Solar Feed-In Tariffs Set To Drop In NSW

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For solar panel owners, getting a good feed-in tariff - the price at which you sell excess solar energy back to the grid - is important. Yet since the lapse of many of the solar bonus schemes that drove Australia's initial solar boom, feed-in tariffs have only continued to drop. A new draft FIT benchmark by NSW's Independent Pricing and Regulatory Tribunal brings yet more bad news for those who may have been hoping for higher tariffs, but may have some benefit for those who have invested in battery storage.

The draft benchmark for 2018-2019 of 7.5c/kWh has dropped around 40 per cent from the current benchmark of 12.8c/kWh. Of course, the benchmark won't necessarily impact your solar tariffs: NSW has no mandatory minimum price, so feed-in tariffs are set by retailers with the IPART's benchmark as more of a guideline. This figure still gives some indication of what your home grown solar power is worth, however.

IPART points to a drop in wholesale power prices for the corresponding drop in solar FITs. "If retailers were required to pay more for solar exports than they pay for wholesale electricity on the NEM, retail prices for all customers would need to be higher to recover the difference," said IPART Chair Dr Peter Boxall. "The result would be higher electricity prices for all households."

Victoria has bucked this trend, however, last year becoming the only state to raise its FIT benchmarks. The reason for the rise was put down to a 2.5c/kWh "social cost of carbon" calculated by the potential carbon reduction of small solar and the avoided human health costs that would come from reducing pollution. Victoria is currently the only state to incorporate this social cost, however, and it doesn't look like NSW will be following suit anytime soon.

Newly proposed time-varying benchmarks may prove better news for those who have recently invested in solar batteries, however. The draft benchmarks vary from 6.9c/kWh to 20.9c/kWh depending on what time of day the electricity is exported:

  • 6.9 to 7.2 c/kWh between 6.30 am and 3.30 pm (when 90.8% of solar exports occur)
  • 8.9 to 11.7 c/kWh between 3.30 pm and 4.30 pm (when 5.8% of solar exports occur)
  • 11.3 to 13.3 c/kWh between 4.30 pm and 5.30 pm (when 2.6% of solar exports occur)
  • 12.8 to 20.9 c/kWh between 5.30 pm and 6.30 pm (when less than 1% of solar exports occur)
  • 8.7 to 9.6 c/kwh between 6.30 pm and 7.30 pm (when virtually no solar exports currently occur).
  • 8.4 to 8.5 c/kWh between 7:30 pm and 8:30 pm (when virtually no solar exports currently occur).

For battery owners who are able to shift their exporting to peak time, this could provide a great boost to electricity bills, but everyone else is likely to be stuck in the lower-rate off-peak times. Solar panel owners without batteries would only have the option to move their panels to face westward in order to generate more energy late in the day.

Stakeholders will be able to provide feedback on these draft benchmarks to the IPART on May 15, and the final report will be sent to the Government by June 30, but it's looking like we can expect a drop in FIT from later this year.

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