Ausgrid’s Two-Way Pricing For Solar Exports Looms

Two-way tariffs for solar exports

Many solar owners in New South Wales will soon be subjected to “two-way” tariffs. Find out what that means and how it will work.

Ausgrid is the largest distributor of electricity on Australia’s east coast, providing electricity to 1.8 million customers in Sydney, the Central Coast and the Hunter Valley. Its network of substations, powerlines, underground cables and power poles spans 22,275 square kilometres.

Like other Distributed Network Service Providers (DNSPs), Ausgrid has been grappling with an influx of solar energy goodness from residential solar power system exports. It’s a case of too much of a good thing at times; particularly between the hours of 10 am and 3 pm when solar system output generally reaches a maximum. Too much can potentially lead to network stability issues.

Ausgrid has come up with a carrot-and-stick approach with two-way pricing in the hope of encouraging solar owners to maximise solar self-consumption during the 10 am to 3 pm period. After a trial currently under way, this is expected to kick in across the network starting July this year.

What Is Two-Way Pricing?

The first thing to understand is two-way pricing and feed in tariffs are separate beasties, but the former will impact the latter. Two-way pricing, aka a two-way tariff, provides a couple of signals – a reward for exporting to the grid when it’s needed and a charge for when it’s not.

In Ausgrid’s case, it intends applying a 1.2 c/kWh charge when solar electricity is exported between the hours of 10am and 3pm, and rewarding solar owners with a payment or credit of 2.3 cents/kWh for exports during the peak demand period (4pm to 9pm).

Ausgrid will also introduce a “free threshold” on the charge side; meaning a certain amount of electricity can be sent into the Ausgrid network between 10am and 3pm and not attract a charge. The amount varies depending on the month, but it ranges from 192 kWh to 212 kWh.

Retailers will be able to choose how they structure this two-way tariff for customers, who might not see the impact directly on their bills.

“It is likely that retailers will pass on this tariff via changes in the feed-in tariffs they offer customers, by reducing these feed-in tariffs during certain hours of the day and increasing them during other hours of the day,” states Ausgrid.

(Added: Perhaps some retailers may choose not to pass it on.)

How Will This Impact Power Bills?

Ausgrid believes it’s likely the two-way tariff will have a “very small impact” for most solar owners and offers this example in its fact-sheet:

Two-way tariff example

In its example, the system sent 307 kWh into the network between 10am and 3pm for the month of November, when there is a “free threshold” ofย  205 kWh. The customer is charged for 102 kWh, which Ausgrid says is $1.19 for the month. On the reward side, the customer has sent 52 kWh into the network after 4pm, earning $1.21; so the overall result is a credit of 2 cents (spend it wisely).

I get slightly different figures based on that example – $1.22 on the charge side and $1.20 on the reward side – a debit of 2c.

During the winter months, the amount exported during peak demand periods will be very little. But Ausgrid says:

“If the retailer fully passed through our two-way tariff, a typical solar customer with a 5kW system will see an annual bill increase of $6.60 per year.”

But systems are getting larger, so the impact could be greater depending on a customer’s energy consumption profile. Still, it should be a drop in the bucket compared to overall savings.

Whether this two-way pricing will be enough carrot and stick to alter consumer behaviour remains to be seen, and some of that will have to do with how electricity retailers implement it and make customers aware of the charge/reward.

Ausgrid’s fact sheet is dated late last year – so there may be last minute changes before two-way tariffs commence in July.

Other DNSPs are taking a different – and arguably a more elegant – approach to dealing with congestion issues. For example, in South Australia SAPN is rolling out dynamic (flexible) solar exports; where inverters may be throttled remotely based on network conditions. Readying for a similar initiative across the border in Victoria, all new inverters installed must be capable of remotely and dynamically adjusting solar export limits.

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.

Comments

  1. Tim Chirgwin says

    My PV array nearly always provides more power than my full electric home (with resistive Hot Water storage) uses.
    I am on time of use tariffs with off peak hot water, and the Hot water is sometimes switched to reheat for maybe 1kwh between the hours of 10 to 3, yet the other 7kwh of water heating is at night 1 to 2 am. This is SAPN controlled.
    As the tank used to only heat at night without any day top-up for 30 years previously, then equally it could run midday without night top-up.

    Now wouldn’t it be interesting and of huge community benefit if the DNSP just switched on the HWS during the peak solar times instead of at night, and allowed me to directly use my solar (and just swap power my solar generated for power used at the same price), or others surplus solar at the applicable rate?

    Maybe just a bit too simple to utilise surplus solar, increase useable sunshine at no cost rather than variable export limit customers, and reduce grid congestion, and in-house timers or power diverters would then pretty much be averted.

    • Les in Adelaide SA says

      Tim, we’ve had solar for just on 4-1/2 months, and quickly learned a few things.

      One of my next tasks is to get the Controlled Load TOU meter removed (currently set for 00:00 – 06:30 I think), and get the Hot Water Service onto the same meter used for import and export . . . then a simple dumb timer for between say 10:00 and 15:00, to make use of the 70% avg we send to the grid during the day.

      Better free than paying off peak rates at night of just under 19c/kWh, and although it’s not much per day $ wise, it adds up over the quarter to maybe $100 or so, $400 a year.

      If we struggle in winter, we can set an extra time for 00:00 – 06:00 on the EV night rate of 8c if it’s needed.

      The other longer term consideration is then doing new analysis to see if it is worthwhile saving for a battery, where we can virtually eliminate our bills altogether.

      • Finn Peacock says

        Les, we’re a couple of weeks away from a new ‘Add a battery’ calculator which will let you upload your smart meter data and see the exact savings you’d get with a battery.

        • Tim Chirgwin says

          Finn, can your calculator allow for those with controlled load as well?
          Perhaps with a feature option to allow for the potential fitting of a timer to major loads like hot water and pool pump?

        • Good news! Ever since using your site, NREL and typical over-the-top propellerhead-davidleitch-style financial analysis to evaluate and install only profitable green stuff, I went back to my engineering roots to come up with an effective back-of-the-envelope KISS calculation. I use it every day to see that I’m not giving the grid a penny more than I absolutely have to!

          It goes like this:

          My solar cost of generation is 10c/kWh = system cost / lifetime production.

          If I could get a battery with an LCOS of 15c/kWh my recycled solar energy would then be costing 25c/kWh which beats the grid every time.

          I’m still waiting. I know, with the right VPP I could scrape a profit with a more expensive battery, but with news like ArcActive, Gelion, Donald Sadoway working on Al-S, sodium, … I feel there’s a duck-hunting S-Curve 2-4 years down the track. As I’ve got my self-use at 70%, I can afford to wait. But I digress …

          The real point is that truly simple calculations are enough to decide whether it’s worth going into green tech or not. Spoiler alert: stationary batteries aren’t there yet, but I’ll know in 20 sec when they are: installed cost/warranted throughput < 15c/kWh. Waiting, watching …

          Keep up the great SolarQuotes work!
          Cheers

        • Michael says

          Where is the ACCC? Asleep at the wheel again?
          I don’t believe it’s legal to charge for what is provided to the network free of charge.
          This is one for governments to act on.

          Further to the above 5 kw systems have not been installed for years and it’s misleading to use these as an example because precious little energy is exported. The impact on customers will be far worse than the public relations model provided.

          I did not install a solar system so that greedy business could take the energy for all but free and now have the hide to charge people who forked out serious money on top of that.

          Whilst I did not want to install a battery at this time I’ll have to consider doing so and potentially going off grid.

          • Finn Peacock says

            Thanks for the comment. What is your proposed solution to the local distribution network getting overwhelmed with rooftop solar during mild, sunny days?

          • The reality here is that the complexity, lack of transparency, moving goal posts, tech knowledge required and the cost of installation of battery / solar systems, are all adding up to me NOT installing solar at my house. Iโ€™ve received numerous quotes over the past two years (including through this site), none of which make economic sense. This news makes the scenario worse.

            The repayment timescales of a solar / battery system for low power consumers such as us, is simply not realistic. In our case the repayments on a quality small solar battery system before break-even would be at least 15 years, and that includes the cost of charging our EV (which we purchased, intending to install solar)!

            Hearing that distributors are now going to start charging homeowners for the solar power they put back into the grid during the day (from the homeowners’ own infrastructure); along with no guarantees that these penalties wont continue to increase in the future because of a grid not fit for purpose, absolutely kills the case for installing solar systems on small properties without significant government subsidies.

            Finn, the solution is: real government subsidies for low income, small homeowners’ solar installation; and building fit-for-purpose local distribution networks which properly reward those contributing solar energy into the grid.

          • Rod Nicholas says

            Responding to Finns “change of tune” what to do with solar overwhelmed grid ? I live in NW Victoria surrounded by at least 4 massive solar farms… encourage us households to install solar then suddenly we
            are supplying too much? Give me a break !!!

          • Ken Eisman says

            Finn, my solution to excess rooftop solar would be for the utility to install grid-level storage and store the excess for use during peak loads

      • I’ve got partway there.

        I have a dumb solar heater with electric boost which is now controlled by a Shelly smart switch.

        I’ve set up a schedule so that it runs after midnight on our very cheap night time tarrif (8c kWh) but it also lets me run it during the say when I have excess power from my panels.

        The only problem is that the element draw 3.6kW which I typically don’t have spare in winter when the solar HW panels don’t contribute much.

        A lower draw element of 1 – 2kW would be a much better match – something I have yet to do.

        Next step is to program it up so that it doesn’t run at night when the weather forecast for the next day is going to warm enough to heat it up.

    • James Bennett says

      Tim

      if you are on TOU prices, you have a smart meter, which is managed by your retailer and not by your DNSP. Some retailers have shifted the controlled load to the middle of the day with some boost overnight. Other retailers have retained the overnight heating.
      SAPN has TOU rates for controlled load which retailers pay, with the lowest prices during the solar sponge and typical controlled load prices overnight.

      Speak to your retailer, or your electrician about reconfiguring your system.

      James B

    • Philippa England says

      We recently put up a solar system and asked the installer to switch the hot water system over to general load and install a timer at the switchboard. So our hot water does not operate from controlled load but from our solar – all good!

      Mike and Philippa

    • Michael Maher says

      I have solar hot water as well as a PV system. I had a timer installed on my meter box and had the controlled load circuit removed. So now in the colder weather I heat water off the grid between 11 am – 1 pm a period of only 2 hours per day. On a sunny winters day I get the benefits of solar hot water and the 2 hours to boost it off the PV system. In summer between September and May I generally have the solar hot water booster switched off. This seems to work well for. 2 person household.

      In summer I donโ€™t spare the air conditioning. I also pay extra every fortnight all year round so that I have plenty of credit so as not to think twice about heating my home on those very cold days which are generally rate in my part of Australia.

    • This is simply a case of wanting the cake and eating it to.

      Is they were serious about grid overload then they would apply limit feed in to say 5kwh etc.

      However, they want it both ways…

      They actually want the solar feedin to on sell for 50,60,70c/kw in the peak periods 2pm to 8pm … but also want to double dip and charge you to give them this power.

      So it’s just an end user pays regardless – daily fee (much higher for solar household) + usage and now + feedin.

      Remove the daily fee and sure, id be happy to pay to feed into the grid. I’ll get a battery and avoid the grid all together.

  2. This makes me concerned about my Sungrow batteries terrible interface. I’ll need to switch it to charge after 10am instead of whenever the sun comes up.

    • I’ve just requested that our installer do the same for our Sungrow 26.5 kWh battery, as i think he’s got more acces than the battery owner.
      I couldn’t figure put how to change the charge schedule either!

    • Rod Nicholas says

      Similarly contacted Origin Victoria who look like getting rid of off peak controlled load hot water…the state Govt scrapped pension concessions on this also. At my suggestion to switch hot water heating to daytime? Stunned indifference… We have smart meters .. it can be done…Once again privatisation at it’s most rabid!

  3. Charging people to export won’t stop the solar beast. It will start the battery beast.

    • Darrell says

      Yep, but not until batteries cross an economic tipping point. That’s running a bit late, but it’s on the way. There’s a pile of credible post-Lithium development out there (sodium, zinc, aluminium based, et al)

      I’m afraid it’s a case of don’t get mad, get even. Wait a couple of years, watch battery LCOS, do your sums and move when the savings are real. You’ll be kicking the Greedy Griddies into touch for at least a decade with your first battery. And there will be no coming back, because your second one will be even cheaper.

      Patience, Grasshopper.

  4. George Kaplan says

    Honestly this doesn’t look like it’d have much impact. You’re given a roughly 6.5 kWh allowance per day, and you’ll export roughly 5x this limit on a non-cloudy day. So you’re getting a hidden 20% reduction on income and a less than 50% increase on the final kWh or two that you export in a day – maybe a little more around the summer solstice.

    In short this won’t have any major effect on exports, but will impact solar profitability, and increase the viability of off grid options – the value of power goes down\and the costs rise.

    Ausgrid claim an average 5kW system will see a yearly increase of $6.60 per year, but according to my very crude analysis, those with 10kW inverters are likely to see a bill increase closer to $8 per month(!!!) around the Winter solstice, and higher if it’s not too cloudy around the summer solstice. It’s a $100+ ‘saving’ for power providers at a minimum.

    And if the ‘savings’ shows that it works well, then the peak export period penalty can be increased, unless too many folk opt to go gridless in which case other challenges will ensue!!!

    • I also do not see this as a huge deal yet. Yes it has me thinking about batteries more, but when the two way pricing is implemented I will be taking a wait and see approach. If my retailer does not over react then the worst case scenario is my FIT drops to 5.8 from 10 to 3, then bumps to 9.3 from 4 to 9 (in those summer hours when the sun is still shining anyway).

  5. David Jackson says

    A huge drop in the size of the carrot…from the current 26c down to 2c…

    Lets not kid ourselves this has anything to do with grid stability or “educating” customers to load shift…its all about the shareholders, they come first ๐Ÿ™‚

  6. Our power provider here in Western Victoria has cheap EV power between midnight and 6:00 at 10c kWh but I get FREE power between 11am and 2pm and a 10c FIT. Our house is all electric, this free time really works well during Winter as I can put the heaters on full to warn the house up, we are well insulated and it takes hours before the heater kicks back in when I turn the temp back down to 22c.
    Again during summer I use my free time to cool the house down.

  7. Tim Chirgwin says

    I think the retailer is being sneaky,..you will be using your own pv power first and will not get a FIT because you will not export, and then if that is not enough you will get “power free”.
    They are effectively convincing you not to export in the middle of the day when they don’t want it anyway!

  8. Saliya Wimalaratne says

    Australia needs a grid, and charging PV owners to export excess is a fast track to no grid. Why?

    PV owners that export more than they use are ‘suppliers’ not ‘customers’. My 10kW system generates 32kWh and we use 27kWh daily (annual average) – net export of 5kWh/day.

    Australian-supplied grid-tied battery storage is overpriced ($1/Wh) compared to Australian-supplied off-grid battery storage ($0.50/Wh) but that’s also very expensive compared to world-supplied battery storage ($0.20/Wh).

    PV owners can heat/cool homes or water at convenient times to use excess energy, but sooner or later they will buy battery storage. At $0.20/Wh $10k AUD buys about 50kWh of storage – more than enough for even heavy users.

    Once people can generate and store enough power for their needs, they no longer need the grid.

    The grid and Australia needs PV and battery owners to stay connected, and the cost model needs to acknowledge this. We should incentivise people who are willing to allow their real estate to be used to generate and/or store energy. We probably need to re-nationalise the grid completely too.

    • George Kaplan says

      Net exports of 5 kWh/day? I’ll raise you – ~28kWh/day for net exports last month. Despite only buying enough power for about 0.75 people, said exports are still not enough to break even and be a supplier rather than a customer.

      With wild speculation that the next price rise will be around the 20% mark, PV owners could be losing ground and thus ever more interested in off grid with fossil fuel backup generator options.

      Power companies, like so many other Australian corporations, seem to be looking to see just how much they can increase their profit margin, and the cost of living, failing to take into account that many customers can choose to opt out.

  9. It would be nice if the retailers or grid operators or maybe our local councils could take advantage of the excess power and store it in the towns and cities where it will be used later.

    We are trying to do our bit to reduce our greenhouse gases, so the government should see the excess generation that they didn’t have to pay for as a win. Putting in regional battery banks is a winner as it gives more resilience to the distribution network. To minimise disruption to towns when big weather events cause havoc as seen recently in South Gippsland where Mirboo North was without power for weeks due to trees bringing down power lines.

    Don’t penalise people for a situation that has been overlooked, be clever and think of how we can take advantage of the excess power.

    After all, our country can be proud to have an abundance of solar generation installed. To penalise consumers will only see them reduce the power that they export. If the government is truthful they will reduce Australia’s claims on solar production, due to the introduction of draconian measures.

    Come on people, we’re better than that. Get the policy right.

  10. We and many other households invested in renewable energy in response to the Ausgrid trial, seeking to collectively make a real difference. The changes from the trial to this plan constitute significant betrayal of us and the broader renewable energy cause.

    The purpose of the trial was to see what impact realistic charging practices could make. Having first abandoned gas to go electricity-only, we bought a battery and joined the trial, it becoming fully operational 3 months ago. Surely our response was everything they dreamed of? Our February to April averages per day:

    Consumed: 13 kWh (for 6 people in an energy-efficient Victorian terrace)
    PV Produced: 18 kWh
    Battery charge: 10 kWh
    Battery discharge: 9 kWh
    Grid import: 7 kWh
    Grid export: 11 kWh
    Fraction of grid export in undesired time period 10 am โ€“ 2 pm: 7 %

    This shows the transformative ability of household batteries in moving renewable energy from damaging excess time periods to critically needed time periods, with just 7 % of exports contributing to destabilisation of the electricity grid.

    In terms of costs, our electricity bill for those 3 months (without bonuses) was -$230, whereas we would have paid $200 for this before the battery, so a saving of $430. Given the battery purchase and installation price, this means a payback time of 7 years for a battery with a 10-year warranty. This is sensible household economics, as well as a significant contribution to the changeover to renewable energy. The Ausgrid trial scheme was well thought out and made sense from all perspectives.

    What will we do when the selling bonus changes from 26.6 c/kWh to 2.3 c/kWh? We could continue on the same to keep the environmental advantage, but our bill increase by $2.50 per day, or $900 per year. The battery will never pay for itself.

    The change in the changeover time from 2 pm to 3 pm will be tough for us, and most households, too.

  11. So in other words, they’re forcing solar owners to install unviable battery systems to meet their Corporate shortfalls and profits.

    • Finn Peacock says

      1) no-one’s being forced to do anything
      2) this is a Network tariff, not a retailer tariff – aimed at grid stability – the feed in fees don’t go into the retailer’s coffers, they go straight to the network. If anything, this makes life more complicated for the retailers.
      3) you can avoid these fees with some simple ‘auto curtailment’ automation – no battery required.

  12. Hard to believe that it has come to the point where people need to consider switching off solar grid exports and effectively wasting output instead of making excess midday power available to EV chargers or grid scale batteries. Easier it seems to hit the consumers and producers than think outside the square and implement a better outcome for the economy and environment. Assuming generators, distributors and retailers act only in self interest the market operator and/or governments should force a better outcome than this.

    • Thanks to the 26.6 c/kWh bonus we were making about $2 per day profit on our modest electricity, and yes that is critical to making batteries viable to drive onwards the clean-energy revolution. The other factor making home batteries economically viable is the grid price spikes. In 3 months, we amateurs made $87 on 29/2, $16 on 2/5, $16 on 3/5, $89 on 7/5, and $222 on 8/5. So an amazing week. This actually makes up for the big hit with last week’s announcement of the loss of the 26.6 c bonus.

      But surely this just says that consumers need the bonus as an incentive to tool-up for contributing to events like this week’s power crisis ? Surely paying out a little on a regular basis is better than paying out huge amounts in crisis situations?

  13. Jonathan Prendergast says

    This article is very misleading.

    ” After a trial currently under way, this is expected to kick in across the network starting July this year.”

    The trial is already available “across the network”. It is not limited to certain geographical areas like that sentence suggest

    The updated two tariff will remain voluntary (unless I have missed something) not be forced upon anyone, and customers on existing flat rate or other network tariffs can remain on them without two way tariffs or charges for exports.

    We have people in our community in the Sutherland Shire worried about being charged to export solar. Due to misleading articles like this.

    • Michael Bloch says

      Hi Jonathan. My understanding is this isn’t voluntary – everyone will be charged it, but perhaps some retailers may choose not to pass it on (I’ve added a mention of that). As I mentioned in the original article, Ausgrid envisions retailers will likely pass on this tariff via changes in the feed-in tariffs they offer customers. There’s also a link in the article to Ausgrid’s fact sheet explaining two-way pricing in greater detail.

      • Jonathan Prendergast says

        Just checked. The fact sheet says it is “opt in” in the first sentence.

        • Finn Peacock says

          It appears to be opt-in until July 2025. Then it’s compulsory for all “new and existing residential and small business customers who are export ready”.

          But the charge is to retailers, not consumers. Retailers will likely offer a choice of tariffs that don’t pass the charge on directly (but will have to absorb them).

          In Sutherland Shire you can easily find a 7c Feed-In-Tariff, so even if this charge is applied by the retailer, at current rates, no-one needs to pay to export.

  14. Des Scahill says

    Constantly changing complex tariff systems that vary by retailer,excessive fixed charges, a steadily collapsing grid due to a mixture of inadequate maintenance coupled with growing climate change impacts,, and of course ‘political interference’; seem to be succeeding in convincing nearly every householder and small business owner who is able to, that going off-grid is rapidly becoming the only sensible personal solution left.

    There are some downsides to going off-grid of course, however….

    • Agree with the sentiments above. In my view charging a negative FIT is a sign of regulatory and market failure. Encouraging a demand shift through pricing to match peak solar production seems like an obvious solution. We are now off grid capable after installing a battery and after 4 months have drawn an average of 20kwh from the grid. This may increase a bit through winter but the grid including $1 a day for connection has just become the backup generator.

  15. I have a 12Kw system with a Tesla battery and a heat pump and am still export about 650kw per month to the grid. Originally had 8 adults in the house but now only two adults. Hardly anything will get exported back to the grid before 10am (Tesla battery charging) and after 4pm there isn’t much solar generation in Sydney. All this charge will do is to encourage me to run the air conditioner on heat or cool more often even when I wouldn’t normally bother. I had a larger system installed so the winter power usage would be covered but haven’t been through a winter with it yet. The Tesla battery is worth every cent and my last 2 bills since installing it with adding solar panels has been a $61 credit and a $7 credit. They can take the new fee out of that ๐Ÿ™‚

  16. Juliano B says

    Given the grid is shared, why aren’t the big generators – who also overload the grid with us solar suppliers – also being charged for putting more kWh than needed in the grid from 10pm-3pm?

    I struggle to understand how a policy could be made to punish some suppliers (solar) but not others (coal power plants), particularly because that one segment is doing the right thing and the grid is shared by all.

    I have no problem with tariffs to stabilise the grid but I have a huge problem with only a few picking up the whole burden.

    • Anthony Bennett says

      Hi Juliano,

      The coal generators are being punished by the spot price for electricity going negative. They can’t afford to shut down so they keep them hot, burning fuel, even when there’s no demand. Arguably the market is a bit broken but getting changes to it is very difficult because the incumbent players are also industry people in the regulators.

      Arguably the people getting a free ride have been those with refrigerative air conditioning, they’re big users and they’ve been driving the expansion of poles and wires ever since they were invented.

  17. I am gobsmacked when learning this “2 way tariff” from Augrid.

    For years, the government has encouraged people to have PVs on their roofs and now they are paying penalties because of those PVs?

    How can an average Joe control how much power to be exported or not, to avoid paying that ridiculous sum of penalty each bill?

    So much for calling to increase “electrify”. What a joke.

  18. Tim James says

    While the charges at this point in time do not seem to be too bad, this is just another small step. Once introduced, the daytime fee will go up a bit at a time. They will keep their profits and we will be not only supplying it for them during the day but also providing them the battery capacity after hours. After hours They will pay 2c per KW/H while selling it at 50c and we will have solved their storage problem.

    Do the math on a battery. It costs us around 50c/KW/H. They want us to export it to them and pay us around 2c so they can sell it at peak hour rates. Their profit? 50C plus any excess we send because our battery is full. Sensational business model. They are geniuses. We are the ones getting taken.

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