Home solar rate overhaul

The feed-in-tariff for rooftop solar will be replaced with a payment for supplying power in the later hours of the afternoon, the government will announce next week.

Business News understands the state government has been reviewing the tariff, following years of debate about the pressure on the power grid from rising rooftop solar output.

About 29 per cent of WA households have solar on their roofs.

When power production from the panels peaks, it reduces demand from other generation sources on the grid, and leads to spikes in voltages on the network.

A report by the Australian Energy Market Operator has warned demand may fall below safe operational levels by 2023 if rooftop uptake continues apace.

The existing tariff is about 7 cents per kilowatt hour, with a replacement model likely to pay a higher rate, possibly more than 10c/kWh, only after 3pm, Business News understands.

Numerous reports have recommended changing the tariff structure in recent years.

A report by Power Ledger chair Jemma Green, released in June, recommended shifting to a dynamic price for the feed in tariffs as a price signal for users to invest in storage.

Work in the state’s Distributed Energy Roadmap paper estimated the cost of the feed in solar scheme continuing to operate in its existing form would be $17 million in the 2020 financial year.

Mannkal Economic Education Foundation released a report last year highlighting potential energy reforms, warning that there was a hidden cost shifting under way as rooftop solar users effectively passed their connection costs onto other users. 

Moving to cost-reflective pricing would be an important step.

Mannkal executive director Andrew Pickford said a move to abolish the existing feed-in-tariff would be a good thing, if it was not retrospective.

“It would be a positive development to remove some of the distortions in the (system) by electorally popular but economically inefficient policies,” he said.

“The withdrawal should be measured and sensible, it shouldn’t rewrite existing contracts, it should close access.”

Energy Minister Bill Johnston is building momentum behind a growing reform program in the electricity market.

Business News revealed this morning that a change in the contestability threshold for electricity retailers is also under consideration.