Analysis of the impact of proposals to charge solar homes to export electricity to the grid

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Mountain, Bruce ORCID: 0000-0002-2093-2038 (2021) Analysis of the impact of proposals to charge solar homes to export electricity to the grid. Technical Report. Victoria Energy Policy Centre, Victoria University, Melbourne, Australia.

Abstract

This report critiques the Australian Energy Market Commission’s (AEMC) calculation of the impact of the network injection charge that the AEMC proposes that households with rooftop photovoltaics (hereafter “solar homes”) should pay when they export surplus rooftop solar generation to the grid. The AEMC’s proposal is set out in its Draft Rule Determination published on 25 March 2021. It would appear to be the case that the AEMC has made an error in its calculations. Once corrected the impact of its proposals on solar homes is likely to be large, not small as the AEMC suggests. The price for network injections that is consistent with the AEMC’s $100 average solar home injection price is at least 4 cents per kWh and possibly up to 4.9 cents per kWh. The AEMC presents the case study of a 5 kW solar home to which a $100 network charge applies. But using the AEMC’s assumption of solar exports, the $100 charge requires an injection price of 4.8 cents per kWh, not 2 cents per kWh as the AEMC suggests will apply. Using the corrected injection price means that the typical (median) solar home in Victoria can expect to receive just $32 per year for the surplus solar production that it feeds in to the grid after the revised regulated minimum feed-in rate takes effect from the middle of the year. For a typical 5 kW solar home in Sydney, the correct network injection charge increases from the $100 per year that the AEMC claims, to $240 per year. Much lower retailer feed-in rates in all regions of the NEM can be expected soon reflecting large declines in wholesale prices. Taking account of the AEMC’s corrected network injection price and much lower retailer feed-in prices, it is likely that at this price the great majority of solar homes in the National Electricity Market will receive little or no income for the surplus solar production that they export to the grid.

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Item type Monograph (Technical Report)
URI https://vuir.vu.edu.au/id/eprint/41996
DOI https://doi.org/10.26196/bjq6-2694
Subjects Current > FOR Classification > 1401 Economic Theory
Current > FOR Classification > 1402 Applied Economics
Current > Division/Research > Victoria Energy Policy Centre (VEPC)
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Data Citation/Attribution

Mountain, B. (2021). Analysis of the impact of proposals to charge solar homes to export electricity to the grid. Victoria Energy Policy Centre, Victoria University. https://doi.org/10.26196/BJQ6-2694

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