Charged for providing solar power
The Australian Energy Market Commission is recommending new rules which allow people with rooftop solar to be charged for exporting energy to the grid.
This official reasons for this appear to be because:
- a) the grid is struggling to cope with the increase in solar energy,
- b) the grid was not configured for two way traffic, and
- c) 20% of all customers now partly meet their needs through rooftop solar.
This level of solar can, sometimes during the day, mean that the minimum demand for corporately supplied electricity approaches zero. This pushes fossil fuel production into unprofitable regions – although this factor may not be being mentioned.
Switching solar off in South Australia
Once in South Australia, the whole State was powered by solar panels, as about 280,000, or 35% of households in South Australia have solar installed. At that time Australian Energy Market Operator (AEMO) chief executive Audrey Zibelman said:
Never before has a jurisdiction the size of South Australia been completely run by solar power, with consumers’ rooftop solar systems contributing 77 per cent.Davies All of South Australia’s power comes from solar panels in world first for major jurisdiction. ABC News 25 October 2020
This event was greeted by the announcement that new inverters must have software installed that allows them to be controlled remotely by the power company.
This appears to mean that a person’s own solar panels can be switched off by that power company, and they have to consume energy from the grid. The first such mass switch off occurred in March 2021, five months after the announcement.
with South Australia experiencing “near-record minimum demand levels for electricity from the grid” during a planned outage of circuits feeding the Heywood interconnector which links the state’s grid with Victoria… AEMO instructed transmission company ElectraNet to “maintain grid demand above 400 megawatts” for one hour during the afternoon [by switching people’s solar off].Keane et al Solar panels switched off by energy authorities to stabilise South Australian electricity grid. ABC News 17 March 2021
Which is great for a centralised power system that does not face any export charges.
Climate Justice and the social good of charging solar owners
As we might expect there is an attempt to justify this imposition of charges on exports by encouraging rivalry.
The AEMC said the recommendation was not designed to create mandatory export charges, but to create more flexibility and pricing options.
“Introducing this flexibility should benefit the 80 per cent of consumers who don’t have solar PV (photovoltaic) on their roof,” Mr Barr said.
“We’ve modelled that there’s a small reduction in their bills if this comes in.”
Mr Barr said households across Australia could see a reduction of up to $25 a year on their energy bills.Eacot Australians with rooftop solar panels could soon be charged for exporting power into the grid, under proposed changes ABC News 25 March 2021
The ABC quotes a person in a family of four celebrating the charges, saying
“I looked into getting [solar power] because our electricity bill is around $1,300 a quarter, that’s for two adults and two kids,…
“I kind of think, ‘Well, you’re lucky because you might have to pay an extra minimal amount per year but the amount you’re saving is a lot more than what we are saving because we don’t get any savings at all,'” she said.
“I’d swap any day.Low-income families back proposed solar export fees in hope of reducing power bills. ABC News 26 March 2021
I suspect that this is inaccurate as one source implies the average annual home electricity bill in NSW is $1,421. If the $1300 a quarter bill is accurate, then some kind of energy efficiency, power-saving scheme, finding out where that consumption was going, would probably be far more effective in reducing the family bill than charging people with solar. Especially given that the new rules might mean “Australian households could save up to $25 on their bills each year.” This seems to be of trivial advantage (less than 2% reduction) for most people who can afford to pay electricity bills.
On the other hand people with solar panels would see a reduction in their earnings. Solar Citizens argued
It is inequitable to charge solar owners when generators in the transmission network are not charged for accessing the networkEacot Australians with rooftop solar panels could soon be charged for exporting power into the grid, under proposed changes ABC News 25 March 2021 .
The AEMC is essentially making a ‘climate justice’ argument – people who cannot afford solar are supposed to suffer from solar, so to be fair we should continue to use fossil fuels, and charge people using solar. It could also be argued that solar panels provide cheap energy, and that this reduces everyone’s electricity bills. Over-supply is supposed to make a product cheaper. Restricting that supply is supposed to make the product more expensive, especially with ‘necessary products’ as opposed to voluntary consumables. On the other hand if people decide to respond by storing power and going off grid, to avoid being turned off when convenient for power companies (or if the grid collapses) then use of the grid could become less economic, and real problems start.
Some also say that the evidence is that:
proportionately, rooftop solar uptake is the highest in middle and lowest socio-economic areas and the lowest in the highest socio-economic areas. Where then, is the supposed transfer from the rich to poor that needs to be righted?Mountain, Where is proof that rooftop solar is being subsidised by non-solar households? RenewEconomy, 26 March 2021
At this moment, I do not know whether this is true or not in general, but it is true that there is more solar in Lismore, as a percentage of rooftops, than there is in Annandale in Sydney.
The same author comments:
Snowy Hydro will pay nothing towards the (at least) $3 billion of to-be-built “shared network” to get their electricity to market. Instead, electricity consumers in New South Wales and Victoria will pick up the tab at around $560 per connection.
While Snowy Hydro gets away scot-free, the typical household in NSW or Victoria that has solar panels on its roof should, according to the AEMC, be charged around $100 per year to use the grid to export the circa 2,200kWh that we estimate the typical household with rooftop solar exports each year.Mountain, Where is proof that rooftop solar is being subsidised by non-solar households? RenewEconomy, 26 March 2021
I guess Justice issues do not apply to corporations.
Official optimism about power corporations
The AEMC seems to be claiming, that companies will undoubtedly provide different services so people need not fear loss, while others have suggested the charges will provide investment funds to encourage the building of a better grid. It also, for reasons which are not clear, expects this to allow more Australians to install solar.
According to its draft report, the AEMC started its journey with three potential scenarios for consumers in Australia’s booming rooftop solar market:  Do nothing to upgrade the grid, pass on no costs, but nobble distributed solar investment and returns in the process;  upgrade the grid and spread the costs over all customers;  upgrade the grid and recover costs through export charges on solar customers only.
Having summarily ruled out scenario one, the Commission said its analysis of total revenue recovered under the remaining scenarios indicated that the fairest distribution of costs was made under scenario 3; as opposed to scenario 2, where all customers – solar and non-solar – would pay an estimated $14 a year to cover the cost of solar exports.Vorath Modelling: How the proposed rooftop solar tax will affect solar households. RenewEconomy 25 March 2021
Energy Networks Australia [“the peak industry association for energy networks“] chief Andrew Dillon supported the charges:
“The AEMC’s draft decision will help networks support the increasing number of customers who want to connect solar and export their energy into the grid.
“Without changes to how DER (Distributed Energy Resources) is managed, the ongoing growth in solar means networks would increasingly need to restrict power exports or even block solar connections to prevent voltage spikes and even local black outs…
“This rule change will incentivise networks to invest in a smarter grid that can better support a two-way flow of electricity as more customers both consume and export electricityAEMC move to support more solar welcomed Energy Networks Australia 25 March 2021
Despite this kind of claim there is no guarantee that companies will use the money to upgrade the grid, as this would lower their profit, and possibly benefit their competitors. If they improved the grid the companies could not justify getting the extra income from the regulation (?). Able to charge, rather than pay, people for solar exports they would appear to have more incentive to keep a bad grid, and not upgrade it.
The current recommended cost is
2c/kWh for exports in the middle of the day. This would cost up to $100 a year, but it is not recommending a flat or compulsory tariff and wants consumers and networks to negotiate flexible outcomes.Parkinson Solar tax: Networks able to charge households to export solar power to grid. RenewEconomy 25 March 2021
The AEMC modelling suggested that the charges would not significantly reduce solar take-up of systems less than 6-8 Kw. The AEMC announcement of charging people for export:
was promptly labelled a “sun tax” by community interest group Solar Citizens, which called on state energy ministers to “protect solar owners from this discriminatory charge”.
But electricity distribution companies said the proposed reforms would allow more rooftop solar systems and batteries, collectively known as distributed energy resources or DER, to connect on to the grid and provide networks with the incentive to invest in “smarter” management systems for the network.McDonald-Smith ‘Sun tax’ riles solar users Australian Financial Review 25 March 2021
It is not clear why. After all if people are paying to export, then the companies either make money, or people decide not to export, and thus make more use for fossil fuel back up, and remove the cheaper exports.
Also batteries are reasonably expensive. Choice comments:
Batteries are still relatively expensive and the payback time will often be longer than the warranty period (typically 10 years) of the battery.Choice. How to buy the best solar battery storage. ND.
This goes against the climate justice argument of penalising the wealthy for having solar. Only the wealthy will afford batteries, as well as the costs of installation. So the wealthy benefit rather than ordinary users.
The Tasmanian Renewable Energy Alliance remarked:
It is also discriminatory. Large power stations are not charged to use the network to export power, neither should solar owners…
There are many positive ways of encouraging consumers to invest in new technology and change their behaviour in ways that benefit all consumers. These include time-of-use tariffs, better feed-in tariffs and virtual power plants…Vorath No biggie or bin job: Solar advocates react to export tax proposal. RenewEconomy 25 March 2021
As long as it penalises solar, and does not use it as an energy source
Currently it looks like we have two systems proposed. One in which solar panel users have to pay for grid electricity they don’t need because their panels are switched off, and a second in which people are charged for exporting electricity. We could have both. In both cases it would appear electricity companies are profiteering off solar generation. There is no proposal for a system in which supposed overloading leads to exports being switched off, or stored, so that people are not being charged extra for having solar panels. If we switched to people with solar, heating their water during the day, that would also reduce input into the grid. Another route would be to encourage the construction of decent grids, perhaps by public utilities, or perhaps all we need is better/redesigned transformers and substations – some of which are getting pretty old. Although, the Australian Energy Market Commission’s chief executive, Ben Barr, said fixing poles and wires would be “very expensive and end up on all our energy bills, whether we have solar or not”, which given the ‘gold plating scandals of a few years ago was not a concern when the sources of power were primarily fossil fuels. Indeed the previous incentives to improve networks were held to be a public good.
If you believe people are driven by profit then charging them extra at your whim, seems to be a way of discouraging uptake. Bruce Mountain, from the Victoria Energy Policy Centre said:
“It is like arguing that bicycles should be charged for using the roads…. The uptake of solar was the one big success we have had in the energy transition.”Parkinson Solar tax: Networks able to charge households to export solar power to grid. RenewEconomy 25 March 2021
The point seems to be not to use solar constructively in a way that does not cause these ‘traffic jams’, but to penalise people with solar for some reason.
Conclusion: Do the claims match likelihood?
This is not the first time the AEMC has made this proposal for charging people for export, but it abandoned two previous attempts due to unpopularity from solar users. This time as well as using ‘Justice’ arguments it is also claiming that is is:
Changing distribution networks’ existing incentives to provide services that help people send power back into the grid…. We also propose recognising energy export as a service to the power system in the energy rules to give consumers more influence over what export services networks deliver and how efficiently they deliver them…
Gives networks pricing options they don’t have now, like rewarding solar and battery owners for sending power to the grid when its needed and charging for sending power when it’s too busy. New incentives will give customers more reason to buy batteries or consume the power they generate at busy times on the grid…
Allows each network to design a menu of price options to suit their capability, customer preferences and government policies. Customers could choose things like free export up to a limit or paid premium services that guarantee export during busy times.New plan to make room on grid for more home solar and batteries, AEMC 25 March
None of these points seem to encourage people to export energy to the grid, or make it likely for companies to encourage export to the grid, or make more room on the grid for household solar, other than by stopping exports as opposed to fixing the grid problems.
While perhaps we can agree that “Customer preferences [should] drive network tariff design and the solar export services they get,” that we should “recognis[e] energy export as a service to the power system” and that “planning ahead will avoid costly over investment and crisis solutions down the track” (AEMC) This does not seem to be it. Neither do the results being aimed at seem to be likely to arise from the method being proposed.
There is some evidence that there are plans to expand the poles and wires, but whether these plans will be useful for connecting new renewable farms to the web, and solve the local grid wiring problems that make small scale export problematic, is difficult to say.
The new projects include:
the Marinus Link, between Tasmania and the Australian mainland, Project EnergyConnect, linking South Australia and New South Wales, HumeLink linking the Snowy 2.0 project with the grid in NSW, and VNI West between Victoria and NSW.Vorath Wind farm commissioner role expands to tackle tricky transmission projects. RenewEconomy 26 March 2021
Another report adds that researchers from the University of NSW are going to investigate how distributed energy resources (such as small-scale energy devices, like rooftop solar and battery storage systems), behave during periods of sudden failures in the energy system (including failures of network infrastructure due to fire or lightning strikes or unscheduled outages at large thermal generators), in an effort to boost system resilience and maintain reliable supplies of power.
It is expected that there will be opportunities:
to harness rooftop solar capabilities to help restore power system security. Despite this growing role and potential impact, there is very little data showing how solar PV behaves in the field during such eventsMazengarb Can rooftop solar and household batteries keep grid stable when big generators fail? RenewEconomy 1 April 2021
“Integrating renewables into the electricity system is a key priority for ARENA, so the tools being developed throughout the project will help to ensure that Australia’s record-breaking solar installations continue to be of benefit to the grid and in helping with system security.”Mazengarb Can rooftop solar and household batteries keep grid stable when big generators fail? RenewEconomy 1 April 2021
This functionality may be changed by distributors charging for electricity export or shutting down solar panels…..
Giles Parkinson, founder of RenewEconomy, who is generally a reasonably reliable source, states:
State energy ministers are looking to adopt new protocols that will allow network operators to not just switch off rooftop solar when instructed, but also pool pumps, electric vehicle charging stations, hot water systems and even air conditioners….. the promise is that it will be used rarely – in terms of hours a year. But that remains to be seen.Parkinson. Solar “switch-off” rule to extend to EV chargers, pool pumps and air con. RenewEconomy 13 April 2021
This is an extension of the idea that people with solar panels must be forced to buy power from the grid when it is convenient for those big operators selling power on the grid.
As Parkinson and others point out this is likely to get people to plug their EVs into the socket.
Another consequence is that rather than the householder being a ‘prosumer’ a producer and a consumer, the corporate aim seems to be to gain control of what happens ‘behind the meter’ so that the company puts its own advantage first, and makes the consumer a paying labourer or producer – an appendage and slave to the system, rather than the other way around….