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.