A Fair Solar Feed-In Tariff For Australia Is Around 22 Cents

 

Solar Feed-In Tariffs Should Be Higher Than They Are — But Not As High As Some Believe

In my not at all humble opinion, Australian solar feed-in tariffs are too damn low!  People aren’t receiving a fair deal for the clean solar energy they export to the grid.  This is bad for our nation and the world because with a fairer price we would see more rooftop solar installed which would reduce the damage to our health and our environment from burning fossil fuels.

But before I am voted leader of the revolution for higher feed-in tariffs and march my armies on Canberra — or maybe somewhere that’s actually nice to go — I should point out that, unlike some people, I don’t think solar feed-in tariffs should equal the retail cost of electricity.  While feed-in tariffs  should be higher than they are now, a “fair” price is likely to still be less than what most of us are are normally charged for grid electricity.

As a result, this article will probably end up a successful attempt at making the maximum number of people possible disagree with me.

The reason why I believe feed-in tariffs should be higher is because, while they usually take into account the daytime wholesale price of electricity, current solar feed-in tariffs generally don’t include the value of other benefits rooftop solar provides such as:

  • Avoided transmission and distribution costs.
  • Ancillary services that help stabilize the grid.
  • Health costs avoided by reducing coal pollution, and…
  • Environmental damage avoided by reducing greenhouse gas emissions.

Victoria has taken a step in the right direction by including a payment for avoided carbon emissions in their solar feed-in tariff, but I don’t think they go nearly far enough.

This Is Not For People With Old Timey High Feed-in Tariffs!

If you are sitting in Queensland reading this and you have an older solar system that is getting a 44 cent feed-in tariff, I’m not fighting for higher or lower feed-in tariffs for you.  And if you are one of the small set of Victorians getting a 60 cent1 feed-in tariff, then this article isn’t about you either.  You can just sit back and relax and enjoy your sweet feed-in tariff money rolling in.  If you have a 1.5 kilowatt solar system, as most of you do, you could easily be saving over $1.50 a day.  That’s enough to pay for two cheap tubs of ice cream a week.

Those who are beneficiaries of ancient high feed-in tariffs can just wait until everyone else is finished reading this.  And no sneaking off to use a mirror to shine extra light onto your solar panels.  While technically not illegal, that would be against the spirit of your feed-in tariff agreement.  Also, you could fry your system.  Not to mention fall off the roof.  And you’d look pretty silly standing up there with a mirror anyway.

Current High Feed-In Tariffs Are Mostly Con Jobs

While it may appear that people in South Australia, Victoria, NSW, and GoldCoastBristopia are free to shop around for a higher feed-in tariff if they’re not happy with what they’re getting, this isn’t really the case.  The problem is, high feed-in tariffs offered by electricity retailers are mostly bullshit.

Plans with high feed-in tariffs normally make up for them with higher costs elsewhere on the bill.  These can include higher charges per kilowatt-hour, increased daily supply charges, lower than average discounts, or a combination of all three.

It’s all part of the illusion that has been created to make it appear there is effective competition in the retail electricity market.  It works like this:

  1. Convince politicians that competition will reduce electricity prices.
  2. Introduce confusing electricity plans that prevents retail competition from working properly.
  3. Raise electricity prices to cover the cost of managing all this fake competition.

While retail plans are intentionally confusing, some are better than others, so it is possible to benefit from a plan with a higher than average feed-in tariff, particularly if you export a lot of solar electricity.  But a while back when I looked at all the electricity plans available at the time in Adelaide and Sydney, those that had average feed-in tariffs were often better for solar households than ones with high feed-in tariffs.  Plans with high feed-in tariffs are frequently simply con jobs since households won’t see genuine savings on their electricity bills.

To help you avoid rip-off merchants we have an electricity plan comparison tool that allows you to enter details from your bills, including how much solar electricity you export, to help you work out which is genuinely the best retail plan for you.

Victoria Moves In The Right Direction

Victoria has taken an important step by including a payment for “value of avoided social cost of carbon” in their minimum feed in tariff.  It’s shown in the table below, which I took from a report you can download here:

Victoria's Minimum Feed-in Tariff

While 2.5 cents is infinitely better than zero cents, in my opinion the value of avoided carbon emissions is far higher.

Also, they didn’t include a component for the health benefits of avoided pollution because working it out was apparently too difficult for their poor little brains.  As the report states…

Too Hard, Not Trying

So because they couldn’t be certain of the amount, they decided not to include it at all.  They weren’t even willing to take a wild stab in the dark — which would probably still be less of a health threat than breathing coal fumes for thirty years.

I’ve found this excuse come up a lot when reading reports on solar feed-in tariff recommendations.  It is pathetic.  They could at least estimate a reasonable minimum value and refine it later as more information becomes available, but they couldn’t even manage to do that.

I wonder how things would go if I started using this “too difficult” excuse in my life?  Do you think my bank would be okay with it if I told them the fees and interest on my loan were really hard to work out so I’ll just pay them what’s easy to determine and forget about the rest?

Wholesale Electricity Prices

Many solar households receive feed-in tariffs that only cover the wholesale cost of electricity or less in some cases.  Average wholesale electricity spot prices have been high over the past year and so far this year, when weighted for population, average 8.3 cents a kilowatt-hour in the National Electricity Market (NEM)2.  High prices are expected to last for around two or three more years.  Spot prices aren’t the actual cost of wholesale electricity.  The real cost is secret.  But while spot prices should average a little higher, they are reasonably close to the real price.

AEMO Info

Australian Energy Market Operator (AEMO) information on average wholesale spot prices in National Electricity Market states in dollars per megawatt-hour. To get cents per kilowatt-hour divide the figures by 10.

Rather than the average wholesale price, this portion of the solar feed-in tariff should equal the average daytime wholesale price, weighted by the average output of rooftop solar through the day.  While solar is pushing down prices during daylight hours, it still produces a considerable amount of electricity on hot summer afternoons when prices are often sky high, so the average wholesale price of daytime electricity isn’t low yet.  Although it probably will be in the future.

Because transmission losses from exported solar electricity are extremely low, as it is almost all consumed close to where it’s produced, the wholesale price component of solar feed-in tariffs should be adjusted upwards to account for this.  Currently Victoria increases their feed-in tariff by around 0.6 cents to allow for this.

Tasmania’s Feed-In Tariff Has Been Way Low

Back when Tasmania was in crisis because drought had caused hydroelectric dams to run low and the Basslink interconnector to Victoria broke, state wholesale electricity prices went through the roof3.  But was this increase reflected in an increased feed-in tariff for solar?  Nope!  It remained a constant 6.05 cents throughout the crisis.

If the state government had used the resulting windfall from solar households not being paid the market price for their exported electricity to instead provide a bonus for installing new solar capacity immediately, that could be understandable, since they needed as much additional generating capacity as they could get as quickly as possible, but they weren’t interested in that either.  They just let solar households subsidize the entire state grid and help pay for things such as importing generators from the Philippines on account of how people in less rich countries don’t need electricity as much as Australians do4.

Fortunately, their solar feed-in tariff increased to 8.9 cents on the first of July.  While this is a little higher than their current cost of wholesale electricity, it doesn’t come close to pricing in the other benefits of rooftop solar, and they need all the help they can get in Tasmania because it’s not at all a sunny place by Australian standards.

Avoided Long Distance Transmission Costs

A portion of electricity bills is the cost of rapidly wriggling electrons through high voltage power lines that connect Australia’s mostly coal fired power stations to towns and suburbs.  At the moment, rooftop solar generally doesn’t use long distance transmission lines at all, so that cost is avoided and should add a couple of cents to solar feed-in tariffs, though the amount will vary by state.

This detailed graph from Energy Networks Australia shows a breakdown of residential electricity bills in Victoria:

As you can see, provided you have eyes capable of resolving individual pixels, transmission costs are 5% of residential electricity bills, which comes to about 1 cent per kilowatt-hour of grid electricity consumed5.  As Victoria is a compact and heavily populated state by Australian standards, this figure is below average.

Avoided Distribution Costs

Exported solar power uses local distribution infrastructure and does add some costs to local distribution.  But it doesn’t require the same amount of infrastructure and costs as distributing power from large scale generators.  Unfortunately, just how much rooftop solar is likely to save on distribution costs is beyond my poor little brain’s ability to calculate at this time.

Avoided Transmission And Distribution Infrastructure Costs

Transmission lines need enough capacity to meet peak demand, which happens on hot summer afternoons during heatwaves.  Because rooftop solar is always producing electricity at these times right where it’s needed, it reduces the amount of transmission infrastructure that has to be built.

In Australia there’s already enough rooftop solar installed to provide most of this benefit.  It could also be argued that this is what the high feed-in tariffs available in the past were helping to pay for.  But additional rooftop solar capacity is still useful for helping meet peak demand and this should be reflected in feed-in tariffs, even if its value turns out to be very small after the numbers are crunched.

Avoided Ancillary Services

Modern solar inverters do some pretty sophisticated work to help keep the grid stable by contributing to both frequency and voltage regulation and this is completely uncompensated.  Victoria does have a payment 0.1 cents per kilowatt-hour included in its minimum feed-in tariff, but this is for ancillary service fees electricity retailers avoid by accepting a customer’s exported solar electricity.

What the total value for ancillary services both provided and avoided would be, I don’t know, but for now I’ll just go with Victoria’s figure of 0.1 cents, since they rounded it up.

Avoided Health Costs

Each kilowatt-hour of solar electricity exported to the grid will reduce fossil fuel generation by around one kilowatt-hour.  Generally, because most of our power comes from coal and because of the way coal power stations operate, it is coal use that will be reduced and that is the most dangerous of fossil fuels when it comes to pollution.

Morewell Coal Smoke

An Australian town wreathed in coal smoke. Note:  Australia — not China. Specifically the town of Morwell in Victoria where people got less well and more sick from a coal mine fire. (Image Credit: ABC TV News)

One estimate of the health cost of coal generation in Victoria — not including coal mine fires — is 0.8 cents a kilowatt-hour.  While coal power in other states tends to be less deadly, electricity generated by rooftop solar that isn’t exported also reduces coal generation and should be accounted for in the feed-in tariff6.  This means we should probably be adding at least 0.8 cents to solar feed-in tariffs.  Possibly much more if that estimate doesn’t fully capture the heath costs of coal.

Avoided Greenhouse Gas Emissions

The amount of additional carbon dioxide the atmosphere can safety tolerate is zero.  Because of this, carbon emissions avoided by rooftop solar should be compensated at the rate it would cost to remove those emissions from the atmosphere if they had been released.  This is because I believe a company makes a mess should pay the full cost of cleaning it up.

The lowest estimate for removing large quantities of CO2 from the atmosphere I am aware of is 7 cents per kilogram7.  Because each kilowatt-hour of rooftop solar electricity exported reduces CO2 emissions by around one kilogram, at least 7 cents should be added to solar feed-in tariffs to reflect this.

But because self consumption of electricity from rooftop solar also reduces emissions, this should be taken into account.  If Australian solar households self consume an average of 30% of the solar electricity they generate, then solar feed-in tariffs should be raised by at least 9.1 cents to cover the cost of avoided greenhouse gas emissions.

Fossil Fuels Should Directly Pay For Health & Environmental Costs

In an ideal world, instead of increasing solar feed-in tariffs to compensate for avoided health and environmental costs, fossil fuel generation would directly pay for them.  But because coal appears to hold a special, privileged position in our society, the current government refuses to make it pay for even a portion of the costs it imposes on society.

This is ridiculous.  If I started a nuclear waste disposal business and began burning low level radioactive waste in an incinerator and let mildly radioactive smoke drift across the landscape, I would be considered a criminal, even if I could show the total harm to human health was less than that of one small coal power station.  I find this really annoying because I am running out of room in my shed for low level radioactive waste.

Until we decide to make fossil fuels pay the full cost of the harm they cause, we should use the next best solution, which is to compensate renewable energy for reducing fossil fuel generation, so we should include the value of avoided health costs and carbon emissions in solar feed-in tariffs.

The Total Comes To Around 22 Cents Per Kilowatt-Hour

If I add together the estimates for what I believe the major components of a solar feed-in tariff should be:

  • 9 cents for the cost of wholesale electricity.
  • 2 cents for avoided long distance transmission costs.
  • 0.8 cents for avoided health costs.
  • 9.1 cents for avoided greenhouse gas emissions.

It gives a total of 20.9 cents.  If it is assumed the value of other benefits only add about one cent to that then a fair solar feed-in tariff is roughly 22 cents.

This figure could go up or down if time and effort was put in to refining the estimates.  I know there are people out there who will disagree with the value I used for avoided greenhouse gas emissions, on account of how they like the idea of Australia having an inland sea or something, but I do think I used a reasonably low estimate.

This 22 cent figure for a fair solar feed-in tariff won’t remain constant forever.  It will go down when wholesale electricity prices fall, which they eventually will, and it will also decrease once coal power is mostly eliminated from the grid and the emissions avoided by rooftop solar power declines.  Unfortunately, if our current government has their way, it may be a long time before we reach that point.

So let’s try to not let them have their way.

Footnotes

  1. 60 cents premium tariff plus at least Victoria’s 11.3 cent minimum feed-in tariff.
  2. Prices tend to be high in December as temperatures rise, so the average for the year is likely to be a little higher than this.
  3. Contrary to popular belief, Tasmanians have now had roofs for over 30 glorious years.
  4. Hello Philippines!  Because you are all lovely people (except for, you know, the death squads) I’ll explain that was sarcasm.  This is a cultural defect that stems from having been a British colony.
  5. This is for a typical household that doesn’t have an electric hot water system on a controlled load.  Because controlled loads can be extremely cheap in Victoria they can throw this figure off, but most Victorians use gas for hot water heating.
  6. Alternatively, this could be directly paid to households that have smart meters that record household self consumption of solar electricity.
  7. This involves sequestering carbon in agricultural waste, which Australia would be capable of doing on a moderately large scale.  Reforestation and afforestation (the growing of forests where there weren’t any in the past) may potentially reduce remove CO2 from the atmosphere at a lower cost, but may not be able to so rapidly enough and on a large enough scale, particularly when their habit of burning is taken into account.
About Ronald Brakels

Many years ago now, Ronald Brakels was born in Toowoomba. He first rose to international prominence when his township took up a collection to send him to Japan, which was the furthest they could manage with the money they raised. He became passionately interested in environmental matters upon his return to Australia when the local Mayor met him at the airport and explained it was far too dangerous for him to return to Toowoomba on account of climate change and mutant attack goats. Ronald then moved to a property in the Adelaide Hills where he now lives with his horse, Tonto 23.

Comments

  1. Steve Charles says

    I would certainly be happy with a 22 cent FIT. You put forward a good argument. Another factor to take into account with coal exports is the pollution, illness and deaths that will be caused in the countries that burn it, not to mention the CO2 and climate change. This is not good for humanity.

  2. RB: “Alternatively, this could be directly paid to households that have smart meters that record household self consumption of solar electricity. ↩”

    DANGER Will Robinson!!~

    Let’s rethink the terminology here.* Friends who switched from A1 metering to a so-called Smart meter in WA, found their solar-electricity system was suddenly costing them more than before they erected panels!!

    We have a clause in our tenancy agreements that prohibits tenants switching from A1 to Smart meters. This is not only protective of their 47c+ feed-in tariff, but the(ir) expense of switching back to A1 metering when tenancy ceases.

    * Yes, I’m aware that you’re talking about a different ‘Smart’ meter, but others may not be aware of this… or the Smart meter scam initiated in WA… .

  3. Ronald, I would be interested to see how you contextualise your calculated feed in tariff with what is available in the retail market in Victoria, given that you can get a standard retail rate of 26.4c/kWh less 42% discount, which takes you to 15.312c/kWh before GST.

    I will note that there is a very rational argument that the retail price for electricity, as you point out, doesn’t cover all the costs (environmental and health especially) of burning coal.

    Clearly I would love a feed in tariff of 22c/kWh, but somehow I think it is unlikely that I will ever get a higher tariff for feed in than I pay for power I consume from the grid.

    • Ronald Brakels says

      In Victoria the solar feed-in tariff would be a little lower because of their lower wholesale electricity price and would be around what a typical household pays for per kilowatt-hour when supply charges and GST are included.

      Once feed-in tariffs are higher than charges per kilowatt-hour it leads to a perverse incentive for people to minimize consumption during the day and then switch on appliances in the evening. The easiest way to avoid this is to eliminate supply charges and make up for the lost revenue by increasing the charge per kilowatt-hour.

      Falling wholesale prices should take care of any extra that’s left over and wholesale prices during the day would probably fall rapidly with a 20 cent or so feed-in tariff.

  4. David Ritson says

    Quite frankly there should not even be different rates for feed-in. There need only be a single rate and your meter be net metering. Hell, any old mechanical meter would still be just fine for that!
    Point is, the energy should be valued the same in either direction. Period.

    • You should have posted your business model because there is no such thing as a free lunch. Go and buy a fridge where the dealer gives you his profit margin. Nice idea but no cigar.

  5. Michael Pawson says

    Just as there is peak hour pricing for consumers, there should be peak hour tariff for feed-in suppliers, those with panels and batteries who can supply at peak times, late afternoon and early evening.

    • How much power can you be relied upon to provide when it is required. Of course the answer is you cannot and that is where your idea fails.

  6. Bob Gitsham says

    Another well researched article from you Ron.
    However I would argue that rather than all the fancy calculations that you use.

    Why not just say, that given the retailers will simply onsell any solar input to the nearest available consumer at full retail, then let me suggest that the fair FIT would be 75% 0f the local retail price.

    Thus the retailer would make a 33% profit simply from putting a few numbers on a bill, lets face they don’t do anything else,.

    And the happy supplier of the solar power would get a nice return on their investment.

    This would also encourage lots more people to invest in solar, without the need for any government subsidies.

    • There is a little more to this. When I signed a FIT plan with my retailer they increased the discount they give me on power I draw from the grid. First I was a little incredulous, then it dawned on me that for every kWh of my feed in they buy, they can sell a kWh of “green power”! “Green power” sells at a higher rate. There may something in what you are suggesting!

      • I don’t believe that to be the case. GreenPower is sourced from large-scale generation certificates, and solar-feed works with small-scale certificates. Both increase the total energy sourced from renewables in the system and are not offset against each-other.

  7. We get 44 cent feed in tariff. We paid $7,500 to the solar company for the 3.5 kW system and the govt. gave them $6,000. First year we got $1500 rebate, 2nd year $1200. Our electricity usage has gone down; yet, we now get a cheque for approx. $500 a year due to the fees and charges.

  8. Even 50% FIT of the standard rate would be good. Pay 40c per Kwh import and receive 20c for feed in. Seeing as most bigger systems (5+KW) will export double or triple of what you use, you’d not have a power bill for most of the year. (I’m currently at 60 import and 200+ export for this quarter and it’s only been two weeks in).

  9. I agree – except I worked it out at the retail cost of 25c/KWh minus 20% “handling” and admin fees to give us a FEIT of 20c/KWh.

    Wholesale electricity cost is around 8c/KWh. So how do they justify a markup of 300% when they have added no value to the electrons flowing into my light bulbs? (Remember – we already pay for the poles and wires component separately!)

    Meanwhile in China, retail electricity is around 9c/KWh or thereabouts.

    Energy costs in Australia are nothing short of price gouging. I telephoned my retailer (Origin) and advised them that Alinta were offering a 25% discount for prompt payment of the bill. Without hesitation, I was offered the same discount. How many hundreds of thousands of pensioners and old folks are not savvy enough to make this call and get the automatic better discount? – the energy retailers are raping us all.

    • If you call origin and ask to speak to their retention department, they are the people who are authorised to offer higher discounts. If you are in Victoria, they will probably go as high as offering 40% off.

  10. Hi Ronald

    Just wondering if you took into account the home owners cost for their infrastructure they have put in place?

    We are in Victoria, we live in town and are debating about going totally off grid by getting a 2nd lot of batteries because the pittance we receive for the electricity we generate during day (after what we use) and send to grid is not compensated fairly and yet we are charged a connection fee plus KWH for what we use in the early hours of the morning. The connection fee gets me should be a one off, not an ongoing thing. They only connect you once.

    We would consider staying on the grid (as I suspect many others would to) if we were paid a fairer feed in tariff and no connection fee.

    • I can hear your pennies dropping all over the place Bronwyn. Go the whole way: get as many batteries as you need ~ there are some good offers around ~ an reduce/alter your usage. eg. buy a ew extra very cheap these days panels and have them running your big users (fridges,etc) full-on all day long (ie NOT on batteries) and they’d stay cold overnight. Get a small el-cheapo generator
      (sine-wave, remote-start for $600 at Bunnings)and use that intermittently to run your big-use short-time stuff: microwave, washing-machine, etc.

      You’ll never look back.

      • ps…..When I say run fridge-freezers etc. ‘full on all day’ I mean:- disconnect the thermostats and attach a smallish decent (and cheap ~ check out Mean Well) inverter to EACH circuit.
        The ‘normal’ fridge runs for about 9 hours per day on an on/off basis dictated by the thermostat. Cut out the ‘ middle-man’ and connect directly to a ‘distribution-point’ (‘bus-bar’??) inline from the panels. I just used a length of half-inch copper-pipe:- poke the ‘positive’ lead from the panels into the end of the pipe and hammer the whole thing flat. (add a drop of solder if you want to get flash; you can run other circuits off that as well: either via abovementioned inverters or directly as 12/24/36 /whatever DC. (You’d be surprised at some of the savings available these days.)
        Either connect the batteries via different circuits altogether (my preference), or through the ‘bus-bar’, but that will (to do the most effective job) require suitably-placed diodes (available for about $10 each from any outlet.)
        Incidentally, always use the heaviest-size cable (and switches, circuit-breakers etc) you can fit in (more savings in power-use) ~ keep your eyes open around demolition-sites, power-company re-cabling jobs, etc., and just ask. Often free; ALWAYS dirt cheap. email [email protected] for details if you like. I’ve always been a ‘battler’ and love to see people getting out of the trap of ‘convention’ and commercialism.
        All the best.

  11. Thanks Ronald, you make a great point about how confusing it is to compare one retailer with another which effectively kills competition. I recently switched to Energy Locals for that reason (among others). Their pricing policy is clear and transparent, their rates are good and they appear to have a social and environmental conscience.

    Check them out, they might be worthy of an article.

    • The only retailer one should deal with is the one that replaces the wagging-apparatus on the Dobermann you got from the animal-shelter! No other retailer adds anything to the ………er, ‘bottom’-line.

  12. Stuart Walsh says

    A great article. When I first installed the 18 panels on the roof when living in Dubbo I was paid 66c a kw/h for my solar, and was very happy with that, as it not only helps the environment, it also helped my living standards at least stay livable. I think like you Ronald, they need to reflect our contribution to help greenhouse emissions and also help alleviate the load on the grid, and we should be rewarded a bit more for this effort, not the paltry amount we are now, although mine is a bit healthier than average.

    I’d like to see half the amount exactly of the charges made by the electricity companies each day, that would alleviate the mathematics they need for rainy days V fine days V winter and summer days.

  13. When I install a solar system I receive a REC (Renewable Energy Certificate) which is generally paid via a reduction in the total cost of the solar system. I could if I was inclined keep my REC’s and sell at anytime of my choosing on the open market, but it a bit of a hassle and generally easier to sell directly to the solar installer.

    The REC prices have varied recently but for the sake of this example I will use the value of $35 per REC. A REC is the equivalent of 1 Megawatt hour of electricity. In Kilowatt terms this is 3.5 cents/Kwh. This REC payment is in effect a payment in advance for the renewable energy that my system will produce over the next 15 years.

    Therefore if I accept your mathematical prowess at arriving at your 22 cent feed in tariff, I would have to put forward the proposition that a reduction of 3.5 cents/Kwh should be app[lied to your calculation to recognize the upfront REC payment that I have already received.

    The only other flaw in your analysis is that those people with solar are reaping the benefits of higher prices and those without are paying the cost but it does not provide an incentive to the renewable sector, as an industry to install new technology. A better way maybe to pay a higher feed in tariff to an industry fund that can be used to foster further renewable energy development. But this is sounding awfully like a carbon trading scheme.

    • Sounds to me more like a communist takeover. NObody needs an elephant in the living-room. Let alone on the couch watching the TV.
      It’s YOUR money, Ralph! YOU dictate the terms/conditions/price you’re willing to pay. ….Without haggling; your options range all the way from ‘acceptable’ to ‘doing without’.

    • There does seem to be some double counting here, given the ‘social’ benefits priced into the RECs

      Ronald? You probably know more about the underlying justification for a REC – is this a valid point? It is what I was thinking when I was reading this article.

      • Ronald Brakels says

        Well, the purpose of Australia’s Renewable Energy Target was to meet the target for renewable energy. Sounds a bit tautological, but if the government were to declare that wind farms will receive lower payment for the electricity they generate because they get renewable energy certificates, that would weaken the Renewable Energy Target and the value of Renewable Energy Certificates would have to be higher to get the same result.

        Economically speaking, the purpose of a RET is to get construction started and bring down the cost of building renewable energy capacity. To jump start things.

        So while people can argue that the RET should be considered in setting feed-in tariffs, I am happy to set it aside. For one thing it avoids the problem that people with the gradual phase out of STCs people have received different amounts.

        • Isn’t putting it aside a bit like saying “We don’t know exactly how to score the impact in health, so we will treat it as Zero?”

          • Ronald Brakels says

            No, I explained why it’s not included. The goal of the Renewable Energy Target is to get renewable generating capacity built and lower its cost and this is separate from the benefits provided by exported electricity from rooftop solar mentioned in the article.

  14. One thing you forgot to factor in is the daily connection charge – as small scale solar generators are supplying excess energy back to the grid then they should receive a corresponding discount on the connection charge.
    Essentially they are electricity retailers – so rationally they should be charging a reverse connection charge to cover the capital costs of the install and wires! Its a long bow…

  15. Robin Memory says

    Ronald, when the Victorian Essential Services Commission calls for submissions regarding its next annual FIT pricing around December, it would be great to see this article submitted. Having said that, as far as I could tell, the responses submitted appear not to have changed the outcome at all. Couldn’t agree more about the too hard basket comments around health impact. There are so many ways we could use that back. When my rates come I might say I’m having trouble with some of their calculations so I thought I’d not pay that bit of it…..if only.

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