12 August 2016. ESCOSA yesterday released a draft proposal that recommends that the current 6.8c/kWh minimum solar feed in tariff would no longer be set from 1 January 2017. Their ‘reasoning’ behind this statement is interesting. They state:
“The Commission’s proposal is based on its view that the market structures that facilitate electricity retail competition are sound and that continued regulation of the minimum R-FiT may inhibit competition in the future, to the detriment of consumers“.
So, the implication here is that the retailers will continue to see value in purchasing solar electricity fed onto the S.A. grid by Adelaide solar system owners and that ‘competition’ for it could potentially increase its value. In our opinion, this is a counter productive step in terms of encouraging the uptake of solar installation in Adelaide. As we have discussed previously, the current (low) minimum 6.8c/kWh feed in tariff makes the case for using all, or certainly the vast majority, of the electricity produced by a solar system in the home. This can be accomplished, in some instances, by firstly ensuring the correctly sized solar system is purchased initially – sized relative to the daily household electricity usage and, secondly, ensuring that electric appliances and systems such as washing machines, clothes dryers, dish washers, air conditioning, swimming pool pumps and the likes are used during daylight hours – the hours when the solar system is producing electricity. The objective here is to use the majority of the solar electricity generated by the system, in the home (rather than sending it back onto the grid).
It remains to be seen how the energy retailers will respond in 2017 and what prices they will offer for solar energy exported back onto the S.A. grid. If it turns out that energy retails do not offer reasonable feed in tariff’s in 2017 and beyond, this is further likely to encourage new and existing solar panel owners to consider the installation of solar battery storage systems.
This will mean that ‘excess’ solar energy can then be stored, rather than sold back to the electricity grid and used at night time to power a home. The current ‘financials’ of battery storage most likely inhibit the installation of solar battery technology currently, however the current interest in these battery systems clearly indicate that people are not driven purely by the financial benefits of solar, but see environmental benefit and ‘energy independence’ from the electricity grid as reason enough to invest in solar energy storage systems. In our opinion, solar battery storage systems are likely to come down in price in the same manner that solar panels have. 15 years ago solar panels were being quoted (at manufacturer level) at around US$4.00+ / watt. In August 2016 this price is around US$1.00 / watt to US$0.50 / watt depending on the manufacturer and quality of the panels. This, again, will be a game changer and will make the feed in tariff way less relevant to Adelaide solar power system owners.
The ESCOSA proposal can be found here.