.The Australian Energy Regulator has released draft guidelines for comment that will govern how distributors should develop and justify two-way export tariff proposals. Under the Australian Energy Market Commissions’ recent rule change, the AER was required to make Export Tariff Guidelines, to facilitate small-scale solar into the grid and support the growth of batteries and electric vehicles. It will also allow for the ability for network energy businesses to propose two-way tariff pricing that may only be implemented following approval. Feedback on these guidelines is open until March 8 2022, set for publication in May 2022.
What does this actually mean?
When you install solar panels on your commercial or residential property, you’re not just considering the amount of energy you’re generating for your own use, but also “export tariffs” – the fee paid when you feed energy back into the grid – have been of considerable interest.
Up until now, these payments have come at a major expense for solar owners.
When solar power was initially developed, it was hoped that solar owners generating power and feeding excess back into the grid would stand to profit from this process. However, the grid was designed for electricity flowing into premises, not out, meaning that providers are actually paying big money to utilise this excess energy and rebates to solar exporters have become smaller and smaller (if existent at all). A kind of ‘congestion’ has been caused in electricity markets due to the uptake in solar usage and the excess of generation through peak times, such as late morning and early afternoon, meaning energy networks are struggling.
What the Energy Market Commissions’ recent rule change aims to do is to ensure that both the owners of solar panels and the businesses receiving their excess power, stand to benefit from this process. It enables real growth of the solar industry and means sustainable energy sources will only increase in popularity and usage over the next few years. It also stops these charges getting seriously out of hand and promises to enable a future where solar production may eventually be profitable.
What these guidelines will do:
Australia’s electricity grid was initially designed for electricity flowing into premises, not out. But, as solar panel installation has gained in popularity across Australia, electricity flowing ‘out’ has been happening increasingly.
One of the motivators, outside of the solar rebates, that reduce the overall upfront cost of systems has been availability of these feed-in or export tariffs, which provide a credit for surplus solar energy exported to the main grid.
However, there has been so much solar capacity in some parts of the National Electricity Market (NEM) that congestion has been caused, threatening the stability of local networks and meaning charges have been made to those wishing to export excess energy.
There are a couple of fixes for this, including increased spending on this kind of infrastructure, which is not only costly but also only necessary during “peak” hours when solar energy production is at its highest.
So, the Australian Energy Regulators were tasked to develop Export Tariff Guidelines on two-way pricing, to cover issues such as:
- Customer protections
- Potential structure of proposals
- A process for approving or not approving proposals
- Expectations of networks with regard to community consultation
- A basic export level (free export service) that must accompany any two-way pricing proposals
Here are some of the guidelines developed:
- Enabling two-way pricing will not necessarily mean rooftop solar power system owners will be forced to pay to export solar electricity at all times, or at all.
- Any proposal to implement an export charge will have to pass a pretty tough AER test, which will include public submissions.
- The AER will encourage distributors to undertake tariff trials, to test new tariff structures and customer or third-party responses DNSPs (distributors) will have to justify chargers; e.g. only if solar exports are contributing to increased network costs – and show how they calculated these charges.
- Charges must ONLY recover costs associated with providing the export service, and historical costs associated with providing a network’s intrinsic hosting capacity should not be recovered through export changes – as these are being covered by consumption charges.
- There would need to be meaningful engagement by DNSPs with customers – and not just solar owners.
- Significant lead up time would be required before new two-way pricing options could be introduced by a distributor, and a transition strategy in place clearly demonstrating how the distributor will take into account the impact on customers.
- A distributor will have to offer basic solar export service up to a defined export threshold (to be determined according to circumstances) at no charge.
- The same distributor may also offer a “premium” export service offering a higher export threshold, or no threshold, for a defined price.
- A charge could only apply at times when exported power is likely to drive future network investment. A “negative” charge (rebate/credit) in addition to any existing feed-in tariffs would be applied when the network would benefit from increased exported solar power.
- Any two-way pricing proposals will not take effect until 2025 at the earliest in most NEW states – it will be the following year for owners in Victoria
This might seem pretty intense, but, luckily, the AER released an Explanatory statement report to go along with its new Draft Export Tariff Guidelines, to give further information on the changes proposed to take place.
If you don’t like what you see? Feedback is encouraged. These changes may only be implemented following approval and any individual inquiry or comment is welcome to help make the future of solar brighter.
Feedback on these guidelines is open until March 8 and set for final publication in May of 2022.
Feel free to call NuWay Solar to discuss these changes further today if you’re still unsure of anything and want further clarification.