More sun for everyone

More than a quarter of Australian homes already have rooftop solar, and there are projections that rooftops and other distributed energy resources (DER) could contribute to half of all grid capacity by around 2040. This level of PV penetration is causing technical issues, exacerbating existing local overvoltage issues, and raising broader system security concerns, especially as minimum system demand drops to record lows in the middle of the day.

In response, distribution networks have been imposing tighter static export limits – down to zero in some parts of the country. As regulated monopolies, they have also been asking the regulator for more revenue to cover their DER integration costs. In turn, this has raised the ire of some welfare groups concerned that non-solar owners are subsidizing solar households.

In response, the Australian Energy Market Commission (AEMC) has just completed a nine-month public consultation process that has resulted in a reform package on DER access and pricing.

Opponents of the reforms have zeroed in on the potential for distribution networks to introduce tariffs for solar exports. Economic benefits from those tariffs may not flow to all customers. Equally important though is the fact that export tariffs would also allow networks to pay for energy discharged into the grid where and when this reduces the need for new network infrastructure. Networks will also be prevented from unilaterally imposing zero static export limits and will need to provide a basic level of exports for free for at least 10 years.

All this has been thrashed out at length over the last year during the AEMC’s consultation process. Even within the solar industry and amongst solar advocates, it has been a deeply divisive issue.

Industry backlash

For some, it has been a line in the sand: Under no circumstances should solar owners be forced to pay to export to the grid. For others, it is a logical inevitability in what is still supposed to be the national electricity market. The reforms acknowledge that where solar exports are a net cost to the grid, that cost should be borne by owners as the main beneficiaries.

Opponents are still hoping that some state and territory governments will block the implementation of export tariffs in their jurisdictions. It is hard to see how they could do that without jeopardizing the implementation of the rest of the package, including the parts they support. And given that the centerpiece of the changes to the rules is the removal of the clause which prevented distribution networks from charging for exports, it’s also hard to see how governments could turn back the clock to a version of the rules that no longer exists.

The Total Environment Centre (TEC) partnered with ACOSS, the nation’s peak welfare body, as a rule change proponent, so the views expressed here are not unbiased. However, several years ago, a TEC discussion paper argued the case against export tariffs.

What changed our minds? TEC realized that, if designed well, these reforms could lead to more solar being exported to the grid. That would be the case where zero static export limits were removed, and people could choose to export more at most times in return for a small levy when the network is congested.

That outcome will depend on how the reforms are implemented, so TEC’s intention is to participate in the detailed design of export tariffs, and the related regulator guidelines, over the next year. The intention is to ensure that solar owners are not ripped off.

For instance, if a network wants to impose a levy during the middle of the day, it should also be required to pay for exports late in the day. And the TEC will be pushing for a reasonable minimum static export limit to be nominated, based on the inherent hosting capacity of each network.

It is understandable that some people don’t like these reforms. Our energy supply is something we can now have more control over in a world that seems to be increasingly out of control, and export tariffs feel like an intervention by Big Brother. Also, the boom in rooftop solar has been a shining light in the darkness of Australia’s climate and energy policy morass over the past two decades, so why mess with success?

On the other hand, some consideration should be given to the logical endpoint of maintaining a blanket ban on pricing DER exports. Should solar owners be entitled to export for free all the energy they don’t need onsite and choose to put into the market, even if it isn’t needed and may require extra network spending? And if so, is it right that non-solar users should subsidize this, even if the subsidy is not large?

These questions have been central to this reform process, but we will no doubt continue to debate them for years to come.

About the author

Mark Byrne is a former urban planner with a Masters in international law and a Ph.D. in the humanities. He has been TEC’s energy market advocate since 2012. His achievements include managing the Green Electricity Guide (with Greenpeace), and being a proponent in four requests to change the Australian National Electricity Rules to decarbonize the energy system in ways that are fair and cost-effective. He is passionate about the role of local energy resources like solar, community-scale batteries, EVs and demand response, especially in making the energy system resilient to the accelerating impacts of climate change.