#AceNewsReport – Apr.29: An energy expert has hit out at a new proposal to charge solar panel users for exporting their excess electricity, labelling it a “sun tax” and arguing it will cost solar households more than is being estimated by the independent statutory body pushing the changes:
The Australian Energy Market Commission (AEMC), which sets the rules around the energy market, has proposed a shake-up of the system that would allow electricity networks to charge solar panel owners for sending excess energy back to the network, among other measures, to address growing network problems.
Fears proposal to charge households with solar panels to export electricity will kill demand for solar energy
“ We’ve modelled different charges from $10 to $100, depending upon the size of your solar system,” Australian Energy Market Commission chief executive Benn Barr said.
The plan has been controversial because for decades solar owners have been paid what is known as feed-in tariffs, where they sell their surplus energy back into the electricity grid. This proposal to charge them a fee flips the status quo on its head.
The AEMC argued a change was necessary because the current system is unsustainable as the huge uptake in household solar has overloaded the grid, and the alternative would mean more solar users being blocked from exporting their energy.
Mr Barr said the pricing model would be flexible, up to individual power companies to determine, and would still allow for households to be paid for sending energy back to the grid when it was in demand.
“You get a good return from solar. And it’s not going to make it uneconomical for customers to put it on their roof,” Mr Barr argued.
But a new analysis by the Victoria Energy Policy Centre at Victoria University has challenged the proposal by the energy market rule maker, saying the cost to solar households will be greater than predicted.
“We estimate that if the AEMC’s proposals are implemented, they will reduce the income that most typical households get from exporting solar by 80 per cent,” said the centre’s director, Professor Bruce Mountain, who conducted exclusive research on the proposal for 7.30.
“Essentially, they will get the equivalent of a hamburger a year as their income from rooftop solar sales. I think that’s very likely to bring pressure in the rooftop solar market, and customers will be less interested in it,” Professor Mountain argued.
What the modelling predicts
The AEMC has released a draft report modelling possible charges, but the commission stressed it was only a proposal and would be up to electricity companies to set any new fees or payments.
They predict that, under the new pricing system, the money made from having solar panels and using feed-in tariffs (selling solar-generated electricity back to the grid) for an average household would go down from $970 to $900 a year — a 7 per cent reduction.
But Professor Mountain, who is an energy economist, disagreed with the commission’s initial figures and their final sum, saying his analysis of publicly available data and calculations found the average amount of money households would make per year would go from $129 down to just $29 — an almost 80 per cent reduction — under the AEMC proposal.
“The economics of what they are proposing is not reasonable. It’s not in the public interest,” he told 7.30.
However, Mr Barr disagreed.
“I think there’s a misunderstanding that somehow this is a blanket charge which we’re setting that’s applied across the board — it’s not,” he said.
“It’s actually giving poles and wires businesses the option to go out and consult and design these charges.”
While the commission said it was designed to encourage more households to get solar, Professor Mountain said any charge would have the opposite effect.
“I think if these proposals take effect, I think it’s very likely that many fewer people will install rooftop solar, it will kill the golden goose,” he said.
Solar panel owners left disappointed
The proposal has not gone down well with some solar panel owners like Matt Pilsbury, who felt it was punishing them for installing the technology.
Mr Pilsbury installed solar panels on the roof of his house in Tarneit in Melbourne’s far west last month in an effort to help the environment and his hip pocket.
“We wanted to get solar panels for a while, to try to save a dollar,” he said.
He spent $8,200 after government rebates installing panels on his roof, and expected to make that money back from the feed-in tariffs that solar users have benefited from for the past decade.
But when he applied to have his new panels connected to the grid, he was shocked to find he couldn’t.
“Once we got them installed, it was to the point where we found out that we couldn’t pump back into the grid and so we couldn’t get any money back,” he said.
He says his power company told him the electricity network was full — because too many other households in the area had solar panels — and he could not export his excess solar power back to the grid.
“I’ve just been pumping energy back into the grid for free, and not saving a single dollar,” he told 7.30.
Current grid not equipped for two-way usage
Mr Pilsbury’s problem is increasingly common in the rapidly expanding city fringes where solar panel uptake is booming — and it is why change is needed, according to the AEMC.
Australia has one of the highest uptakes of rooftop solar in the world, growing from just 0.2 per cent of households in 2007 to 20 per cent now — and it is predicted to rise to 50 per cent within a decade.
But Mr Barr said the growing popularity was causing the grid to become increasingly overwhelmed, flooded with more energy than it can handle from solar, and at risk of becoming jammed and causing blackouts.
“The grid, the poles and wires were set up to get power from generators to your house, not from your house, back into the grid,” Mr Barr said.
It is these problems that the AEMC is hoping to address with its proposed pricing system — by encouraging people, through payments and charges, to store solar power generated during the day with batteries, then use it at night, and to only send it back to the grid when it is required.
“By that you allow this two-way pricing, and incentives for when the power is needed. Charge up in the middle of the day when your solar is generating, and get it back into the grid at night or at 6pm when the grid needs it,” he said.
Mr Barr also argues the current system is inequitable, with solar essentially being subsidised by all electricity users through the government incentives and subsidies solar users receive.
“At the moment, the only way of solving this problem is actually building more and more poles and wires, which everybody pays for, whether you’ve got solar on your roof or not,” Mr Barr said.
But Professor Mountain disagrees with this point, saying that “this idea of traffic jams and of technical problems that put a high expense on the uptake of power by households and by businesses is just not true. It can easily accommodate these changed usage patterns”.
“Rooftop solar is a threat to network companies. It’s a threat to large energy producers. And in some cases … they’ve been seeking to neutralise that by stopping customers from getting access to the grid to export solar. And that undermines the economics of households installing solar,” he said.
Mr Barr rejects the assertion that the proposal is being pushed by network companies, and notes the proposal has been backed by groups including the Australian Council of Social Services, who said under the current system, all households were essentially subsiding the 20 per cent of the population who are solar panel users, via government subsidies.
The AEMC says its modelling predicts households who do not have solar — which is around 80 per cent of all households — would get an annual reduction of around $15 on average in their electricity bills, if the new pricing system is applied to solar panel owners.
Proposal perceived as a ‘sun tax’
Users like Matt Pilsbury feel the proposal would punish them for doing just what they had been told to do for years by the government, via public messaging and financial incentives to go green and get solar.
“There’s still people signing up every day trying to get solar panels put in and as soon as they get them they find out you’re not gonna be saving any money, it’s just costing them money,” Mr Pilsbury said.
Professor Bruce Mountain agrees, arguing any proposed change to charge solar users will be perceived as a “sun tax”.
“I don’t think it’s fair or economically sensible to be applying a tax to the 2.7 million households that have already installed solar,” he said.
“They installed solar in good faith with governments, both state and federal, that encouraged them to. They, in most cases, have funded almost all or a large part of the investment themselves.
“For governments now to tax them on it is to expropriate part of the value of investments that they made in good faith. And I think they will rightly be angry about it.”
Mr Barr disputes Professor Mountain’s analysis and said the proposal “modelled a range of options” for companies to consider.
‘”This isn’t a one-size-fits-all approach. There’ll be two years of consultation and protections for customers, including existing solar PV owners. It won’t be a blanket solution, more a package of options for customers that they can pick from depending on their individual circumstance,” he told 7.30.
“And importantly, the Australian energy regulator will need to sign off on any of those changes that they’re for the benefit of customers.”
Energy Networks Australia, the body that represents electricity transmission and distribution networks, said in a statement that as the transition to a two-way grid continues, “it makes no sense for us to continue to only charge for one-way usage”.
“The ongoing growth in household solar is a major challenge for the grid, but it is not a threat to network revenues. The independent Australian Energy Regulator sets total network revenue. This means any changes such as the introduction of export charges will not change network revenues or profits. In fact, any revenue raised from export charges will directly lead to lower network usage charges for all solar and non-solar customers.”
#AceNewsDesk report ………Published: Apr.29: 2021:
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