Australia: NSW post-subsidy FIT raised by 48 percent

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When the state government in the populous Australian state of NSW, of which Sydney is the capital city, closed its FIT scheme on July 1, 2011, it requested that IPART determine a "fair and reasonable" solar FIT for the state. The basis of IPART’s determination was that the tariff be provided without subsidy from the government or higher electricity prices for consumers.

IPART hearings leading up to yesterday’s announcement were keenly contested by the Australian solar industry and also by utilities. The recommendation from the solar industry, and some academics working in the field, was that net metering be introduced, providing a 1:1 tariff. This would see the full retail price paid for photovoltaic-generated electricity being fed back into the grid.

In handing down its determination, IPART has dismissed this submission, however it has also recommended that utilities increase the amount they are paying for the electricity by almost 50 percent. The range of AUD0.077 to AUD0.129 was the recommended tariff for 2012/13, up from the previous rates of AUD0.055 to AUD0.103 – the U.S. dollar currently buys AUD0.99.

One of the reasons given by IPART for the increased FIT was the tax of carbon the Australian federal government will increase as of July 1, 2012.

In announcing the recommendation, IPART’s CEO Jim Cox said that a 1:1 system of payments was rejected because utilities still incur costs on the electricity exported to the grid by households and businesses with photovoltaic arrays. "While retailers are able to supply electricity generated by solar photovoltaic units to other customers, they incur costs in doing so," said Cox. "This includes charges for transportation across the networks and costs associated with meeting green scheme obligations. That is why our decision on the benchmark range for the feed-in tariff is less than the retail price."

The Sustainable Energy Association (SEA) has welcomed the increased rate and noted that the recommended rate is higher than what is currently being offered to households and businesses by retailers around Australia. The SEA’s CEO Ray Wills also noted that a 1:1 tariff is a fairer price.

"The IPART determination is below 1:1 parity; IPART contend they have considered a range of factors, and we have no doubt they have, but it is not clear if IPART have considered the timing of electricity generation and the value of electricity at the time of generation," said Wills. "Any valuation must reflect the time of production and the realized value of that electricity in the market, and ‘fair and reasonable’ tariffs should move closer to this price point," said Wills.

IPARTs recommendations do not affect those who have photovoltaic systems that have qualified for the previous subsidized FIT program, the Solar Bonus Scheme, which pays either AUD0.60/kWh or AUD0.20/kWh.