain unaffected by changes
Despite all the sudden and unpredictable changes that the NSW solar industry has endured since the introduction of the Solar Bonus Scheme in 2009, those who are currently benefiting from the now defunct NSW Solar Bonus Scheme will continue to receive the rates guaranteed under their current contracts. IPART’s recommendations in the new report do affect 60c/kWh or 20c/kWh recipients.
Solar power does have value for electricity retailers
One of the most interesting facts to surface in IPART’s final report is the admission that solar power does have value to electricity retailers and grid operators–something that had been denied by NSW electricity retailers and generators who opposed the state’s Solar Bonus Feed-in Tariff scheme. Although IPART has deemed solar power to be worth less than the retail electricity rate to electricity retailers, “retailers do make a gain from their customers’ PV”, according to CEO Jim Cox. This means that all solar power exported to the grid to date without a Solar Feed-in arrangement in place has essentially been charity for retailers. As solar industry veteran and analyst Nigel Morris of Solar Business Services noted on Twitter: “Electricity Retailers pocketed $25M in 2011-2012 in PV export value, 12% of the Solar Bonus scheme cost in the same period”.
New government information portal for comparing electricity prices, solar feed-in tariff rates
To make sure they are getting what they ‘deserve’ for their solar power, retail electricity customers should be armed with the knowledge of what rates each retailer offers, according to IPART. This will theoretically foster competition and pressure electricity retailers to offer more competitive Solar Feed-in Tariff rates. To facilitate greater transparency in electricity pricing, the NSW government’s web-based, automated electricity rate comparison service (MyEnergyOffers.nsw.gov.au) now includes information on all of the Solar Buyback rates offered by state electricity retailers under their various electricity bill plans. A fact sheet (pdf) released by IPART about the ‘subsidy-free’ Feed-in Tariff summarises:
We think that if customers know the benchmark range and can access retailers’ offers more readily, they should be more likely to shop around to attract the fair and reasonable value for their PV exports. We are therefore recommending improvements in information disclosure by retailers, particularly through their call centres and door-to-door marketers. The feed-in tariff offers from retailers are now available on our myenergyoffers website, http://www.myenergyoffers.nsw.gov.au/.
Going solar in NSW: What to do?
– Determine your home or business’s quarterly electricity consumption by looking at an electricity bill;
– Decide if solar power is a worthwhile investment for you. (Generally speaking, a solar PV system will provide the most benefit to those who use electricity during the day);
– Visit the MyEnergyOffers website and find which retailer offers the best electricity rates in combination with the best Solar Feed-in Tariff rates;
– Once you’ve had a system installed, keep a close eye on electricity consumption, ensuring that it coincides as much as possible with solar PV generation.
© 2012 Solar Choice Pty Ltd
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