{"id":16428,"date":"2017-11-13T13:14:28","date_gmt":"2017-11-13T02:44:28","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=16428"},"modified":"2018-10-22T09:17:51","modified_gmt":"2018-10-21T22:47:51","slug":"solar-feed-tariffs-likely-fall-within-3-years","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/solar-feed-tariffs-likely-fall-within-3-years\/","title":{"rendered":"Why Solar Feed-In Tariffs Are Likely To Fall Within 3 Years"},"content":{"rendered":"
\"Crystal

Ronald\u2019s crystal ball says: \u201cThe future may bring lower feed in tariffs if wholesale electricity prices tumble.\u201d<\/p><\/div>\n

Increasing renewables will reduce wholesale electricity prices. Unfortunately that means feed in tariffs will probably fall too.<\/strong><\/p>\n

Solar feed-in tariffs – the payment households receive for surplus solar electricity they send into the grid – are likely to fall within the next three years along with wholesale electricity prices.<\/p>\n

The bad news: a fall in both feed-in tariffs and grid electricity prices will reduce the returns from rooftop solar.<\/p>\n

The not so bad news: solar\u2019s value as an investment will fall from amazingly amazing all the way down to merely amazing.<\/p>\n

I expect feed-in tariffs will drop by 2020 because I expect daytime wholesale electricity prices to fall by then. Wholesale electricity prices are the largest contributor to feed-in tariffs.\u00a0 But it’s not a sure thing.\u00a0 If rooftop solar received\u00a0fairer compensation<\/a> for all its benefits then feed-in tariffs would rise.\u00a0 But this is unlikely to happen so I\u2019m predicting they will decline. Come back here in 2020 and tell me if I was right.<\/p>\n

Wholesale Electricity Prices Are Way High<\/h2>\n

We used to have some of the lowest wholesale electricity prices in the world.\u00a0 While we couldn’t beat places like Norway with its huge hydroelectric resources, we could beat almost everyone else who didn’t have so much dam power.\u00a0 Electricity was cheap to generate because of our oversupply of coal power stations, low natural gas prices, and plentiful hydroelectric power. \u00a0Direct investment in coal power and hydro by government also helped.<\/p>\n

But Australia’s long run of low wholesale prices have come to an end.\u00a0 So far this year spot prices for have averaged 8.3 cents per kilowatt-hour in the Eastern states.\u00a0 This is more than twice the average in 2015. They are the highest they’ve been since we kicked off the National Electricity Market, or NEM<\/a>, in late 1998.<\/p>\n

There are three main reasons the cost of generation has soared:<\/p>\n

    \n
  1. Domestic gas prices more than doubled<\/a>\u00a0after gas export facilities were built pushing prices towards international levels.<\/li>\n
  2. We\u2019ve started closing old, clapped out, coal power stations.<\/li>\n
  3. Building new renewables has been retarded by the Coalition Government.<\/li>\n<\/ol>\n

    Expensive Natural Gas Means Expensive Electricity<\/h2>\n

    Australia’s natural gas used to be the cheapest in the world, outside of some oil rich nations where it was considered a waste product of oil production and simply flared off.<\/p>\n