The Essential Services Commission (ESC) has determined the minimum solar feed in tariff rate electricity retailers will be required to pay next year.
The Commission’s final decision is to set a minimum feed-in tariff rate of 8.0 c/kWh for the period 1 January 2014 to 31 December 2014.
While some would argue this hardly represents a “fair value” for exported solar electricity; the rate is unchanged from its current level.
Even at 8c per kilowatt hour; installing solar panels in Victoria still presents a good investment opportunity – particularly in self consumption scenarios.
According to solar provider Energy Matters; a good quality 5.5 kW system installed in Melbourne can deliver a financial benefit of between $1,300 and $1,700 a year. These estimates are based on an 8c feed in tariff and 50% feed-in rate to 100% consumption of produced electricity.
The Clean Energy Council (CEC) says ESC’s final decision also supports time-of-use feed in tariffs and this will be considered in next year’s review.
Peak electricity production from rooftop solar power systems often coincides with peak daytime power consumption. During this period, the wholesale price of electricity from all sources is generally higher – sometimes reaching over $10,000 a megawatt hour during heatwave events. If “fair value” were to be properly applied, it would need to take into consideration “time-of-use”; or more accurately, time of production.
Solar PV has already been shown to help rein in the wholesale price of electricity during peak periods and with time of use FiTs in place, this effect could be heightened.
Solar households could shift consumption patterns to maximise return on their solar investment while providing the most benefit to all electricity consumers; i.e. using the power generated when it is at its lowest value and exporting when it is at its highest.
Between now and the next review, the Essential Services Commission will conduct research into time-of-use feed in tariffs and the CEC says it plans to contribute to that analysis. It says it will also continue to argue a time-of-use feed in tariff must include a critical peak payment and ongoing regulation of incentives is required as ‘gentailers’ make most of their profits in critical peak periods; meaning there is little incentive for them to offer a critical peak FiT.
The full details of ESC’s final feed in tariff rate decision for 2014 can be downloaded here (PDF).
