The Queensland Competition Authority (QCA) has released its final report concerning the future of the state’s Solar Bonus feed-in tariff incentive scheme. Although the QCA’s new feed-in tariff rate recommendations–at less than 8c per kilowatt-hour (kWh)–are only a fraction of the 44c/(kWh) rate to be received by those who made the application deadline, there is good indication that solar panels will continue to be a popular money-saving option for Queenslanders into the future.
Queensland feed-in tariff rates for new applicants
Southeast Queensland: Recommended at 7.55c/kWh, voluntary
The QCA has followed the route of its NSW equivalent IPART in recommending that competition between electricity retailers be the main determinant of the value of solar power exported to the grid where there is ample choice for electricity customers–i.e. the southeastern part of the state, serviced by the government-owned network company Energex. This means that there will be no mandatory minimum ‘solar buyback‘ rate guaranteed by the government for customers in this area, although a ‘benchmark’ rate which reflects the ‘actual value’ of the solar power to the network companies will be published. In the QCA’s final report, this rate is 7.55c/kWh but will likely be revised upwards in future years. The QCA assumes that energy retailers will be able to compete with one another for solar customers by offering them a more generous rate for their solar power than their competitors, thus theoretically mitigating the need for government intervention in the market. This arrangement has proved to be somewhat effective in NSW, where a number of retailers do offer something, although none of them offer a rate that is within IPART’s recommended benchmark range.
The rest of Queensland: Between 7.06-14.05c/kWh, mandatory (location-specific)
In the parts of the state that are serviced by the Ergon grid, however, the QCA determined that competition between electricity retailers is scant enough to warrant a government-guaranteed minimum rate. Similar to the setup on northern Western Australia’s Horizon Energy grid, solar buyback rates in the less populous parts of Queensland will be regionally differentiated. The determination of the rate to be offered in each area will depend on the deemed ‘actual value’ of exported solar power to network, and will range between 7.06c/kWh to 14.05c/kWh.
The possible introduction of ‘cost-reflective’ network charges for solar PV customers
The final report takes note of the phenomenal popularity of the Solar Bonus Scheme, which facilitated an uptake of solar PV systems throughout the state well in excess of anyone’s expectations. The costs associated with the scheme are also expected to be large–up to $3 billion by the time it ends in 2028. The QCA has been charged with identifying potential solutions to these looming costs, and has recommended 3 potential fixes in its final reports:
- 1) Electricity retailers contribute to the distributor-funded tariffs
- 2) The development of more cost-reflective network charges for PV customers
- 3) Requiring solar PV customers to be on tariff 12 (the ‘time of use’ tariff)
It remains to be seen, however, which of these will be implemented and in what way this will affect the business case for going solar in Queensland.
Should I install a solar PV system in Queensland now?
The determinations in the report are not exactly a renewable energy advocate’s dream, but the situation could certainly be worse. Although a controversial gross feed-in tariff for new solar customers was proposed in an earlier draft of the QCA’s report, this suggestion was ultimately scrapped after facing overwhelming opposition by not only electricity customers interested in going solar, but also by electricity utility and retail companies themselves.
Given the soaring cost of retail electricity in Queensland and the rest of Australia and the affordability of solar PV systems compared to just a few years ago (not to mention the state’s reliably sunny weather) Queensland households and businesses will doubtless continue to look to solar panels as a way to save money. In fact, Energex anticipates that by 2021, 740 megawatts (MW) of solar capacity will have been added to its grid in addition to the capacity to be signed up under the Solar Bonus Scheme, which will total an estimated 490MW once fully installed. This is an estimated 740MW of solar PV capacity that will not be subsidised by the state government, indicating that there will still be a strong business case even without a feed-in tariff.
As is currently the case in NSW, Queenslanders who will benefit most from the new arrangement will be homes and businesses that use power during the day–particularly between 10am and 2pm, when the sun is shining its brightest and solar PV system production is at its peak. When the Queensland government reduced the Solar Bonus Scheme rate from 44c/kWh, it announced that it would offer 8c/kWh for 1 year for those who signed up after the 44c deadline. The voluntary rates that will be on offer from some retailers are likely to match or exceed this 8c rate, which as we have written previously and as the Queensland government points out, affords the right homes and businesses the same return on investment (ROI) as those who installed systems when the 44c/kWh feed-in tariff was first introduced and solar system prices were significantly more expensive. (Read more: The economics of solar power under Queensland’s 8c/kWh feed-in tariff rate.)
How the Queensland government proceeds with implementing the new rates and other changes will be the main determinant of solar system ROIs in the state. In particular, if solar customers are made to pay significantly more in the name of ‘network charges’, this could weaken the business case for having a system installed. However, the prospects are looking reasonably positive for solar in the state in the medium to long-term.
Thinking about going solar in Queensland? Request a free, instant comparison of solar quotes from installers in your area.
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