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Western Australia's Tariff Announced

The long-awaited renewable energy feed-in tariff scheme will pay households 40c a kilowatt hour for electricity exported into the power grid.

 

Details of the scheme, the funding for which was announced in the state budget last week, were unveiled by Energy Minister Peter Collier today.

 

However, they were immediately slammed as "ludicrous" by the Greens.

 

The payments will be made to householders with new and existing solar, wind and micro-hydro systems feeding into the South West Interconnected System and regional power grids.

 

The systems, which include tenanted properties, must be owned by the homeowner. Payments would be made for 10 years.

 

Synergy customers would be allowed systems up to 5kW, while that limit doubled for those covered by regional retailer Horizon.

 

Mr Collier said payments would be made from August, with registrations accepted from July.

 

However, the scheme has been widely criticised by conservation groups, who say that the net feed-in tariff, as opposed to gross feed-in, would mean little in the way of actual payments.

 

With a net scheme, only excess power above that required by a household is paid for, while with a gross scheme all power generated is paid for, with the householder still required to pay their full power bill.

 

Mr Collier said the tariff would be in addition to that paid under the existing renewable energy buyback scheme, so householders could receive at least 47c a kWh.



“This provides a genuine incentive for home owners to install renewable energy systems, which not only has a positive impact on the environment but it will also help householders manage their electricity bills,” he said.



A feasibility study was also being undertaken into the potential for a similar scheme for businesses.

 

But Greens MLC Robin Chapple said the scheme was "meaningless" for the "well-meaning people" who would consider installing small-scale systems.

 

"The Minister today has made ludicrous claims about the payback period under his scheme, but unless householders have more solar panels than they need the payback period is simple - never," he said.

 

WA Sustainable Energy Association chief executive Ray Wills said the scheme would allow WA "to catch the pack" as all states tried to ramp up renewable energy use.
 
Solar Installations Rise in 2009

Global Financial Crisis aside, Australia's solar power industry grew by a whopping 366% during 2009 alone. This was courtesy of a government rebate that has enabled "free" solar power systems to be sold and installed to homes throughout Australia. I guess the big question is, "Will Australia be able to repeat these figures in 2010, now the rebate has been replaced by a less generous point-of-sale discount?"

 

Figure 1: Rebated Australian Grid Connected Solar Power Installations (kW/year). Source: Solar Homes and Communities Program statistics.

 

The short answer would be ‘no’. Chances are that 2010 may see a fall in Australian Solar PV installations. A fair share of last years’ growth was assisted by an A$8/Watt federal government rebate which was capped at $8,000. When this rebate was combined with Renewable Energy Certificates (RECs) it meant zero-cost 1 kW solar power systems could be offered by solar installation companies. Since then though the amount of initial support from the government has dropped by more than 50% with the rebate being replaced by the Solar Credits scheme. So what does this mean? Simply put it means Photovoltaic (PV) solar is no longer free and as a result sales have declined considerably.

 

2010 now shapes up to be a potentially bumpy ride for the Australian PV industry. Having the ability to sell free systems and make a reasonable profit drew many new industry entrants around the end of 2008. This enabled a rapid increase in the amount of solar energy systems being installed during the first half of 2009 until the government's abrupt ending of the rebate. This snap decision by the government not only sent shock waves through the industry but infuriated many home owners throughout Australia hoping to take advantage of the rebate.

 

While legislation was being passed on Solar Credits, the solar industry got to work installing the 63 MW of solar systems issued under the pre-approval for the rebate. The solar industry then took a further setback when the REC's value plunged from $50 to $30 which meant the value of Solar Credits (in effect a REC multiplier for the first 1.5kW of a solar system being installed) plummeted from $5150 to $3090 for a 1 kW system (from $7750 to $4650 for a 1.5 kW system). Then as a geared-up industry started installing 8 MW a month, sales volumes fell through the floor.  

Figure 2: Grid-connected solar power installations, 2009. Source: Source: Solar Homes and Communities Program statistics.

 

Setbacks aside the Australian PV industry marched on and installed another 4,600 solar credit systems adding another 12 MW to the total of already installed solar systems in Australia. Naturally though, those states with a Feed-in Tariff (FIT) have been far more successful when it comes to selling systems under the solar credits scheme. With New South Wales announcing a Gross Feed-in Tariff of 60c/kWh, it is expected demand will continue throughout 2010.

 

What this tells us is that even though affordability has been reduced, demand for PV solar systems remains strong, especially in states with a Feed-in Tariff. At present all states are offering a Feed-in Tariff with the exception of Western Australia who will commence a Feed-in Tariff in July of 2010. So just how much will get installed in 2010? Well there is no real way to tell however approximately 28 MW of the pre-approved rebates from 2009 remain to be installed. As for how successful Solar Credits will be, well this comes down to just how well the industry copes with any further setbacks along with the individual performances of salespeople within the solar energy industry.

 

Figure 3: Percentage of 2009’s Australian solar power installations receiving Solar Credits. Source: Compiled from data on the REC Registry.

 

Sadly though, the evidence on hand highlights the potential immaturity of the solar industry in this country. A large number of recent industry entrants are still selling on price alone which means they are either unaware of prior setbacks or have simply ignored them all together. During the back end of 2008 Australian solar panel prices sky rocketed on the back of a weakened Australian dollar which coincided with Spain's infamous PV demand. These events pretty much left low-margin operators stranded and unable to compete in the market place. Having said that these factors are currently in reverse and our industry may well pay the price when demand catches up with supply during 2010.

 

Additionally, many companies entered the market during a time when lowest prices, driven by rebates, brought greater market share. As a result, very few companies are informing their customers of the value in larger solar energy systems. Even though the average size of systems being installed has increased with solar credits, this is largely due to the fact a majority of sales are now 1.5kW not 1 kW. Meanwhile the installation of 2 - 4 kW systems are now in decline and have become less common than they were under the rebate out shown in Figure 4. Unfortunately, what customers are not aware of is the fact that over a 10 year period a 1.5kW systems creates barely enough revenue to replace an inverter meaning their investment may well be wasted.

 

Figure 4: Proportion of PV Systems of 2-4 kW in size under each government support mechanism. Source: Compiled from data on the REC Registry.

 

Using more innovative sales techniques may improve the outcome for both solar businesses and their customers. Regardless of the 1.5-kW Solar Credit sweet spot, a larger solar power system offers a more favourable long-term financial and environmental benefit. Even in those states with a net FIT, a larger system will earn a substantially higher premium revenue because they feed more power in to the grid, dramatically reducing payback (Figure 5). Even states with a gross FIT, a larger system will provide stronger insulation from rises in the price of electricity, which may be as much as 68% over the next three years.

 

All that aside, the fact remains, larger inverters are more efficient and also cost less when proportionally measured. Solar companies able to convince customers to upgrade their system size and incorporate energy efficient technologies may well produce better outcomes for both customers and the industry overall. This would strengthen customer relations with a benefit from greater gross profit and diversified income streams that are less dependent upon government support.

 

 

Figure 5: Likely System Payback under a net Feed-in Tariff, as varying with system size and household power consumption levels.
 
No House Fires Caused by Solar Panels

NATIONAL: The Clean Energy Council (CEC) has moved to reassure consumers about the safety of Australian household solar panel systems following a story on ABC’s Lateline program on the 17th February 2010.

Clean Energy Council chief executive Matthew Warren said while there had been around 100,000 solar panels installed in Australian households over the last 30 years, the industry has received no reports of any causing house fires.

“We take safety seriously.  The safety record of the solar industry is good. To put this in perspective there are more than 10,000 house fires every year, most of which are caused by faulty wiring or appliances – not solar panels,” Mr Warren said.

“All solar panels receiving government support must be installed by an accredited installer.  The panels must comply with the Australian standard.  All houses connecting solar panels back to the grid must also be installed by a licensed electrician.

The accreditation program includes audits of installed systems to ensure compliance with these rigorous standards and consumer confidence is maintained.

“All households looking to install solar panels should be using a CEC-accredited installer who is required to ensure that their solar panel system is safe and complies with the Australian standard,” Mr Warren said.

“The Clean Energy Council will continue to work with Federal and State Governments to ensure the highest standards are maintained and consumers can continue to generate their own clean electricity with confidence,” he said.

“We welcome any additional measures to improve the safety, performance and reliability of these technologies as they evolve to becoming part of the mainstream energy supply in Australia.”

“Both major parties should be proud of the transformative effect their policies have had in developing the Australian solar industry.  They have made solar power more affordable for consumers, created jobs and reduced thousands of Australian household’s reliance on fossil fuel-based electricity,” he said.

 

For more information please visit the Clean Energy Council.

 
 
ACT Leads The Way For The Best Aussie Feed In Tariff Scheme
A Feed-in Tariff rewards households and businesses that install renewable energy generation technology by paying a Premium Price for the electricity they generate.
For each unit of renewable energy generated, you will be paid at a rate greater than the retail price you would usually pay to buy the same amount of energy for your use.

The ACT Feed-in Tariff Scheme is based on gross generation, so you are paid for each unit of electricity that you generate. Most other jurisdictions only pay you for any energy left after deducting your own consumption.

When Will The Solar Feed In Tariff Start?

Stage 1 of the Scheme aimed at householders and small business will commence on 1 March 2009. An announcement on how larger scale generation will be included within the Scheme is expected in June 2009.

How much will I be paid?

From commencement of the Scheme on 1 March 2009 until 30 June 2010 the Premium Price will be 50.05 cents per kWh generated for systems up to 10kW. For systems between 10kW and 30kW a rate of 40.04 cents per kWh will be paid.
 
Big Rises For Home Power Price In WA
By Linda Cann

ELECTRICITY prices look set to skyrocket after WA’s Office of Energy recommended a 52 per cent rise for 2009-10, with more to follow.

Energy Minister Peter Collier today released a report outlining the OOE’s final recommendations into the review of electricity retail tariff arrangements.

The report recommended a 52 per cent increase in tariffs for households with a further 26 per cent increase for 2010-11, and 13 per cent more for 2011-12.

Opposition energy spokeswoman Kate Doust warned the price rises would cause hardship for householders already facing the fallout from the economic slowdown.

“We recognise that prices have to rise, but we prefer the government picks up the model we offered prior to the election, which is 10 per cent increments over a six to eight year period,” she said.

“We are concerned about the hardship that sharp increases would impose on families and pensioners.”

The OOE said the increases were necessary to bring household electricity prices into line with the costs of supplying electricity.

The OOE also forecast that a 29 per cent increase would be required in 2009-10 to bring small business electricity prices up to cost-reflective levels, with a further 26 per cent increase required for 2010-11.

Mr Collier blamed the former Labor government for the increase in tariffs.

“The previous government held prices artificially low for too long as part of the disaggregation process,” he said.

“Their market electricity reforms were supposed to lower the price of electricity, so why are we now faced with the prospect of increased prices at a time when many Western Australians are facing financial difficulty?

He said the State Government was still to consider the recommendations outlined in the report.

“We are mindful of the current economic situation and the financial pressure many families, householders and businesses alike are feeling,” he said.

“This will be taken into consideration as we make a responsible long-term decision.”

Mr Collier said the recommendations were a key component of the rescue package for Verve Energy.

“Verve Energy will continue to have poor financial performance until it is able to receive revenues that support its costs,” he said.

“The level of electricity tariffs must support the continued development of electricity supply to ensure investments are made to meet demand. Otherwise, security of future supplies will be threatened.”

The OOE’s forecast tariff increases are based on cost estimates of the components to supply electricity - generation, networks, retail, and greenhouse gas mitigation costs.
 
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The maximum rebate, for an average-sized 1.5 kilowatt system, will be about $7500. A smaller-sized 1.0 kilowatt system will attract a rebate of about $5000.

The value of the rebate will fluctuate and it will decline annually from 2010 until 2016 when the program finishes.



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