NSW’s Independent Pricing and Regulatory Tribunal (IPART) has announced the Solar Bonus Scheme benchmark buyback rate for solar power fed into the electricity grid in NSW for the financial year 2012-2013. The rate range of 7.7 to 12.9c per kilowatt-hour (kWh), while not mandatory, is the amount that grid-connected solar PV system owners should seek from their electricity retailer for the period. It is also higher than last year’s recommended rate range of 5.2c – about 10.3c per kWh.
Since after the conclusion of NSW’s state-sponsored Solar Bonus Scheme, electricity retailers are no longer obliged to purchase electricity exported from solar PV systems at a set rate. Instead, customers are encouraged to ‘shop around’ and find the retailer who offers the best rate for solar power. To this end, the government has established a website (myenergyoffers.nsw.gov.au) for comparing electricity rates from different retailers, as well as the solar buyback rates that they offer.
With electricity prices rising dramatically in NSW and across Australia, combined with the steadily dropping price of solar PV technology, interest in solar PV systems for home and small businesses has been growing. In states such as NSW which currently offer Solar Feed-in Tariff rates that are below retail electricity rates, solar PV systems are an excellent investment for those who use the bulk of their electricity while the sun is shining. In effect, using electricity direct from a solar power system enables the owner/user to bypass the electricity grid, reducing power bills and saving money. (Read more: The economics of Solar Feed-in Tariffs vs Solar Buyback schemes.)
The ‘fair and reasonable’ rate for 2012-2013 is based on the ‘actual value’ of exported solar power to the distribution network, although the definitions of both ‘fair and reasonable’ and ‘actual value’ are both contentious, given the other benefits that solar promises the grid and society in general. (Relatedly, the Clean Energy Council recently released a list of ‘solar myths‘–misconceptions about solar power that have managed to gain traction in some media outlets.)
IPART said the following in a media release announcing the new benchmark rate:
The CEO of IPART, Jim Cox, said “This benchmark range represents the fair and reasonable value of electricity exported to the grid by PV customers during 2012/13. The value of this electricity is higher than previously estimated by IPART for 2011/12 due to the introduction of a carbon price which increases the cost of wholesale electricity.” The range for 2011/12 was from 5.2 to 10.3 c/kWh.
The benchmark range of 7.7 to 12.9 c/kWh for 2012/13 is lower than the ‘1-for-1’ tariff that some of the solar industry has previously called for, where the customer would receive a payment equal to the full retail price. This is because electricity retailers still incur certain costs on the electricity exported to the grid by PV customers. For example, retailers are still required to pay network costs on that energy.
Mr Cox said “As part of our Final Report which was released in March 2012 we considered the solar industry’s proposal carefully. While retailers are able to supply electricity generated by solar PV units to other customers, they incur costs in doing so. This includes charges for transportation across the networks and costs associated with meeting green scheme obligations. That is why our decision on the benchmark range for the feed-in tariff is less than the retail price”.
Mr Cox noted that ”setting a higher feed-in tariff than 7.7 to 12.9 c/kWh for 2012/13 would involve a subsidy, incurring costs that need to be recovered from higher electricity prices or the NSW budget.”
Download a Solar Power System ROI Calculator for NSW
How to use the calculator:
1. Download the Solar Choice NSW Solar PV ROI calculator (Excel file)
2. Request a Solar Quote Comparison of the solar system installers in Sydney to obtain system prices,
3. Visit MyEnergyOffers.nsw.gov.au to find the best deal on solar electricity and Solar Bonus Scheme solar buyback rates,
4. Alter the variables in the light blue boxes in the calculator (system size, system price, etc) in column B to calculate system Return on Investment (ROI).
(You may also open the file in Google Docs if you have a Google account.)
*Calculator outputs are indicative only–please keep in mind that electricity rates, as well as NSW’s Feed-in Tariff rate, may change over time.
© 2012 Solar Choice Pty Ltd
He is now the communications manager for energy technology startup SwitchDin, but remains an occasional contributor to the Solar Choice blog.
James lives in Newcastle in a house with a weird solar system.
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