IPART Finalises ‘Fair’ Price For NSW Solar Feed In Tariff

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It’s better than a poke in the eye with a sharp stick and will certainly improve the situation in New South Wales, but IPART’s idea of a fair and reasonable value for solar electricity will no doubt be challenged.

The Independent Pricing and Regulatory Tribunal has released its final determination on a New South Wales feed-in tariff rate from 1 July 2012. This will apply to NSW consumers who are not participating in the state’s previous Solar Bonus Scheme.

IPART has determined that a “subsidy free feed-in tariff” for 2012/13 is in the range of 7.7 to 12.9 cents per kilowatt hour (c/kWh) for electricity exported to the mains grid.

“The value of this electricity is higher than previously estimated by IPART for 2011/12 due to the introduction of a carbon price which increases the cost of wholesale electricity,” said IPART CEO, Jim Cox.

Many solar industry participants and NSW solar households were calling for a 1:1 feed in tariff. IPART says it settled on a lower figure as retailers still incur some costs on the electricity exported to the grid by customers with rooftop solar panels, giving network costs as an example – but without providing further clarification as to those costs.

An issue commonly overlooked when considering the value of solar electricity exported to the mains grid is the time of day it is generated. Solar panels generate power during peak demand periods, when the cost of wholesale electricity is usually much higher – at times, costing thousands of dollars per megawatt hour.

It’s this peak demand issue that means solar ranks highly in relation to what is known as the Merit Order; as it can be the cheapest source of electricity. Whether solar’s “Merit Order Effect” was taken into consideration in IPART’s decision remains unclear.

The debatable nature of the “fair value” determined by IPART aside; it finally gives New South Wales resident more incentive to go solar – with the case for investing in installing solar panels even stronger given a jump of 11.8% – 20.6% in electricity prices from July 1.