{"id":39566,"date":"2020-05-25T12:37:14","date_gmt":"2020-05-25T02:07:14","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=39566"},"modified":"2020-05-26T16:05:43","modified_gmt":"2020-05-26T05:35:43","slug":"july-electricity-solar-tariff","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/july-electricity-solar-tariff\/","title":{"rendered":"Cuts To Electricity Prices And Feed-in Tariffs From July Will Extend Solar Payback"},"content":{"rendered":"
\"Electricity

COVID-19 has contributed to wholesale electricity prices cuts, which should be reflected in your power bills from July.<\/p><\/div>\n

The coronavirus has killed more than 340,000 people worldwide and taken a big bite out of economic activity.\u00a0 Fortunately, Australia’s death toll has been low thanks to the effective response from medical professionals.<\/p>\n

While we’ve gotten off lightly with regard to lives lost, there has been a sizable economic downturn.\u00a0 This has caused wholesale electricity prices to drop, which you should see reflected your bills from July.\u00a0 Unless you’re in Western Australia. Nothing good ever<\/a> happens<\/a> to electricity bills there, and the savings will simply disappear into an electricity budget hole. But maybe it means Western Australians will be less ripped off over electricity in the future.<\/p>\n

In the National Electricity Market or NEM, which is the ACT plus all the states except WA (and NT), wholesale electricity spot prices so far this financial year have averaged 2.2 cents lower per kilowatt-hour compared to last financial year.\u00a0 While things in Australia are improving, the world economy remains depressed, so we’re not likely to see much change in the remaining five weeks of the financial year.\u00a0 This means in July1<\/a><\/sup>,<\/em> we are likely to see decreases in both electricity prices and solar feed-in tariffs.<\/p>\n

Australia and the parts of the world that understand how colds spread should start to recover economically over the next six to twelve months. So electricity prices and feed-in tariffs may rise in July 2021.\u00a0 But even assuming a higher economic recovery — which is far from guaranteed — they won’t return to their former level.\u00a0 This is because electricity prices would have fallen without COVID-19<\/a>, mostly thanks to increased renewable capacity pushing down wholesale electricity prices.<\/p>\n

In this article, I will blather on about the economic effects of the pandemic for a few hundred words, and then I’ll work out how much NEM wholesale electricity prices have fallen this financial year. \u00a0Next, I’ll throw in a graph that will estimate how much of the change is due to the pandemic.\u00a0 Finally, I’ll show that, even with lower electricity prices and feed-in tariffs, rooftop solar power is still a good deal for most households.<\/p>\n

Economics In The Time Of Coronavirus<\/h2>\n

While Australia is doing remarkably well, the coronavirus has hit the world a lot harder than I expected. Clearly, I am far too optimistic about contagious diseases and need to read at least an entire pamphlet on epidemiology before making predictions.<\/p>\n

I suppose I shouldn’t be too shocked by the current tragedy in the US — after all, if you lie down with idiots you wake up with stupid.\u00a0 But I don’t understand the disaster in the UK where the virus has killed more British than the Blitz.\u00a0 It’s as if after Brexit they wanted to rub in how much they don’t need Germany any more.\u00a0 When did Britain go from being the Motherland to being an alien land where they can’t even mother themselves enough to stop a bad cold?2<\/a><\/sup><\/p>\n

Because large parts of the world are not doing well, there may be a prolonged global recession that will keep electricity prices down for years to come, as demand remains low for Australian exports that are electricity intensive, such as aluminium and natural gas.\u00a0 (It takes a lot of electrical energy to turn natural gas into liquid natural gas for export.)<\/p>\n

\"\"<\/p>\n

Australia’s Economic Position Is — Relatively — Amazing<\/h2>\n

Optimism is something I’ve suffered from ever since my mother didn’t drop me on my head. But I don’t think it’s the optimism talking when I say that economically we’re in an excellent position compared to most countries.\u00a0 Pretty much everything we import has fallen in price, while a lot of what we export has either held steady or increased.\u00a0 For example, iron ore has stayed relatively constant, while the prices are up for grain and the flesh of animal slaves.\u00a0 Out of our ten major trading partners, 7 have the virus well under control, and Australia’s economic stimulus, while not perfect, has been the best in the developed world.\u00a0 We’ve been fortunate.\u00a0 This pandemic feels as if someone was granted one wish from an evil leprechaun and asked for Australia to have the world’s best-performing economy.<\/p>\n

So while the Treasurer may moan and groan about having a hole in the budget so big the Hindenburg could fly through it sideways, we’re got it good compared to the rest of the world.\u00a0 Things can only get better<\/a>, just so long as we don’t do anything idiotic like start a trade war with China.\u00a0 But who would be stupid enough to do that?<\/p>\n

<\/div>\n

Wholesale Electricity Prices Down<\/h2>\n

Earlier I mentioned the wholesale price of electricity was down 2.2 cents in the National Electricity Market.\u00a0 This is the population-weighted average, but there is considerable variation between the five NEM states.\u00a0 The graph below shows the average wholesale electricity spot price3<\/a><\/sup> for the 2018\/19 financial year and compared to the current 2019\/20 financial year.\u00a0 While this financial year isn’t over yet, I’ve assumed there will be no significant change in its final five weeks:<\/p>\n

\"Average<\/p>\n

The most populous state, New South Wales, has the smallest decline, but falls in the other four states are two to three times larger.\u00a0 If I give the drops as a percentage they are:<\/p>\n