Victoria Proposes 3.3 Cent Minimum Feed In Tariff

Victorians with solar power will get less for their exports if a draft determination by the Essential Services Commission goes ahead: the commission wants to cut another 33 per cent off the state’s feed-in tariff by July 2024.

And there’s probably no way to stop it.

The ESC is, after all, responding to what it sees in the market: the infamous “solar duck curve” is biting hard, and as installations continue to grow, wholesale prices continue to be pushed negative during times of peak solar generation.

So the ESC proposes setting flat minimum Feed in Tariffs for 2024-2025 at 3.3 cents/kWh, with time-of-day FiTs ranging from 2.1 to 8.8 cents/kWh (between 17 percent and 46 percent lower than today’s prices).

The ESC explains in its draft determination (pdf):

“The proposed minimum feed-in tariffs are lower because solar weighted wholesale
electricity prices are forecast to be lower in the 2024–25 financial year – especially at the times when solar customers export most of their power to the grid,”

Prices in the final determination could be even lower because the ESC says it will update its cost forecasts for the final decision.

It is evident that the ESC aims to encourage a maximum number of customers to adopt time-of-day tariffs. This strategy motivates customers to adjust their energy consumption based on the availability of electricity and the state of the power grid. This approach helps to prevent undesired consequences such as broader export curtailment.

Even night-time wholesale prices are expected to be lower in 2024-2025 than today, the decision says:

“Solar-weighted wholesale prices are forecast to be lower for all parts of the day in 2024–25 than prices have and will be in 2023–24”.

And the ESC says FiTs are no longer the main benefit of having solar – avoiding retail electricity prices is far more valuable to consumers:

“Generally solar customers receive greater savings when they self-consume the electricity they generate. Your bill does not measure how much power you did not buy, the savings from your solar panels may not be obvious from your bill.”

Because FiTs no longer deliver the income they used to, and absent the impact of a household battery, the ESC says it’s bad economics to over-provision the solar system a household installs:

“It is best to install a system that roughly matches your daytime electricity requirements and not significantly more. If you connect a system which far exceeds your daily usage the return per kilowatt installed will be relatively low, and your payback period longer”.

Note From Finn:

This is terrible advice from the ESC for most people buying solar panels. I will write a whole post on this later – but if you size your solar system to match your average daytime electricity demand, you are setting yourself up for disappointment. Especially in Victoria with their gloomy winters.  Most people should fill their roof with solar because in the real world:

  • Big systems generate much more in the morning and late afternoon when you use the most electricity.
  • Big systems generate much more in winter and overcast days when you use more electricity.
  • Big systems prepare you for a home battery.
  • Big systems prepare you for an electric car – whether you’ll charge it on weekdays or weekends.
  • Big systems prepare you for home electrification (heating, cooking, hot water).
  • Adding extra solar during the initial installation is surprisingly cheap due to how the rebate works.
  • Adding solar panels after the fact is expensive, and sometimes impossible due to changing standards.
  • The grid needs at least 2x more rooftop solar to decarbonise.
  • Excess production on mild, sunny days is easily solved with curtailment.
About Richard Chirgwin

Joining the SolarQuotes blog team in 2019, Richard is a journalist with more than 30 years of experience covering a wide range of technology topics, including electronics, telecommunications, computing, science and solar. When not writing for us, he runs a solar-powered off-grid eco-resort in NSW’s blue mountains. Read Richard's full bio.

Comments

  1. Is it this where it starts to make sense to get my existing 10kW of panels moved from all being north facing to have more east and west? Although it lowers the total area under the curve, it flattens it more to avoid drawing on the grid – especially west where TOU rates hit hard 3-9pm.

    • Gut feeling would be that the cost of moving those panels would outstrip any savings made from increased electricity production at shoulder times.

      Better off spending that same money and a litlte extra to install more panels on the east and west and using them in tandem with the north facing ones.

      • Anthony Bennett says

        Moving solar is a mugs game in many cases, seized hardware can be a total pain if nothing else.

        I’ve never met a customer who’s complained that they installed too much solar 😉

        • Cool, I’ll stop thinking about it. I’m already at the max 10 kW of panels that United allows here (on a 8.2kw inverter).

  2. George Kaplan says

    With a flat 3.3c/kWh – and yes I get this piece mentions time of day FiTs of 2.1c-8.8c/kWh, would it even be worthwhile staying connected to the grid?

    Assumptions:
    -$1.30/day supply charge – could be more
    -Drop from 5c/kWh > 3.3c/kWh & 10,000 kWh exported per year – likely more with a large system
    -32c/kWh & 10 kWh/day grid power – could vary a lot

    OR
    $474.50 in yearly supply charges
    $170 lost in FiTs, $330 in FiTs received
    $1,168 in yearly usage charges

    10 Year Cost-Benefit from Opting for Off-grid
    (474.5-330+1168)x10
    $13,125 ‘Savings’

    Tesla 2 Powerwall 2024 – $12,100 + installation ($4,000?) | 13.5 kWh Usable Storage Capacity, 10 year 70% warranty.

    Backup generator cost?!?!?

    So it looks like the 33% crash in FiTs won’t be quite enough to justify mass dropoff from the grid, but if power costs rise another 20%, battery costs fall significantly (https://www.solarquotes.com.au/blog/bloomberg-battery-price-falls/), or you opt for a cheaper than Tesla option, then the maths changes significantly!

    The only question left is how much does a good backup generator cost? Anyone have any recommendations? : – D

    • Anthony Bennett says

      Hi George,

      A decent 15kVa generator with a 3 or 4 cylinder diesel engine is likely to be $15 000, not including integration, which is difficult because unless you have something like an Selectronic SpPro then basically all the consumer grade solar PV inverters won’t play nicely with a generator.

      Once you have this machine in place you’ll probably use it during winter and not much otherwise. However the neighbours won’t be impressed when it starts at 2am and drones into the morning to maintain your air conditioner and protect the batteries.

      Nor will you be happy to pay a mechanic to visit annually and service the thing so it’s starts reliably. That’ll cost more than the grid does even before you buy a cranking battery every few years or actually put any diesel into it.

      We have a joke amongst off grid installers, the phone starts to ring around ANZAC day and it’s the generator that’s the problem. Even when they say it isn’t, it’s always the generator. The only off grid people who don’t have generator problems are the ones who have ruined their battery, because they haven’t bought a generator yet.

      The grid is 99.998% reliable, it’s quieter and cheaper.

      • George Kaplan says

        Oh wow that sounds like a mini-powerplant option!!! Wouldn’t need anything remotely like that!!! Frankly I was thinking something more motor mower sized (trickle recharge of the battery) rather than ride on or trailer sized, with expected use of less than once in a blue moon.

        Winter months I average 30-40 kWh/day in exports so it’s unlikely I’d need generator backup – I have a decent sized system. Storm season however is another matter! Get 3 overcast days in a row, heavy rain etc, and even a large solar system won’t be able to recharge a 10 kWh battery, hence the generator option. But in a major flood, storm, or even bushfire, grid reliability could be a problem.

        As for the grid being 99.998% reliable, I’m guessing that’s a random figure you pulled out of the air. This month alone the grid’s been down about 0.28% of the time. Not counting last month’s lightning strike, there’s been at least 4 other months with power issues, and at least 7 part days with power issues. Most are brief, yes, but power glitches are bad for sensitive equipment and it’s ever so slightly frustrating to be one foot in the Stone Age because power problems killed something essential to modern life.

        Raw numbers in cost-benefit calculations are simply the trigger to kill off the grid.

    • It’s time for manual grid disconnect if you have battery storage for your solar. They also want to shut down you solar remotely if there’s too much feed in, leaving you to have to purchase grid power. Enough!

    • Greig Reilly says

      Look at Generac gas generators, way better option than diesel or petrol. Natural gas or LPG. 8,10, 13kva single phase or 20kva 3phase. Can’t fault them.

  3. I wish I had put on a larger system, so better charge a battery and EV and run the all electric house.

  4. I think the ESC is working hard to force us folk in Victoria to shell out for a battery for which we can’t get a return in under 10 years. Saves the state govt having to offer any rebate like they used to. Can’t even get a rebate on an EV in Victoria. Perhaps we should move to Qld.
    Sad thing is there are no real “smarts” being shown with any of this. How about you get a retail discount on consuming power from 11am to 3pm and try and get consumers to load shift into that period. A few thousand EVs plugged in would soak up a bit of the excess. Hey we might all be winners then?

    Thanks for your comments on the stupidity of the advice re system sizing Finn. We run 8.5kW of panels in a 2 person household, and find we can’t fully cover the demand in the 3 colder months in Victoria. I got talked into this large system, and I am eternally grateful to the installer for that advice.

  5. Stephen Egan says

    I hope Ausnet in Victoria will now remove the battery inverter value rating from a solar/battery maximum connection so we can store more solar. Only fair now that the feed in rate is getting so low. Otherwise we cannot install a battery larger than 5Kw.

  6. Willem Bras says

    A home battery and ev are the answers,the supply charges and the money to purchase electricity is going up and up.
    I’m doing very well with Solar Hart hotwater on the roof,6kw panels on the roof and a Sungrow 13Kw home battery.
    Also an ev.
    Have to work the systems to get maximum benefits.
    Never looked back,we are a two persons household and the only payment is supply charges in winter.
    We’re not connected to the gas.
    Induction cooktops are very good.
    Also there is a timer on my SolarHart booster,so I use it at night from my battery (turn the thermostat to 50C)
    So no petrol cost,no gas,and no electricity.
    Yes I’m happy.

  7. Remember that this is a Draft document from the ESC and you can make a submission with feedback on this – submissions close on December the 22nd.

    My tweak on the the last para that Finn has a big issue with:
    “It is best to install a system that roughly matches your daytime winter electricity requirements (including future changes such as household electrification and EV purchases). If you connect a system which far exceeds your peak daily usage the return per kilowatt installed will be relatively low, and your payback period longer.”

    From personal experience, maximise North facing panels in Vic as for us in June ’23 our North facing panels produced double our east facing and 30% more than our west facing panels. South facing panels would produce less than a third of the North facing so offer little value.

  8. The ESC report makes no mention of matching _average_ daytime demand – those are your words.

    The ‘bureaucrat’ actually wrote: …roughly matches your daytime electricity requirements. You then make several points that read a lot like “matching daytime requirements”.

    The section is on pg 11 and has a big bold heading: Solar’s main benefit is avoiding retail electricity prices. It’s excellent advice and explains the importance of replacing grid draw with self consumption – same as your argument. It is best read without the SQ (selective quoting) from SQ ie the quote in question has a lead in stem about maximising RoI – it’s not general advice.

    I wonder if the bureaucrats who ‘typically don’t live in the real world’ make inane generalisations about engineers typically having poor reading comprehension – suspect not.

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