There are fears a new draft report recommending changes to renewable energy incentive payments in Victoria could cheat households out of payment for some of the solar power they contribute to the electricity grid.
The Clean Energy Council (CEC), the peak body representing Australia’s clean energy sector, says while many of the recommendations in the draft report were sensible, there was a risk that consumers could lose out on as much as half of the money to which they should fairly be entitled for their solar power.
A draft report from Victorian Competition and Energy Commission (VCEC) recommends changes to a system of incentives designed to encourage households to install renewable energy generators in their homes.
Under the current system, Victorians who generate electricity using solar PV systems of 5 kilowatts (kW) or less in capacity receive 25 cents for every kilowatt hour (kWh) of surplus electricity they contribute back into the grid. Other households and small business who install any other renewable generator of up to 100 kWh in capacity are entitled to receive a ‘fair and reasonable price’ from their electricity retailer for surplus electricity generated and put back into the system.
The new draft report recommends a phasing out of the small solar scheme, with small solar generators instead falling under the broader compensation scheme. Furthermore, it recommends that customers continue to receive fair value for surplus energy, but that this be paid via a guaranteed minimum of six to eight cents for each kWh they contribute to the grid, with customers having to negotiate additional payments from electricity distribution businesses in recognition of the fact that distributed energy such as solar power allows for reduced expenditure on network poles and wires.
While the CEC supports the idea that moving to a fair and reasonable price scheme is sensible as the cost of solar energy falls, it says expecting individual customers to negotiate their own additional payments regarding the network benefits of solar power is unrealistic.
Furthermore, the CEC claims to have analysis putting the fair value of surplus electricity at between 12 and 16 cents per kilowatt hour, meaning that customers who are unable to negotiate payments above the minimum will miss out on up to half of what might reasonably be considered fair value in payments for their surplus energy.
“It will be virtually impossible for consumers to actually get that additional payment, meaning they will miss out on up to half the value they are entitled to,” Clean Energy Council policy director Russell Marsh says.
Marsh disputes VCEC assertions about the network value of surplus solar energy being too difficult to ascertain.
“The value of solar power to networks has been quantified successfully in Western Australia and should be the model for Victoria as well,” he says.
The CEC says solar power and other types of renewable energy continue to exceed all expectations, continually becoming less costly and more efficient, and that more resources need to go into better recognising the growing value of these new technologies and developing regulations to shape the growth of the industry and protect consumers.
“More than 100,000 Victorian households from all walks of life have already recognised the value of solar power as a way of fighting rising power bills,”Marsh says. “We should ensure that people who buy solar power are guaranteed a fair return on this investment that they have made in good faith.”