Federal Energy Rebates: Solar Households May Come Out Ahead

piggy bank house with solar

Electricity Price Hikes Incoming…

If you live in an eastern state —  or that middle state called South Australia strapped to them by a couple of transmission lines — then in July, you’ll be hit with hefty electricity price increases.

To make the coming price hikes less unpleasant for some, the Federal Government will provide energy rebates — likely to be around a few hundred dollars — to low-income households.  These will include pensioners and most receiving Centrelink benefits.

Federal Government DIshing Out Energy Rebates for Low-Income Households

The plan was revealed yesterday and details should be provided in tomorrow’s budget.  The amount of energy rebate will depend on where you are.  In some places, you may receive a state energy rebate even if you’re not a low-income earner.  For example, Queensland — the state that will be hit the hardest — is handing out $200 to all households. 

The rebates are a fixed amount handed out to eligible households regardless of electricity or gas consumption.  So if you have solar, you’ll receive its benefit and whatever rebates you can get.  If you don’t have solar, now is a good time to get it.  It would make good sense even if electricity prices weren’t about to rise.

Solar Households May Come Out Ahead

Those who use very little grid electricity, either because they have solar panels or are just very frugal, can come out ahead in the game of energy rebates.  This is because they may receive more in rebate money than they pay in higher energy costs. 

Upgrading Solar Systems and Home Batteries to Reduce Grid Reliance

But if you do have solar power and find you still use lots of grid electricity, you may want to upgrade to a larger solar system and/or shift more electricity consumption to the middle of the day to take greater advantage of solar generation.  Home batteries are also an effective way to reduce reliance on the grid.  While they don’t yet pay for many households, higher electricity prices, lower feed-in-tariffs, and time-of-use tariffs make them a better deal than they were.

Price Increases Over A Year Late

The main reason electricity prices are increasing in July is because Vladimir Putin is a shithead.  Fourteen months ago, he decided the best solution to the problem of Ukraine not being violently invaded was to violently invade it.  This caused energy prices to soar overseas and in Australia’s eastern states because they were exposed to international prices.

Another factor has been problems with Australia’s aging fleet of clapped-out coal power stations.  A major offender was Queensland’s Callide Power Station.  Over the past couple of years, it simply hasn’t been able to keep it together.  It had a turbine explode in May 2021 followed by parts of its cooling system collapsing at the end of October 2022. 

The Political Motivation Behind Delayed Price Increases

Callide’s problems have increased Queensland’s wholesale electricity prices for two years now, but despite Ukraine being invaded over a year ago,  very little of the energy price increases from that event have been passed on to the public so far.  Instead, we’ll be hit with nearly the whole amount in two months’ time and pay for it through the next financial year.  It would have been sensible to raise electricity prices soon after Ukraine was invaded to encourage energy efficiency when international energy prices were at their highest.  Unfortunately, the government at the time didn’t take that step.  The fact it was an election year may have been a factor.

It also could be sensible to stretch out the price increases over two or three years, since Putin’s probably not going to invade another country any time soon.  But that’s probably not going to happen because it’s not an election year, and our current mob of pollies will probably prefer higher prices now and lower ones closer to the next federal election.

Energy Rebates Are A Temporary Solution

The state and federal energy rebates are basically slapping patches on the problem of high energy prices.  This doesn’t mean they’re not appreciated.  They will help a considerable number of people avoid hardship.  But I would also like to see the system improved for the better rather than just ad hoc solutions being applied.  While ad hoc solutions may keep you out of hock, they won’t prepare the country for the future. 

It’s possible we’ll soon see improvements made, and they may even be announced in tomorrow’s budget, but I’m not very optimistic.

About Ronald Brakels

Joining SolarQuotes in 2015, Ronald has a knack for reading those tediously long documents put out by solar manufacturers and translating their contents into something consumers might find interesting. Master of heavily researched deep-dive blog posts, his relentless consumer advocacy has ruffled more than a few manufacturer's feathers over the years. Read Ronald's full bio.

Comments

  1. I have a feeling that the increase in electricity prices may have more to do with the unintended consequences of relying increasingly on renewables than with events in Europe. One of these consequences is that because of the intermittent nature of wind and solar power, fossil-fuel generators are required to keep spinning to be ready to switch in instantly the moment the weather turns cloudy or the wind drops. This unfortunately costs them money, but the coal and gas generators get paid only for the time they’re actually putting power into the grid.
    As a result, producing power from fossil sources is no longer as profitable as it used to be. Thus the equipment is no longer being maintained to the standard it once was. And no one is tempted to build new power plants because the business model ain’t what it used to be.
    I’m afraid Mr Putin’s illegal and thoroughly nasty war against the Ukrainians is being widely used as cover for all manner of optimistic election promises and economic failings.

    • Ronald Brakels says

      Australia’s coal power stations are growing less reliable, but electricity prices don’t actually work like that. This can be seen by looking at past spot price averages:

      https://aemo.com.au/Energy-systems/Electricity/National-Electricity-Market-NEM/Data-NEM/Data-Dashboard-NEM

      South Australia has by far the most wind and solar capacity but has moved from normally having the most expensive wholesale electricity in the National Electricity Market to either being in the middle or below average. While price volatility does have an effect on the profitability of different generation sources, sitting ready to supply power to make up for sudden shortfalls is the job of ancillary services. The cost of these have fallen in South Australia thanks to batteries. Synchronous condensors – which are big spinny things that help maintain grid stability – are also playing a role.

    • Geoff Miell says

      Kerry,
      I have a feeling that the increase in electricity prices may have more to do with the unintended consequences of relying increasingly on renewables than with events in Europe.

      Nope. Energy analyst David Leitch wrote earlier this year:

      In this note we observe that gas and electricity prices have always been linked, and that that link was super sized in 2022. The super-sizing happened because there was a shortage of bulk energy (namely coal generation) and this increased the demand for gas just at a time when its price was already exceptionally high.

      We also argue that just building more wind and solar won’t get rid of gas and make electricity prices go down. Or at least not until lots more wind and solar are in the system.

      The reason is that more wind and solar tends to force down lunchtime prices when we don’t use gas anyway. So instead it’s coal generation that suffers and so it’s coal generation that closes. And when it does it creates a new shortage of bulk energy. So it’s only when most of the coal is gone that building more wind and solar will lead to a permanent decline in average prices.

      https://reneweconomy.com.au/full-price-benefits-of-wind-and-solar-wont-be-seen-until-we-get-rid-of-gas/

      Lazard’s latest Levelized Cost of Energy: Version 16.0 assessment, published 12 Apr 2023, confirms – as CSIRO & AEMO’s GenCost analyses have done in Australia – that wind and solar, even “firmed” by battery storage, still beat the fossil fuel competition.
      https://www.lazard.com/research-insights/2023-levelized-cost-of-energyplus/

      Energy systems operating, under construction or in the planning pipeline:
      On-shore wind farms: https://reneweconomy.com.au/large-scale-wind-farm-map-of-australia/
      Solar farms: https://reneweconomy.com.au/large-scale-solar-farm-map-of-australia/
      BESSs: https://reneweconomy.com.au/big-battery-storage-map-of-australia/

      • I have found that if you could do it cheaper yourself, then there is a crooked system being proped up by foolish politician’s uninformed polocies, an example would be privatisation of our assets. I’m off grid and only have had to pay once for equipment that charges my car and runs my house. Pay back period 5 years. The fact that a DIY off grid system can be cost effective, over massive scaled up, and paid for efficient power production should tell us that we are being taken for a massive ride.

        • Geoff Miell says

          Paul:
          I have found that if you could do it cheaper yourself, then there is a crooked system being proped up by foolish politician’s uninformed polocies, an example would be privatisation of our assets.

          Looking at where the political donations come from, is it any wonder?
          https://michaelwest.com.au/addicted-to-donations-alcohol-gambling-fossil-fuels-property-sectors-stump-up-big/

          What surprises me is the continued ignorance of many voters that keep these “foolish politicians” in office.

          I’m off grid and only have had to pay once for equipment that charges my car and runs my house. Pay back period 5 years.

          It seems to me from what you have indicated, you are fortunate enough to have the apparent resources, skills and will to do so. I’d suggest not everyone is as fortunate as you apparently seem to be.

          No one is an island – we are all interconnected.

        • Tom Sjolund says

          Well said, about to do the same.

        • We are being taken for a huge ride. The gold plating of the power grid to lock in a guaranteed return for the grid operators is well documented.

          Following the price increases that are on the way the price of electricity from the grid is probably going to be around 30 cents per kWh.

          Just had a look at a 6.5kw diesel generator and it only burns around 1.8 litres of diesel per hour at 75% load which equates to about 90 cents to one dollar per kWh depending on the diesel price.

          So you can run your house on 100% diesel generator for only three times more than what grid electricity is costing, despite their economies of scale!

          You would only need to offset two thirds of your electricity consumption with free solar and run on a diesel generator the other third of the time to break even with grid electricity!

          The grid has totally shot itself in the foot by trying to gouge extraordinary profits out of people since it’s been privatised. They can bitch as much as they like about “duck curves” and “too much renewables in the grid” but they did it to themselves!

          If everyone was still paying a reasonable price for electricity like before privatisation then most people wouldn’t have been incentivised to install solar. I just took the plunge and put on 7kw of solar because power bills are getting completely ridiculous and only getting worse for no other reason than profiteering by the foreign companies that own most of our power grid!

          • The question is it really gold plating or overcharging? The DNSP every year puts in an RITT proposal to replace dilapadated 66kv infrastructure at the substation. The condition has deteriorated from C3 to C5 over subsequent reports. One transformer even failed violently a few years ago. Does anyone ever follow up a RIT-T to check budgeted works are actually completed? This DNSP consistently underspends its O&M budget, and gets exempted from reliability requirements even in situations of gross negligence.

      • George Kaplan says

        Geoff, that just claims the savings will arrive after the next problem is solved, but there’s always a next problem.

        The NEM 24 hour figures show no state, including SA, currently relies on solar & wind for the majority of their power 24/7. Oh during the roughly dawn-dusk period SA relies on little gas, but once the sun goes down they need a reliable source of power.

        Oh wait, technically I’m misleading slightly. Tasmania is hydro reliant, That state aside, coal underpins Australian power.

        Replacing coal capacity with wind and solar doesn’t mean cheaper power, it means blackouts – unless the next problem is solved i.e. power storage. Yes you mention Lazard, but without reading all 57 pages in detail, is it as supportive as you think?

        Coal is more cost competitive than rooftop residential solar, especially if you discount the high end value which incorporates carbon capture and storage. It’s roughly comparable to Community & C&I solar, while utility solar undercuts its bottom end and caps at coal’s first third. Storage however spikes the base for utility scale solar, however no definition of storage is provided. Is it kWh, MWh, GWh storage …?

        Carbon pricing is examined as a means to effectively subsidise alternatives to coal and gas, but even at $20 – $40/Ton of carbon, rooftop solar remains generally uncompetitive, though community solar gains a bit.

        MISO rates wind’s effective load carrying capability at 15%, solar at 7%, SPP has solar at 85% & wind at 17%. That means 5-7 times as much wind capacity as coal is required to ensure generation, which means higher costs.

        The levelised cost of storage comparison is where the dream collapses. While a doubling of storage duration doesn’t quite equate to a doubling in cost, it’s a hefty jump. And 4 hours, the limit of the study, is grossly insufficient. 3 days of overcast or stormy weather? Well sorry the power grid ran out 68 hours ago. Hope you like candles.

        See the problem? We need reliability.

        • This is pretty much what I’ve concluded over the last couple of years of hype. However, I wonder about your 85% figure. Did you mean 5%? And is your “effective load carrying capability” the same as “capacity factor” which I’ve seen quoted elsewhere? The studies I’ve read suggest a factor of around 15% for both wind and solar, meaning they are non-productive for 85% of the day.
          Either way, we need to remember that solar works only during daylight hours (and not very effectively at the beginning and end of the day), as well as the inconvenience of clouds, rain and so forth which as any owner of household solar will know can reduce your production to almost zero for days on end.
          Wind, too, is highly variable. Even when there is wind available, it may be too little or too much. There may be the possibility of interconnecting wind farms which are far enough apart to enjoy good wind in one area where it has disappeared in another, but the distances (and construction cost) may be great and the transmissions losses over distance may be significant.
          It will be interesting to see how the grid copes as fossil fuel generators are taken offline. But of course we have seen it all before in Germany, the UK, California etc so we all know how it’s going to turn out.
          I have absolutely no doubt that unless some other miracle technology comes along we will be forced to turn to Small Modular (nuclear) Reactors – but probably not for several years after we’ve been running our AUKUS submarines on SMRs in complete safety. This means they could be up and running by mid-century if things go well and a new collection of politicians with some engineering nous get themselves elected

        • Geoff Miell says

          George Kaplan,
          Replacing coal capacity with wind and solar doesn’t mean cheaper power, it means blackouts – unless the next problem is solved i.e. power storage.

          There are energy storage solutions that are mature, affordable and available: GWh-scale BESSs & multi-hour PHES. The problem is deploying them fast enough to compensate for the inevitable closures of coal-fired generators. It’s a matter of getting the job done in a timely manner!

          I see more than a dozen GWh-scale (& many sub-GWh-scale) BESSs either under construction, with approvals or in the planning pipeline exceeding a total of 8,750 MW / 26 GWh energy storage capacity possibly available in the next few years, if they all proceed.

          David Osmond runs a weekly simulation of Australia’s main electricity grid using rescaled generation data to show that it can get very close to 100% renewable electricity with just 5 hours of storage (24 GW / 120 GWh).
          last week: 94.9% RE
          last 88 weeks: 99.1% RE
          https://twitter.com/DavidOsmond8/status/1653612975696261121

          Carbon pricing is examined as a means to effectively subsidise alternatives to coal and gas…

          Carbon pricing in part pays for the increasingly detrimental externalities that burning fossil fuels is doing to our environment, & an increasingly more hostile one for our civilisation:

          The current Earth energy imbalance (EEI) is at an all-time high in the instrumental record – 928,000 ‘Hiroshimas’ per Day.
          https://twitter.com/EliotJacobson/status/1653515518400417792

          The latest Australian Bureau of Meteorology (BoM) model (NINO34, run on 22 Apr 2023) was recently published, predicting a super El Niño by August 2023:
          http://www.bom.gov.au/climate/model-summary/#tabs=Bureau-model&region=NINO34

          SLR is going to change harbours & every coastline. Adaptation will be very costly.
          https://www.solarquotes.com.au/blog/net-zero-australia-panic/#comment-1537689

  2. I have just checked that the article is fresh as we did have prices go up right after election, granted not 100%. I also had an impression that government don’t have much say on prices and we have some sort of market.

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