Energy
Electricity

Solar feed-in tariffs 2018/19

Status
In progress
Start Date
Feb 2018
End Date
Jun 2018
What

In NSW, retailers can choose whether or not to offer solar feed-in tariffs to their customers, and decide the level of the solar feed-in tariff that they offer.  However, to help guide retailers and customers, each year IPART recommends a benchmark for solar-feed in tariffs. 

Our draft all-day solar feed-in tariff benchmark for 2018-19 is 7.5 cents per kilowatt hour (c/kWh).  

This is lower than our current benchmark for 2017/18 of 11.9 to 15.0 c/kWh.

This year we have also been asked to set time-dependent feed-in tariffs to take into account the different values of solar exports at different times of the day.

Our draft time-dependent solar feed-in tariff benchmarks are:

  • 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 less than 0.1% of solar exports currently occur)

  • 8.4 to 8.5 c/kwh between 7:30 pm and 8:30 pm (when less than 0.01% of solar exports currently occur).

Why

The solar feed-in benchmark represents what retailers would pay for solar exports if they had bought this electricity from the wholesale market. This means solar feed-in tariffs will go up and down with changes in the wholesale electricity price. 

Our draft all-day solar feed-in tariff benchmark for 2018/19 is lower than the current range mainly because the forecast wholesale prices have fallen from an average of around 11 cents (for 2017-18 when we published our Final Report) to around 7.5 c/kWh for 2018-19 (when we published our Draft Report).

Who

Our recommended benchmark range for solar feed-in tariffs is a guide for electricity retailers and residential and small business customers in NSW who have, or are planning to install, solar panels. 

Customers with solar panels can shop around for a feed-in tariff using the Australian Government's website Energy Made Easy.  The offer with the highest feed-in tariff isn't necessarily the best deal overall.  Solar customers should consider all aspects of an energy offer, including usage and fixed charges, feed-in tariffs and other terms and conditions.

IPART also has an Excel tool to help solar customers compare bills for offers with different feed-in tariffs and retail prices

How

We are required to set a benchmark range for feed-in tariffs that will not lead to increased electricity prices or require any additional funding from the NSW State Budget.

Therefore we set the solar feed-in tariff at the level where a retailer would incur no additional cost from paying solar customers for their exports, compared to buying this electricity from the wholesale market.

To estimate the value of solar exports for the coming financial year, we estimate the average wholesale electricity price based on the NSW futures contracts, and then apply a ‘solar multiplier’.  This multiplier takes account of whether wholesale prices are likely to be higher or lower than average at the times when solar customers export to the grid (that is, weighting wholesale prices by solar output). 

We also include:

  • a value to reflect the benefit of exported electricity being located close to where it is used (normally some electricity is lost as it flows long distances over the transmission and distribution network)
  • a value for the market fees and charges that retailers avoid paying on exported solar electricity. 

The key issues for this year's review include:

  • how to set time-dependent feed-in tariff benchmarks
  • which historical data should be used to forecast the solar multiplier for 2018-19, given the changes in the wholesale market in recent years.
What Next

We are consulting on our Draft Report. Stakeholders are invited to provide their feedback at IPART’s Public Hearing to be held at the IPART Offices on 15 May at 10 am. Submissions on the proposed benchmarks are being accepted until 4 June and will be considered for IPART’s Final Report.  IPART will provide its Final Report to the NSW Government by 30 June 2018.

Key Contact
Jessica Robinson
Email
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