Why Your Solar Feed-In Tariff Is Lower Than Your Electricity Usage Tariff

Why solar feed-in tariffs are lower than retail electricity prices

To understand why solar feed-in tariffs are comparatively low, you need to understand how your electricity bill sausage is made. Image credit

In this article, I am going to take a typical electricity bill and break it down into its components. 

I told Finn I was doing this for two sensible reasons:

  1. To let people know where their electricity dollar goes.
  2. To show where solar feed-in tariffs come from and why they are significantly less than electricity’s retail price.

But the main reason is I hate electricity bills and enjoy breaking them into pieces.

By the time I’m done, you should have a good idea of how many different buckets your electricity money gets thrown into and roughly what portion each one gets.  I’ll also show that energy fed into the grid from rooftop solar panels is worth more than just the wholesale price of electricity at that time — but, regrettably, still considerably less than the retail price of electricity.  

The National Electricity Market

In this article, I’ll focus on the National Electricity Market or NEM.  This covers all the states except Western Australia while including the Australian Capital Territory and also Jervis “nobody knows I’m a Territory” Bay.  The Northern Territory and pretty much every other territory is left out.  Especially the Australian Antarctic Territory, which will join the NEM when hell freezes over.  Or unfreezes over as the case may be.

What You Pay For Electricity Now

Here’s what households currently pay for grid electricity in cents per kilowatt-hour in the NEM capitals.  This is based on a home with a standard tariff that uses an average of 14 kilowatt-hours of grid electricity a day, which is 5,110 kilowatt-hours a year:

  • Adelaide:  38.4
  • Brisbane:  26.5
  • Canberra:  26
  • Hobart:  33.4 
  • Melbourne:  28.6
  • Sydney:  29.2

I got these figures by looking up the lowest cost Origin Energy plan available in each city.  As Origin is the nation’s largest electricity retailer, these prices should be reasonably representative of what people pay.  The exception was Hobart.  Tasmania only has two electricity retailers and neither of them is Origin, so I chose Aurora as they’re the most widely used.

If these prices seem high it’s because I included the daily supply charge, which usually makes up at least a quarter of household electricity bills and significantly increases the total cost of grid electricity per kilowatt-hour.

Average NEM Price

If I average the city capital prices above after weighting them by the population of the state or territory, it gives me an estimate for the average residential price of electricity in the NEM for a home averaging 14 kilowatt-hours of grid consumption per day:

  •  29.2 cents per kilowatt-hour

Conveniently, that’s the same as in Sydney.  While this is less than what households pay in Europe it’s nothing to boast about, given our lower taxation and generation costs, not to mention the fact our grid isn’t as reliable as in most developed countries that aren’t the United States. 

The Seven Electricity Bill Components

I’ve listed the seven main components of electricity bills below.  I think my breakdown makes sense, but it possible to separate it out into more parts or lump some together, so if other people do it differently it doesn’t necessarily mean I’ve left out steps or added extra ones for fun. 

The seven main components of electricity bills, with very brief descriptive phrases, are:

  • Wholesale Prices  — Make it.
  • Long Distance Transmission — Take it.
  • Local Distribution — Break it down for local use.
  • Metering  — Measure it.  
  • Environmental Protection — Reduce damage.
  • Retailing — Sell it.
  • GST — Tax it.

A brief explanation for each: 

Wholesale Prices:  This is what large scale generators — such as coal power stations and large solar farms — are paid for supplying energy to the grid.  What they receive can be set by a contract or they can sell it on the wholesale electricity market at whatever price is available at that spot in time.  This is called the spot price.

Long Distance Transmission:  High voltage transmission lines transport energy from large scale generators to towns and suburbs.  The cost of building this infrastructure has to be paid for and the considerably lower cost of maintaining it has to be shelled out for as well.

Local Distribution:  This is the distribution of electricity to homes and businesses locally using substations and poles and wires.  This is handled by Distributed Network Service Providers (DNSPs).

Metering:  The cost of reading electricity meters.  This was done by humans but they are gradually being replaced by smart meters that automatically transmit the information.  This — along with excessive charges for people who refuse smart meters — means the cost of metering should be falling.   

Environmental Protection:  There are four schemes designed to reduce the harm caused by the electricity sector.  They work by encouraging the growth of renewable energy, improving efficiency, or doing things such as making sure coal power stations don’t let their ash blow all over the place.  The schemes are:

  • The Large Scale Renewable Energy Target or LRET:  This provides a financial incentive for large scale new renewable generation such as solar and wind farms.  This incentive is expected to rapidly decline over the next few years.
  • The Small-scale Renewable Energy Scheme or SRES:  This is often called the “solar rebate” and pays for STCs that lower the cost of new rooftop solar.  It also lowers the cost of solar and heat pump hot water systems.  This scheme is being gradually phased out over the next 10 years. 
  • Energy Efficiency Schemes: These programs are designed to reduce waste.  
  • Jurisdictional schemes: States and territories have various laws and schemes in place to protect the environment.  These can be funded through fees as well as fines.  Any fees and fines levied on the electricity sector generally end up being added onto the cost of electricity. 

Retailing:  Retailers are paid for sending electricity bills, receiving payments, dealing with customer inquiries, and convincing people to use them rather than another retailer. 

GST:  We have a 10% Goods and Services tax.  This is less than most developed countries tax their electricity.

Environmental Protection

While our electricity bills pay for some environmental protection costs, these are not nearly enough to cover the total cost of the health and environmental externalities1 of fossil fuel generation.  This means the real cost of grid electricity is higher than what we are charged on our electricity bills because we pay for it in other ways.  I won’t go into externalities in this article, but these additional costs are real and shouldn’t be forgotten. 

Unfortunately, our existing environmental protection costs are levied in a dumb way, as they are applied to all metered generation regardless of how clean it is and not mainly on the energy source that causes the most harm — which is coal. 

Average NEM Electricity Bill Breakdown

I will provide a breakdown of the average electricity bill for the NEM.  Because no one has a very large and odd-shaped residential property that extends into all the states and territories of the National Electricity Market, this isn’t going to represent anyone’s actual bill.  What it will do is show where the money most Australians use to pay household electricity bills goes on average. 

My figures will only be an estimate.  I not going to try to make them spot on for the following reasons:

  • Some information, such as electricity contract prices, is secret and I’ve left my Mission Impossible spy kit at home.
  • This year is unusual thanks to the pandemic and, with a bit of luck, it won’t be too long before the economy improves and this will put upward pressure on electricity prices, even though the long term trend will be downwards thanks to increasing renewable capacity.
  • Making things precise means more work for me and that’s just not on.2

I will use the figures this AEMC (Australian Energy Market Commission) report predicted for this financial year.  The average wholesale price they use is higher than it is at the moment, but I don’t think they can be blamed for not predicting the pandemic.  The other values should more or less be correct, as according to this AEMO report the pandemic only reduced demand for grid electricity by 2%3 in the second quarter of the year.  This skips the ‘Rona resurgence in Melbourne during the third quarter, but since things had improved in the rest of Australia by then I don’t think there would be any large change overall.   

According to the AEMO, the wholesale electricity spot price in the NEM has averaged 5.3 cents per kilowatt-hour over the past 12 months.  However, what people have been actually charged is closer to 8.8 cents.  As far as I can tell, this is due to long term contracts causing the overall average wholesale price to be higher than the wholesale market spot price.  Normally it’s the other way around with wholesale spot prices averaging a little higher than contract prices, but the pandemic has made things topsy-turvey.  

If I use the 8.8 cent figure for the average wholesale electricity price while keeping the other figures the same as in the AEMC report, then the cost of electricity bill components in cents per kilowatt-hour are:

  • Wholesale Prices:  8.8 
  • Long Distance Transmission:  2.2
  • Local Distribution:  9.9 
  • Metering:  0.9 
  • Environmental Protection:  1.7  
  • Retailing:  3
  • GST:  2.9
  • Total:  29.2

If I change these values to percentages and put them in a delicious pie graph, we get this:

Electricity bill breakdown - NEM average

This lets us easily see local distribution takes the biggest bite out of electricity bills, followed by wholesale generation, with retailing in a distant third place. 

Electricity Bill Components By State & Territory

While knowing the average for the NEM is interesting, it’s not very useful as the NEM average is a mythical place and no one actually lives there.  What people really want to know are the electricity bill breakdowns for their state or territory and I’ve decided the easiest way to present the information is in a table showing how many cents per kilowatt-hour each component costs.4  Sure, it may look like a wall of numbers, but if you are interested the information is all there:

These figures are from the AMEC report and I haven’t adjusted the wholesale component downward to reflect lower pandemic prices because I don’t have that information and can only give an estimate.5  In other words, I’ve decided to use figures for wholesale prices that I know are definitely wrong rather than guesstimate figures that probably would be wrong. 

Solar Feed-In Tariffs & Electricity Bill Components

When your solar power system sends surplus electricity into the grid for other people to use it gets recorded on their electricity meters as grid consumption.  They are charged the retail electricity price for it while the household that provided it receives a feed-in tariff

Some components of electricity bills aren’t affected by the fact a kilowatt-hour of electricity came from a rooftop solar system and this is why feed-in tariffs are considerably less than the retail price of electricity.  The costs of metering, retailing, and GST remain the same and still need to be paid.  However, other bill components are eliminated or altered, which makes energy from rooftop solar power more valuable than energy from coal power stations, gas turbines, or large solar farms. 

Wholesale Price: Energy provided to the grid is worth the wholesale price of electricity at the time it’s supplied.  Solar power systems only generate during the day, so the average wholesale price solar receives will be different than the average wholesale price for all electricity.  At the moment the average wholesale price received by solar energy generally isn’t far from the average, but it’s gradually trending down as increasing solar electricity production lowers prices during the day. 

Long Distance Transmission:  At the moment almost all energy fed into the grid from rooftop solar panels is consumed nearby, which eliminates the cost of long-distance transmission.  

Local Distribution: For both long-distance transmission and local distribution, rooftop solar reduces strain on the grid when total demand is highest and this helps reduce costs.  But as rooftop solar power expands, some changes to local distribution are required to accommodate it and — while modest in the great scheme of things — it is a real expense.  The pros and cons of rooftop solar for local distribution is a complex topic and I won’t go into because I’d have to write at least a thousand words to get into the nitty-gritty details – and I’m feeling too thick to even think about it at the moment. 

Environmental Protection: Providing clean energy is the entire point of having environmental protection charges, so it would be pretty dumb to apply them to energy from rooftop solar power systems, as it’s about as clean as it gets. 

Fair Solar Feed-In Tariff Estimate

One way to make a quick estimate of what a fair feed-in tariff should be is to do the following:

  • Take the average wholesale price energy from rooftop solar would receive through the day.
  • Add the avoided cost of long-distance transmission.
  • Add the effectively avoided costs of environmental protection.
  • Not worry about anything else to keep things simple. 

If you do this with the information for cost of different electricity bill components in the table above, you end up with a reasonable value even if you take the very cautious approach of halving the average wholesale price to allow for reductions caused by the pandemic and downward pressure on daytime electricity prices.  

Victoria’s Solar Feed-In Tariff Determination

Only one state that comes close to following the rough and ready method I outlined above for determining solar feed-in tariffs – and that’s Victoria.  The following table from this report shows a breakdown of the components of their minimum feed-in tariff for this financial year:

Feed-in tariff breakdown

To cover the average wholesale price of energy provided to the grid by rooftop solar power systems, they allow 7.26 cents per kilowatt-hour.  This is only 72% of the AEMC report’s prediction of 10.1 cents for the average wholesale price of electricity in Victoria this financial year.  

While they allow for some avoided losses in transmission distribution, they don’t allow for rooftop solar power generally avoiding long-distance transmission altogether.  It seems they think all generation has to contribute towards paying for the long lines.  

Rooftop solar energy is also not let off the costs of environmental protections, but does receive 2.5 cents for “value of the avoided social cost of carbon” which is greater than the 1.8 cent per kilowatt-hour environmental protection costs in Victoria.

Rooftop Solar Energy Worth More Than Wholesale Prices

While energy from rooftop solar supplied to the grid is, unfortunately, not worth the retail price of electricity, it is worth more than whatever the wholesale price is at the time it’s fed into the grid.  This is the case even if no allowance is made for the avoided health and environmental costs of fossil fuel generation. 

This is a good thing, as daytime wholesale prices during will trend downwards in the future — even if they temporarily increase as the world economically recovers from the pandemic.  But policymakers who set feed-in tariffs need to recognize energy from distributed solar power is worth more than just the wholesale price and ensure feed-in tariffs reflect that.


  1. An externality is a negative effect that the people causing don’t have to directly pay for.  For example, coal generation doesn’t have to pay for the health costs of coal pollution.
  2. I won’t let my capitalist masters exploit me!  I have read the works of Marx — both Groucho and Harpo.  Workers of the world untie!  You have nothing to lose but your knots!
  3. Note that even small changes in supply and/or demand can have major effects on wholesale electricity prices.
  4. Under “Total” on the table I originally accidentally put the typical prices people are paying now, so all but the first two were off to some extent.  Fortunately, an observant reader pointed out the mistake and I have corrected it.
  5. The average wholesale market spot price over the past 12 months in cents per kilowatt-hour has been: NSW 6.4,  QLD 4.8,  SA 5.6,  TAS 4.4,  VIC 6.1.  The average wholesale price households have been charged over this time has generally been around a couple of cents more.
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.


  1. Your 28.6c for Melb incl. supply charge seems very low (is it with no GST?)

    My Tango bill is Peak and Off peak rates. Off peak 11pm to 7am weekdays and all weekend.

    My daily useage is shown as 6.3kWh

    Peak @ 30.14c
    Off-peak @ 21.01c
    Daily charge 104.5c

    Feed in (4kW system) 10.2c

    • Ronald Brakels says

      The Origin Go plan is currently offering that much for a home using an average of 14 kilowatt-hours of grid electricity a day. But it is for post code 3000 and there may be minor differences for different areas.

    • Hi Guys, I live in regional Horsham Victoria and am moving into a house early next year which had a 6.6KWatt solar panel system installed in March this year, half fcaing east and half facing west. It also has a 5KWatt inverter. I spoke to Tango last week and here is the figures they quoted me when I move in on January next year.
      Supply charge per/day $1.17
      Peak 25.3 cents per KWatt hour
      Off-Peak 17.82 cents per KWatt hour
      Dedicated Electric Hot Water 18.15 cents per KWatt hour

      Grid feed in 10.2 cents per KWatt hour

      Peak power 7am to 11pm Monday to Friday, all other times Off-Peak.

      Do you know anyone else who has better rates here????

  2. What really peeves me off with the retailers is the way they charge solar households more for the same service. Daily supply charge to the same home is higher for solar households. Per Kw charges also higher than non solar.. Why the federal govt has done nothing to to pull these rogues into line amazes me when they continually talk about lowering electricity prices.

  3. You’re wise to ignore WA, where state Labor’s ideology means those who want a cleaner, greener state are cheated… and our government actually _subsidises_ coal…

    “…policymakers who set feed-in tariffs need to recognise energy from distributed solar power is worth more than just the wholesale price and ensure feed-in tariffs reflect that…”

    Never going to happen while McCoalan is in charge.

  4. WA Home Tariff 26.2 cents per unit. Still cheaper than the “Competitive” private companies that we are told pushes prices down.

    • While paying solar electricity suppliers 3 – 10c per kWh… .
      Monopoly utility cash-cow. Buy for 3c, sell for 26c.

      Worse still, rip off our tenants, on _contracted_ 47.135c per kWh.
      (Students, shop assistants, teacher aides, single mums, etc.)

      Never thought I’d be advocating privatisation… _or_ voting Green!~

      • If you look on the AEMO website data dashboard you will see that at most times of the day the balancing price for power is negative. That means the generators are paying to stay on line or shut down thermal plant at great expense. At the same time having to pay roof top solar customers for power they dont need.

        • if the solar power is worthless in the middle of the day, why does the cost of delivered electricity continue to skyrocket at the same time of day? In the middle of the day, when there is a supposed surplus of electricity ( even though demand is by far the greatest during the middle of the day) we are paying a rather large sum for each kw/h of electricity taken from the grid, but a kw/h of solar delivered to the same location, at the same time of day is supposedly worthless? Something doesn’t add up.

          • Ronald Brakels says

            The times at which the wholesale price of electricity is zero or negative in the middle of the day are increasing, but on average it’s still valuable. In Queensland over the past year the average wholesale price per kWh of solar electricity fed into the grid from rooftop solar was around 13 cents. This was unusually high due to the invasion of Ukraine and Queensland’s repeated problems with unreliable coal power, but the value of solar energy fed into the grid is never going to reach zero on average. But it is likely to get very low in time. Depending on the international situation, it could be low next financial year. (Note that low wholesale electricity prices next financial year won’t affect what you pay on electricity bills until the financial year after that.)

  5. I thought networks always received a regulated return. Thus the cost isn’t avoided, its simply passed on to someone without solar or I assume will become more of a daily charge than a usage charge over time…..

  6. John Frediani says

    I was interested to see Western Australia was not included as art of your report.
    They are not part of Australia???

    • The situation in WA is unlike any in Australia.
      Labor inherited major debt due to the LNP’s visionary solar FiT rebate scheme.

      Because this was an LNP initiative (labelled as ‘middle class welfare’ by the Left) Labor has an ideological hatred of solar power… meaning our new rebate system DEBs is the lowest-paid of any state.

      At the same time, Labor is propping-up our collieries… a political priority.

      Our premier will spin a number of new environmental initiatives in the lead-up to the March 2021 election. These will, in fact, be paid for by anyone foolish enough to initiate a solar electricity system feeding energy to the grid. Only new battery technology*… and _disconnection from the grid_ will make new installations economically viable… .

      We’d intended to provide larger solar electricity systems to all our rentals, benefitting all our tenants, once ten-year-contracts ended. DEBs killed that. We’re still fighting to have those 10-year-contracts honoured and tenants (re)paid what they’re owed… .

      * Increased battery longevity, increased warranties.

    • I always consider WA the same as I do New Zealand. Some relationship to Australia but not really part of it on a day to day basis.

      The WA Gov’t only wants to be vocally part of Australia when the mining industry takes a dive and it is looking for a bailout from the Feds. Once the iron ore price improves they act like they are another country.

  7. Ross Le Bris says

    If one accepts the content of this report, then that, coupled with the fact that the exported amount of solar is always far less than the amount shown on the inverter means that we will never be able to escape the greed of the companies until households go completely off grid with batteries and emergency generators.

  8. Dave Buckingham says

    I have no mobile phone reception here .My smart METER wont work here so a meter reader has to drive here just to read my meter about 250 kilometres.one way.

  9. I’m not sure the service value for long distance transmission lines are avoided though? Just because local solar energy isn’t flowing on those lines during the day doesn’t mean they are not still providing a service.

    The very fact energy transmitted along those lines is flexible is partly what enables solar PV to be connected to local grids. The flexibility to *not* need long distance transmission of energy whenever you like has value.

    The long distance HV network doesn’t disappear during the day and magically reappear at night when you need it. It’s like the finance cost of a vehicle, you still need to pay it whether or not you are driving the car.

    Put another way, how would local grids manage if the long distance transmission was removed? It wouldn’t. It would require a lot of extra investment and cost for them to cope.

  10. Another consideration when thinking about the value of domestic solar exports:

    – this is energy supplied to the grid and the grid has to take it whether or not the grid wants/needs it

    – there are no guarantees on the amount nor duration nor timing of energy supply made by the household

    So here’s a product that you (a metaphorical you) must buy from me, take whatever I have in excess to my own needs whenever it happens to be available and I can change that supply at will, e.g. by deciding to use it myself, or by turning something off or meh, sorry, a cloud came over, too bad.

    That’s a pretty risky kind of purchase agreement and IMO lowers the value of the commodity being sold. The price paid needs to reflect that risk.

    Compare that with an energy supply contract or a bid in the wholesale market where businesses have to commit to a given amount of energy supply for a given duration at a specific time in the future and cough that supply up, or else.

    Certainty on the supply of a commodity has value. Domestic solar PV is not exactly a supplier of certainty.

  11. Policy makers o set the solar FIT in fact support monopoly. What is needed not MINIMUM, but percentage of charges. Something like 80% will cover additional cost of operation and will keep retailers far away from manipulation.

    Current system is created to confuse consumers who are lost in selection of retailer thanks to complex system.

  12. Bruce Lehmann says

    One of my pet hates is when people are preporting to be experts and display their charts to bolster their argument and the charts don’t add up. PLEASE CHECK YOUR CROSS TOTALS IN YOUR SECTION “Electricity Bill Components By State & Territory “”. THE TOTALS DON’T ADD UP TO THE COMPONENTS!!!!

    • Ronald Brakels says

      Thanks for pointing that out. I accidentally had the typical current amounts people are paying now in that column instead of the actual totals. A stupid mistake on my part. I have corrected it.

    • Bob the builder says

      I like when people are criticising someone’s inattention to detail and they use non-existent words – “preporting to be experts”

  13. Things were so much simpler when electricity supply was considered to be a public benefit / utility. As soon as you let competition policy run riot and bring in the private companies, then segmentation and confusion reigns to disguise profit.

  14. WA Business owners with solar receive zero feed in tariff and recently (2018) were wacked over the head with a increase of over 300% to the daily supply charge. Total Sham

    • Yes, I agree. Almost two decades ago, I initiated a major solar electricity system* on the roofs of a large public institution.

      Within a year of my doing that, the WA government suddenly implemented the 5 kW rule… effectively limiting the benefit of many years of work on behalf of that organisation.

      Sadly, there’s zero compensation for implementing green strategies and solutions in WA. Only a radical change-of-government… or a Green/Labor coalition… will change that. You’re correct that it’s a sham, Shane; but there’s zero respect for _anyone_ initiating a renewable energy solution which competes with the state-owned monopoly… or ‘undermines’ coal or gas royalties… .

      * Way back then, 7.2 kW was considered a major system!~

  15. In Sydney last weekend we had power for 24 hrs due to coal .with no wind and once the sun went down the climate change gang still had their air-conditioned on .It was the hottest day in November for 80 YEARS, not the hottest day ever.
    These climate gang don’t like smart meters because you pay 40c at peak times and less at 2 am but they have the right for their life style once off the soap box .As your article stated these people object to smart meters. Maybe introducing this will change habits i.e washing , pools and dishwashers etc going at 2 am and not during peak times thereby reducing coal during the day.

    • Geoff Miell says

      Roy Beer,
      You state: “In Sydney last weekend we had power for 24 hrs due to coal .with no wind and once the sun went down the climate change gang still had their air-conditioned on.”

      You wouldn’t be relying on the Daily Telegraph for your information, would you Roy?
      The NEM Watch indicates something different in NSW last weekend.
      See: https://twitter.com/MichaelM_ACT/status/1333194254240288769

      You also state: “It was the hottest day in November for 80 YEARS, not the hottest day ever.”

      It depends on where you were. On 28 November, at Smithville NSW (north of Broken Hill near the NSW-SA border) the hottest NSW November day ever recorded was 46.9 °C at 4:35 pm local time, and it was not even summer yet. This is a prelude of worse to come.

      Global mean temperature rise above pre-industrial age is circa 1.2 °C, and is accelerating faster than the IPCC reports have indicated.
      See: https://www.researchgate.net/publication/329411074_Global_warming_will_happen_faster_than_we_think

      Latest climate model simulations indicate:
      1.5 °C warming reached in the year range 2026 to 2028, best estimate (for all simulations);
      2.0 °C warming reached in the year range 2038 to 2058, best estimate (for most simulations, except SSP1-1.9).
      See Table 1: https://esd.copernicus.org/preprints/esd-2020-68/

      Serious damage from global heating is already being experienced (i.e. unprecedented wildfires, higher rates of evaporation, increasing occurrences of 45+ °C heatwaves, severe storm damage, diminishing crop and pasture yields), and, whatever we do, things will get worse over the next 10-30 years, maybe sooner.

  16. If there were no daily “service” charges, I would agree with this analysis…

    But we pay for the transmission, grid interconnect, and the overall service costs via a daily fixed charge not linked to consumption or generation.

    This then means that our generation (and consumption) should not need to carry that financial load – and changes the overall analysis substantially.

    • DL: “If there were no daily “service” charges, I would agree with this analysis…”

      Yes, that’s how monopoly cash cows work, David. 🙁

      Protected bea$ts, while taxpayers subsidise coal and gas.

    • “But we pay for the transmission, grid interconnect, and the overall service costs via a daily fixed charge not linked to consumption or generation.”

      While it’s true there is a daily service fee, it represents only a part of the total cost recovery for the grid/network/service etc.

      Such costs are also recouped by an amount added onto the per kWh tariff.

      If the the costs were all included as a fixed daily fee, it would be an exorbitant daily fee for households. By splitting this cost recovery between fixed and consumption components means bigger importers of energy contribute proportionally more to the network.

      The per kWh component of these fees is levied on imports from the grid only, not on exports to the grid.

      As a result Solar PV owners end up paying less towards the network than homes without solar PV, even though most still require the same grid/network carrying capacity to supply their homes (e.g. in the evening) as everyone else. Having sufficient carrying capacity at peak times is what drives network/transmissions costs.

  17. Most grateful for this article. Found the itemising very helpful. I see the supply charge as the equivalent of a monthly landline phone rental or a water meter installation that you pay for as long as you’re living at the address irregardless of whether you use it or not. So I accept it as something that comes with PV installation. No big deal for me. I consider I’m already way in front living in country in which tax paying low income earners have been forced to pay for half of my PV installation cost. (Never would have done it otherwise.) And if they could be compelled to pay for half the purchase cost of a Toyota Prius I’d get one of those also.

  18. Michael Paine says

    Re “making sure coal power stations don’t let their ash blow all over the place…”

    About 10 years ago a friend who does voluntary work in Timor Leste found out that Oecusse was being touted as a site for a second-hand (i.e very dirty) Chinese coal-fired power station – despite having no reliable water supply and no local coal. I assisted the consequent protest by preparing this diagram, which shows to multiple harmful effects of coal-fired power stations:

  19. I can’t get solar panels due to tree coverage and use 100% green power at a premium price.

    Looking at this articles % retail price breakdown, if I use my neighbours roof solar power it should be half the price of normal retail as no wholesale or long distance distribution lines are involved.

    Here’s an idea where a clever power company can make easy money by matching local consumers and local roof top solar production when ever that lines up.

    I would be very happy to pay 26c/kwh and have half go to the retailer/local grid and half as a 13c fit for the producer.

    Win,win and win.

    A company who can offer discounted local solar to consumers and a big fit to produces would sign up more customers than any other product on the market.

  20. The biggest giveaway that electricity consumers are being ripped off, is the fact that when the retailers revise tariffs up by 50% during all hours of the day and night, feed in tariffs invariably remain un adjusted. So peak, off peak, shoulder and supply charges all go up, but strangely the value of solar entering the grid hasn’t altered at all?
    Even without analysing the grid costs, it is obvious that the retailers are just delighted to leave feed in tariffs as they are ( rock bottom) whilst electricity delivered at all hours apparently becomes more and more valuable.
    Doesn’t add up.

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