The Queensland Competition Authority, in a recently released issues paper, has suggested that solar PV owners only be paid the wholesale market value of electricity for all generation their systems produce.
Through the introduction of "gross metering" owners of PV systems would have to export all their generation to the grid, receiving around 8 cents per kilowatt-hour. They could not use the generation from their systems to meet their own consumption needs thereby avoiding purchasing electricity from their electricity retailer, which is charged at a price of around 20 to 30 cents per kilowatt-hour.
According to Matthew Wright of Beyond Zero Emissions:
"This is like telling someone they aren’t allowed to eat the fruit and vegetables grown in their own backyard and must sell it to the local Coles or Woolworths where they’ll then have to buy it back at a substantial mark-up. This will kill the solar PV sector.”
The issues paper largely implies that the QCA is bound by its terms of reference from the government to recommend the implementation of gross metering for solar PV. These terms of reference force the QCA to frame any recommendations around maintaining the current distortive manner in which network costs are recovered based on a charge per kilowatt-hour that is the same irrespective of the time of day the electricity is consumed. When combined with another requirement in the terms of reference that electricity prices cannot rise (ignoring any merit-order effect), it creates a fait accompli recommendation that defies the common sense logic espoused by Matthew Wright.
The Issues Paper states, "Due to this lack of cost reflectivity in network charges, grid connected PV customers under a net metering arrangement may not be paying the true cost of their supply from the network. If this situation leads to an under-recovery of regulated network revenue, under the current approach to network regulation by the Australian Energy Regulator (AER), the distribution business is able to adjust tariffs for all customers in future years to recover its allowed revenue, leading to higher electricity prices.
As a result, a net metering arrangement may be inconsistent with a number of elements of the terms of reference, including that:
(a) there must be no consequential increase in electricity prices in Queensland;
(b) a premium rate should not impose a disproportionate burden on other energy
consumers without small renewable generation; and
(c) feed-in tariff policy should not interfere with the regulation of distribution tariffs.
In contrast, gross metering arrangements do not suffer from this problem. Gross metered PV customers draw all of their energy requirement from the network and therefore pay a network charge for all of their consumption (fixed and variable components) the same as other, non-PV customers. This approach could be considered more equitable than net metering in circumstances where network charges are not cost reflective, as it reduces the risk of DUOS under recoveries and consequential tariff adjustments that could impact all customers in later years.
To the extent that network charges in Queensland may not currently be fully cost reflective, the Authority considers there is an argument to prefer a gross metering arrangement over a net arrangement, but is open to stakeholder views on this matter.”
OK so let me get this right. Rather than actually fix our warped way of charging for network capacity that allows air conditioner owners to receive a $7000 cross subsidy (according to the draft Energy White Paper) that will actually increase greenhouse gas emissions, the Queensland Government instead wants to force householders to buy all their electricity, including their own, from an electricity retailer.
"Sorry, you’ve replaced your halogen downlights with LEDs and installed an energy-efficient fridge that’s reduced the amount of revenue the Queensland Government-owned network business can earn. We demand you reinstall the halogen downlights and buy a massive two door fridge with ice dispenser effective immediately."
CLIMATE SPECTATOR: Queensland's uncool PV punishment
The Queensland Competition Authority has suggested that solar PV owners can not consume the generation from their own systems. Why? Because the government wants to subsidise air-conditioners.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free