I was disappointed to read that Grant King described households and businesses with solar PV systems as network free-riders.
Free-riding: To take advantage of the charity, generosity, or hospitality of others
I wonder if Mr King views Origin as a free-rider, a company that proudly boast to be one of the largest installer of solar PV systems in Australia, largely as a result of the generosity of the Australian taxpayer through state government solar feed-in tariffs. I hope so.
As an Origin shareholder it is Mr King’s duty to seek out opportunities to generate shareholder value for me and my fellow shareholders and if those opportunities happen to be overly generous feed-in tariffs, then so be it.
As an Origin electricity and solar PV customer however, I’m upset at being labelled a free-rider. The marketing materials for my solar PV system certainly didn’t explain this risk to my reputation.
Ignorance is no excuse I guess, and this label is starting to weigh on me – I can sense my neighbours anger as they stare at my rooftop while retrieving the dreaded electricity bill from their post-boxes – so I decided to see what I could do about righting the wrong that I had perpetrated upon my fellow electricity user.
Upon investigation I established that I am on what is known as a gross feed-in tariff, which means every electron delivered and consumed in my home is charged to me at the full retail rate. I therefore contribute the same amount for use of the networks as I did before I bought my solar PV system. Phew, I feel better.
But how can I rebuild my relationship with my neighbours and would they even believe my word over a highly successful leader of one of Australia’s leading energy companies?
I decided to do some more research to support my case. Surely my renewable energy system must be doing some good. Fortunately in a submission to the Independent Pricing and Regulatory Tribunal, Origin provided me with the support I needed.
I’ve discovered that my solar PV system delivers benefits not only to me but to all customers by lowering spot electricity prices:
“…by virtue of generating (whether measured on a gross or net basis), solar PV customers reduced the spot price relative to what it would have otherwise been…. The benefit is effectively shared among all customers through lower spot prices (including to those customers with solar PV systems) relative to the spot price without the contribution of embedded generation.”
I’ve also discovered that when I’m consuming electricity at the same time my solar PV system is generating electricity, it reduces the need for electrons to travel hundreds of kilometres from a utility scale power generator through those network systems. The electrons generated by my solar PV system flow directly to my house first and any excess electrons to my neighbours’ properties, yet my neighbours and I still pay for the cost of transporting an equivalent amount of electrons from those far flung generators.
“There is clearly an avoided transmission UoS benefit created by embedded generation of all types (electricity that did not have to be transported to the transmission node from a transmission connected generation source)…. Within the distribution network, customers without embedded generation who are located nearby an embedded generator will pay the full cost of transmission and distribution for all of their consumption, even though a portion of this used only a very small section of the distribution network.”
However, none of these benefits were very tangible, or at least demonstrable so I scrutinised my bills some more and recalled that Origin had being paying me over and above the generous feed-in tariff that the NSW government had introduced to promote the uptake of solar PV. Why?
“The voluntary additional amounts paid by retailers in fact reflect the benefit contributed by solar PV customers.”
Now I’m confused. Is Origin saying that my solar PV system is providing a benefit or is it network free-riding? Perhaps it’s a gross tariff versus net tariff issue?
“Origin believes that a future FIT should apply to net metered customers only. Net metering provides greater incentive for energy efficiency, as a customer will avoid using energy from the grid in the first instance to avoid the retail tariff.”
Okay, so gross tariffs are good because there is no network free-riding but net tariffs are even better because they promote energy efficiency.
I can’t wait to tell my neighbour. It’s a relationship worth salvaging, not least because we wouldn’t have survived last summer without the respite provided by his air-conditioned mansion.
In the meantime, I trust Origin will continue to promote its commercial interests to generate shareholder value for me and my fellow shareholders.
The author works in the renewable energy industry. This article represents the author's own personal views and not those of his employer.